The First Minister of Finance has said that, The Government provides various subsidies, incentives and assistance for fuel consumption, food security, scholarships and educational assistance as well as social welfare programmes. The allocation for subsidies and other assistance in 2008 totalled RM34.1 billion or 22% of total operating expenditure. Of this, RM18.1 billion was for fuel subsidies, RM6 billion as assistance for students, disabled and poor families as well as RM3 billion for food assistance, while RM7 billion was for other forms of assistance.
The second thrust involves RM674 million in consumption subsidies for things such as sugar, bread and wheat flour.
I've always been leery of broadbased consumption subsidies since it is a drag of Malaysia's competitive spirit. Such subsidies can be targeted to lower-income groups. It should not be across-the-board from the super-rich to the super-poor. Maybe it's time we considered food stamps for the truly needy, instead. Really, these consumption subsidies are paid directly by the government to the sugar tycoons, bread barons and flour kings. What gives?
The plan is to give house buyers tax relief on interests paid on housing loans capped at RM10,000 per annum for 3 years. This plan is neither here nor there. I don't think anyone will go and buy a house just to get 3 years of tax deduction on loan interest especially if the loan is for 15 years. After 3 years, how?
Improving public infrastructure
The plan is to, enhance public infrastructure for the benefit and welfare of the rakyat. Apart from building capacity for the future, these efforts will also promote greater activities in the construction sector and stimulate domestic demand. Towards this, the following measures will be taken:
First: Accelerate implementation of projects under the Ninth Malaysia Plan, which have high local content and multiplier effect, people-centric and can be implemented immediately. These projects amount to RM8.4 billion. In addition, RM1.6 billion is allocated for funds to promote investments (Very short on details. More information should be given just so we understand what specifics there are. There's a lot of money here. What local content? What multiplier effect? Where's the people-centric features?);
Second: Provide additional allocation of RM200 million to repair and maintain drains and roads. In addition, the surroundings of public flats will be improved to ensure more comfortable living conditions. This includes painting, repairing of lifts and improving waste disposal facilities (Sounds like something local councils should be doing...including the Pakatan Rakyat states. There should be no discrimination on the basis of politics. Everyone is a Malaysian.); and
Third: Undertake renovation, maintenance and repairs of welfare homes, fire and rescue stations and quarters, as well as public toilets in mosques, surau and tourist spots. For this, a sum of RM150 million will be provided.
Government savings bond
Like etheorist has observed, the plan for RM5 billion worth of savings bonds is anomalous in a stimulus package since this issue is about fund-raising. But, at 5% per annum yields payable quarterly, it's good for Malaysian savers. I'll take it.
Improving school facilities
RM1.95 billion to build and improve facilities for 752 schools. For goodness sake, don't just bloody buy computers and build all sorts of nonsense. Resources should be allocated to training the teachers. The quality of the delivery system is questionable.
And, there must be stringent and highly transparent tender processes for any construction work. The bloody sub-sub-sub-contractors are prone to curi makan on sand, cement and steel frames. Why do you think school buildings are cracking and sinking?
About RM1.8 billion are allocated. That is good. This blog has advocated microcredit/microfinance for a long, long time.
Helping the less fortunate
Another RM20 million to augment the RM830 million already allocated in Budget 2009. The ordinary Malaysians are not feeling the effect of this one. This plan is regarded as a social safety net. It is a flimsy net.
They are retrenched but they get a tax exemption on RM10,000 of the retrenchment benefits. I don't think this one will go down well with the retrenched workers.
Incentivising banks to defer loan repayments
No outlay here. Just get the banks to agree to defer loan repayments for 1 year. What happens after that?
I don't think kudos can be given for the second thrust. No oomph. No real social safety nets.