1 00:00:00,400 --> 00:00:04,619 Speaker 1: This is a podcast from BFM 89.9. The business station. 2 00:00:06,239 --> 00:00:10,810 Speaker 1: This BFM budget 2024 special is brought to you by 3 00:00:11,090 --> 00:00:11,500 Speaker 1: Massing 4 00:00:20,000 --> 00:00:24,180 Speaker 1: is 707. You're listening to the evening edition with Sharmila 5 00:00:24,600 --> 00:00:28,899 Speaker 1: Ganesan and Shara Kin. And we are breaking down budget 6 00:00:28,909 --> 00:00:34,930 Speaker 1: 2024 which was unveiled just minutes ago by Prime Minister 7 00:00:34,959 --> 00:00:37,470 Speaker 1: as well as Finance Minister Dato Sr an brahim. 8 00:00:38,150 --> 00:00:42,060 Speaker 1: And joining us for that is Patrick Tay who is 9 00:00:42,069 --> 00:00:45,790 Speaker 1: deals partner of economics and policy, as well as Jack 10 00:00:45,799 --> 00:00:49,799 Speaker 1: Dave sing tax leader, both from PWC Malaysia, Jack Dave Patrick. 11 00:00:49,810 --> 00:00:51,159 Speaker 1: Thank you for speaking with us today. 12 00:00:51,310 --> 00:00:52,909 Speaker 2: Hello. Hi. Thanks for having us. 13 00:00:53,319 --> 00:00:56,220 Speaker 1: Ok, simple question to start off with. Maybe not so simple. 14 00:00:56,229 --> 00:00:58,580 Speaker 1: How would you grade budget 2024? 15 00:01:00,779 --> 00:01:04,080 Speaker 2: Thanks for that. Yeah, so I think as a budget 16 00:01:04,089 --> 00:01:04,319 Speaker 2: um 17 00:01:05,010 --> 00:01:08,619 Speaker 2: to me it seems some people have tutor say it 18 00:01:08,629 --> 00:01:11,839 Speaker 2: is a brave budget. To me it's relatively boring, which 19 00:01:11,849 --> 00:01:16,220 Speaker 2: is good, right? If we look at where it's really 20 00:01:16,230 --> 00:01:21,989 Speaker 2: positive is that it provides the funding right to execute 21 00:01:22,000 --> 00:01:25,480 Speaker 2: strategies and initiatives that has been announced. So in that respect, 22 00:01:25,489 --> 00:01:28,620 Speaker 2: it's really positive, right? It's very consistent, right? In terms 23 00:01:28,629 --> 00:01:31,230 Speaker 2: of fiscal discipline, it is also very consistent, it's brought 24 00:01:31,239 --> 00:01:32,120 Speaker 2: the deficit down, 25 00:01:32,559 --> 00:01:35,878 Speaker 2: right? But we don't have, we have yet to analyze 26 00:01:35,889 --> 00:01:38,949 Speaker 2: the details around where it's brought down etcetera. But as 27 00:01:38,959 --> 00:01:42,110 Speaker 2: a percentage GDP so fiscal is, of course, it introduces 28 00:01:42,120 --> 00:01:45,988 Speaker 2: the Fiscal Responsibility Act, etcetera and all that. I think 29 00:01:46,000 --> 00:01:48,889 Speaker 2: there are some inconsistencies and there are some areas of improvements, 30 00:01:49,000 --> 00:01:52,589 Speaker 2: there's some, in my words, you know, lack of courage 31 00:01:52,639 --> 00:01:55,900 Speaker 2: for some needed initiatives that we needed to make, etcetera 32 00:01:55,910 --> 00:01:59,150 Speaker 2: and all that. So basically areas of improvement but overall, 33 00:01:59,160 --> 00:02:01,529 Speaker 2: you know, like a pretty good modern budget. 34 00:02:02,529 --> 00:02:05,400 Speaker 2: Yeah, so maybe just adding on to what Patrick has shared. 35 00:02:05,639 --> 00:02:08,910 Speaker 2: Um I think it's actually along the very same lines 36 00:02:08,919 --> 00:02:14,448 Speaker 2: as the previous Madani budget delivered by Prime Minister. And 37 00:02:14,460 --> 00:02:17,100 Speaker 2: you know, he starts off by sharing some of the 38 00:02:17,110 --> 00:02:20,410 Speaker 2: metrics areas that we have done well as a country. 