Government policy targets and timelines in cases of “raising the ceiling” for the nation’s economy and “raising the floor” for people.
Some targets are “doable” in less than 10 years, for example, top-30 largest economy (2022: #36) as news on catalytic, high-impact FDIs like Tesla and Infineon indicates the right path to be a competitive economy; attractive investment destination; raising economy’s value-add and complexities; and creating better/quality jobs.
Maybank Investment Bank chief economist Suhaimi Ilias, who attended a dialogue session on the MADANI Economy with the Secretary General of the Ministry of Finance (MoF SecGen) on Friday (Aug 4), said the key topics of discussion were on targets and timelines (T&T) i.e. “too many”, “too ambitious”, “realistic and achievable” targets?
Why the 10-year timeline?
While, other targets need longer a timeline — of up to 10 years e.g. Top-25 ranking in the Corruption Perception Index (2022: #61) as proof of strengthening good governance – and the targets related to the rise in labour share of income to 45% in 10 years is seen as a big challenge, the MoF SecGen commented this target is not about raising workers’ income at the expense of profits and investment, but the focus on labour market reforms and restructuring of TVET e.g. progressive wage model; workforce upskilling/re-skilling programmes; change TVET from supply-driven to demand-led by co-opting industries as per the launch of “Academy in Industry” training programme.
“The MoF SecGen acknowledged our feedback about the need for effective and efficient monitoring and tracking as well as regular/high-frequency updates on implementation and execution. He also shared on recent moves to facilitate investors/investments and skilled/talent workers e.g. Residence Pass – Talent (RP-T) and Digital Nomad Pass under Strategic Investment Pass (SIP) programme.
It was also shared that the National Industrial Master Plan (NIMP) 2030 to be in effect later this month will be “mission-based” rather than “industries-based” so as to be in line with MADANI Economy framework e.g. raising economic value-add and complexities; incentives that are based not on investment value per se, but also on investment that create high-income jobs and linkages with domestic industries; growth and financing of MSMEs.
Fiscal policy
As the session was with MoF, fiscal policy inevitably was another key area of discussions. To recap, MADANI Economy targets budget deficit to GDP ratio of 3% or less over the next 10 years.
The MoF SecGen reiterated this year’s budget deficit forecast of 5% of GDP and the targets of 4.1% in 2024 and 3.2% in 2025 based on the Medium-Term Fiscal Framework as per the retabled Budget 2023 (27 Feb 2023) i.e. no slowing in fiscal consolidation next few years.
The “3% or less over the next 10 year” target reflects a desired level for sustainable budget deficit, thus government debt and debt servicing, plus the government still need to spend and invest, especially in relation to “raising the floor” for the people e.g. universal access to public infrastructure and services (transport, education, healthcare); social protections.
Meanwhile, “goodies” announced during the launch of MADANI Economy (e.g. MYR300 to 1.3m civil servants and MYR200 to 1m pensioners; MYR100 e-wallet credit to 10m people in the B40-M40 category) are funded mainly by savings from cancelling and/or tendering projects previously awarded under direct negotiations.
The MoF SecGen also touched on the Fiscal Responsibility Act (FRA) to be tabled by year-end.
Among others – and in line with other countries’ FRAs – there will be fiscal charter that set goals on fiscal deficit, debt level and servicing, as well as government guarantees and committed liabilities, and MoF is answerable to the Parliament for deviations from the goals, added Suhaimi.
