Budget 2020: A Quick Look & Challenges Ahead

budget 2020

The PH Government have just announced the budget for next year – budget 2020 is a smaller budget compared to last year and seems to be in a better managed compared to a rushed one last year (when the PH Ministers were still struggling with their portfolios). Infographic source: The Star

P.s. Still unbelievable Lim Guan Eng is the Minister of Finance!

The bad news is for Budget 2020, 80% of the budget (RM241 billion) is going to operating expenditures and out of this amount, a very huge chunk of RM109 billion is reserved for salary & retirement funds of the civil servants alone.

Only 20% of the budget or RM56 billion is going to the development activities. The gap between operating expenses and development expenses has continued to increase over the last 20 years. We are continuing to spent limited money on non revenue generating expenditures.

The Government needs to cut down unnecessary operating expenses and push more towards development which will generate more business and improve our economy. Paying civil servants alone does not propel the economy further. It does not generate revenue to the government.

As per Budget 2020, GST will not be reintroduced which is a good thing but because there are more indirect taxes that will continue to impact businesses in next year (such as Sugar Tax that came effect in July 2019), do expect that cost of living not to go down drastically.

Fuel Susidies

From consumer point of view, there will some reduction of toll charges by 18% discount across all PLUS highways (the Second Penang bridge toll to be reduced from RM8.50 to RM7 – really nothing to shout about!). Not sure about other highways especially the dreaded LDP.

Then there is fuel subsidies – for most of other road users, they will receive a special Kad95 which allows them to enjoy the fuel subsidy at a discount of 30 cents per litre limited to 100 litres per month for cars or 40 litres per month for motorcycles when purchasing RON95 at the petrol station.

I guess it is better than nothing although I prefer the subsidies to be taken out completely. Infographics source: Bernama

Further thoughts on this later…

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