39 00:02:20,639 --> 00:02:23,490 Speaker 2: But at the same time, also very clearly laying out 40 00:02:23,500 --> 00:02:26,550 Speaker 2: the challenges that we are faced as a nation and 41 00:02:26,559 --> 00:02:29,758 Speaker 2: then moving on from there to very specific measures in 42 00:02:29,770 --> 00:02:32,240 Speaker 2: terms of trying to address some of these challenges. 43 00:02:32,710 --> 00:02:36,910 Speaker 2: Having said that I think it is not easy given that, 44 00:02:36,919 --> 00:02:39,229 Speaker 2: you know, the revenue side of the equation is fairly 45 00:02:39,240 --> 00:02:42,690 Speaker 2: challenged and it is not easy to just bring in 46 00:02:42,699 --> 00:02:45,610 Speaker 2: new taxes, et cetera to increase the revenue side of it. 47 00:02:45,788 --> 00:02:48,889 Speaker 2: So I think it's a very measured approach in terms 48 00:02:48,899 --> 00:02:53,250 Speaker 2: of doing it not bringing in something really new, maybe 49 00:02:53,258 --> 00:02:56,169 Speaker 2: providing some details on what was announced previously. 50 00:02:56,460 --> 00:03:00,729 Speaker 2: So not to spook people with, with with new things. 51 00:03:01,050 --> 00:03:04,570 Speaker 2: But I think also importantly, uh you know, some of 52 00:03:04,580 --> 00:03:07,740 Speaker 2: these things which were announced previously need to be implemented 53 00:03:07,750 --> 00:03:10,410 Speaker 2: first before we keep on adding on to the list 54 00:03:10,649 --> 00:03:13,839 Speaker 2: of measures, right? So it is good that you know 55 00:03:13,850 --> 00:03:17,630 Speaker 2: there are some definitive timelines in terms of implementing some 56 00:03:17,639 --> 00:03:21,839 Speaker 2: of these measures and also some details on how and 57 00:03:21,850 --> 00:03:23,240 Speaker 2: when they will be implemented as well, 58 00:03:23,619 --> 00:03:25,038 Speaker 2: I wonder if I could just follow up on that 59 00:03:25,050 --> 00:03:29,478 Speaker 2: with you Patrick about the what's typically said before a budget, right? 60 00:03:29,490 --> 00:03:32,520 Speaker 2: The one of the things that uh was, was talked 61 00:03:32,529 --> 00:03:35,559 Speaker 2: about was the global conditions, right? So IMF projections on growth, 62 00:03:35,570 --> 00:03:39,039 Speaker 2: global growth, for instance, do you think that this budget 63 00:03:39,050 --> 00:03:43,009 Speaker 2: reflected some of the concerns about a slowdown in terms 64 00:03:43,104 --> 00:03:47,335 Speaker 2: terms of growth globally? I think there definitely is. So 65 00:03:47,345 --> 00:03:50,865 Speaker 2: uh you know, in the Prime Minister's own words, not 66 00:03:50,875 --> 00:03:52,964 Speaker 2: so much in the speech, but in the report, you know, 67 00:03:52,975 --> 00:03:55,324 Speaker 2: he wants to not only raise the ceiling, but he 68 00:03:55,335 --> 00:03:58,035 Speaker 2: also wants to raise the floor and and in the speech, 69 00:03:58,044 --> 00:04:01,875 Speaker 2: you know, I think there's a concern about making sure 70 00:04:01,884 --> 00:04:07,345 Speaker 2: that the B 40 especially, but generally Malaysian households are 71 00:04:07,354 --> 00:04:10,604 Speaker 2: kind of for want of a better word insulated or 72 00:04:11,020 --> 00:04:15,240 Speaker 2: you know, given some relief around against the negative global 73 00:04:15,250 --> 00:04:15,809 Speaker 2: head winds. 74 00:04:17,410 --> 00:04:20,940 Speaker 1: So this year's budget has broken its own record from 75 00:04:20,950 --> 00:04:25,769 Speaker 1: last year. It's 393.8 billion. What does this increase? Tell 76 00:04:25,779 --> 00:04:27,868 Speaker 1: us about the direction that Anwar wants to go in? 77 00:04:28,760 --> 00:04:34,029 Speaker 2: So factually, that's correct. But it's only a 1.4% increase, 78 00:04:34,040 --> 00:04:38,229 Speaker 2: you know. So I think it's pretty much inflationary. I 79 00:04:38,399 --> 00:04:41,410 Speaker 2: don't think it signifies any change in direction. I don't 80 00:04:41,420 --> 00:04:44,390 Speaker 2: think we are collecting, you know, a whole range of 81 00:04:44,399 --> 00:04:46,799 Speaker 2: more revenues. And that's one of the areas where I'm 82 00:04:46,809 --> 00:04:48,910 Speaker 2: a little bit disappointed where, you know, we have 83 00:04:48,994 --> 00:04:51,303 Speaker 2: been implemented. But as Jack said earlier, you know, it 84 00:04:51,315 --> 00:04:53,315 Speaker 2: may be that as steady as she goes approach rather 85 00:04:53,325 --> 00:04:57,424 Speaker 2: than implementing too many reforms, right? So in that sense, 86 00:04:57,434 --> 00:05:00,454 Speaker 2: even though it's factually correct, it's a record budget increase, 87 00:05:00,464 --> 00:05:03,433 Speaker 2: but it's really inflationary, a bit of noise etc. 88 00:05:04,440 --> 00:05:07,488 Speaker 2: Yeah, and it's also a very typical question that's asked 89 00:05:07,500 --> 00:05:12,368 Speaker 2: is the breakdown between uh your operating expenses and your 90 00:05:12,380 --> 00:05:16,779 Speaker 2: development expenditure within a budget. So when you look at that, 91 00:05:16,790 --> 00:05:20,079 Speaker 2: if the numbers are correct, that I have uh development 92 00:05:20,089 --> 00:05:25,349 Speaker 2: is about 22% 22.9%. Um How does that fare in 93 00:05:25,359 --> 00:05:28,980 Speaker 2: terms of what a country needs for a healthy budget? 94 00:05:29,988 --> 00:05:32,719 Speaker 2: I think, you know, if you, if you look at, 95 00:05:32,730 --> 00:05:36,109 Speaker 2: you know, the budget itself, there is the revenue side 96 00:05:36,119 --> 00:05:38,010 Speaker 2: of things that need to be looked at before the 97 00:05:38,019 --> 00:05:41,559 Speaker 2: government can look at the expenditure side of things because 98 00:05:41,570 --> 00:05:43,470 Speaker 2: at the end of the day, the deficit is a 99 00:05:43,480 --> 00:05:47,179 Speaker 2: number that needs to be managed as well. And I 100 00:05:47,190 --> 00:05:49,779 Speaker 2: think there is a commitment to bring down the deficit 101 00:05:49,790 --> 00:05:51,209 Speaker 2: over a period of time. 102 00:05:51,540 --> 00:05:55,739 Speaker 2: Hence, unless we are going to find a really, really 103 00:05:55,750 --> 00:05:59,959 Speaker 2: new sources of revenue or expand the existing sources of revenue, 104 00:06:00,149 --> 00:06:03,779 Speaker 2: it will be difficult and challenging to sort of increase 105 00:06:03,790 --> 00:06:08,320 Speaker 2: the level of development expenditure, the operating expenditure, if you 106 00:06:08,329 --> 00:06:11,359 Speaker 2: look at the breakdowns, a lot of it is actually fixed, 107 00:06:11,799 --> 00:06:15,910 Speaker 2: you know, government emoluments, pensions, et cetera. All those are 108 00:06:15,920 --> 00:06:18,070 Speaker 2: really fixed and it's difficult for the government to reduce 109 00:06:18,079 --> 00:06:21,250 Speaker 2: those costs. And I think the Prime Minister also alluded 110 00:06:21,260 --> 00:06:24,579 Speaker 2: to the fact that, you know, the financing cost to 111 00:06:24,589 --> 00:06:28,309 Speaker 2: the government has increased. So that is about 46 billion, 112 00:06:28,320 --> 00:06:32,170 Speaker 2: about 15% of the money goes to the financing costs. 113 00:06:32,500 --> 00:06:36,109 Speaker 2: So the balance then goes into development expenditure. 114 00:06:36,540 --> 00:06:40,160 Speaker 2: And therefore, I think there's a need to sort of 115 00:06:40,170 --> 00:06:43,670 Speaker 2: taper down the development expenditure a little bit. So it 116 00:06:43,678 --> 00:06:47,320 Speaker 2: was about 99 billion last year going down to about 117 00:06:47,329 --> 00:06:48,040 Speaker 2: 90 billion 118 00:06:48,690 --> 00:06:52,130 Speaker 2: directionally. Is that the right thing to do? I think, 119 00:06:52,140 --> 00:06:56,170 Speaker 2: you know, more development expenditure will certainly help us as 120 00:06:56,178 --> 00:06:59,670 Speaker 2: a nation to sort of maybe spend more on improving 121 00:06:59,678 --> 00:07:03,450 Speaker 2: our infrastructure, et cetera, which will then help improve the 122 00:07:03,459 --> 00:07:07,399 Speaker 2: living standards and also make us more attractive for investments, 123 00:07:07,410 --> 00:07:07,859 Speaker 2: et cetera. 124 00:07:08,299 --> 00:07:11,420 Speaker 2: But I think the government is trying to maneuver within 125 00:07:11,429 --> 00:07:14,518 Speaker 2: this very tight parameters that it has got to operate within. 126 00:07:14,559 --> 00:07:16,269 Speaker 2: If I can just add a little bit to that 127 00:07:16,279 --> 00:07:19,910 Speaker 2: as well. Yes, although 99 has dropped to 90 there's 128 00:07:19,920 --> 00:07:24,869 Speaker 2: also signal desire quite consistent to actually increase the level 129 00:07:24,880 --> 00:07:28,600 Speaker 2: of private participation in development, infrastructure and projects, et cetera. 130 00:07:28,609 --> 00:07:28,989 Speaker 2: And all that 131 00:07:29,309 --> 00:07:34,119 Speaker 2: also quite importantly, it is also the focus on ensuring 132 00:07:34,130 --> 00:07:37,429 Speaker 2: the quality of the investments, quality of the expenditure. So 133 00:07:37,440 --> 00:07:41,230 Speaker 2: I think I'm less worried about any reduction of that 134 00:07:41,239 --> 00:07:45,339 Speaker 2: order of magnitude about a 10% fall because I think 135 00:07:45,350 --> 00:07:47,170 Speaker 2: if we can focus on quality, we can focus on 136 00:07:47,179 --> 00:07:50,989 Speaker 2: attracting private participation in domestic investments, etcetera. 137 00:07:51,899 --> 00:07:55,570 Speaker 1: Now looking at what was unveiled earlier, at least from 138 00:07:55,579 --> 00:07:58,880 Speaker 1: what we could tell, they don't really seem to be 139 00:07:58,890 --> 00:08:03,230 Speaker 1: as many quote unquote goodies for individuals except for civil 140 00:08:03,239 --> 00:08:05,950 Speaker 1: servants and others on the government's payroll. What does this 141 00:08:05,959 --> 00:08:08,160 Speaker 1: indicate in terms of the government's priorities? 142 00:08:08,679 --> 00:08:13,440 Speaker 2: Obviously, it's not an election, not an election budget. Yes. 143 00:08:13,989 --> 00:08:19,040 Speaker 2: Um there are, you know, really some really interesting things 144 00:08:19,049 --> 00:08:19,720 Speaker 2: in the detail 145 00:08:20,179 --> 00:08:23,079 Speaker 2: ah in terms of the direction. So for example, if 146 00:08:23,089 --> 00:08:25,970 Speaker 2: I pick out just a few randomly random ones that 147 00:08:25,980 --> 00:08:29,769 Speaker 2: are important for us as a country to have say 148 00:08:29,779 --> 00:08:34,869 Speaker 2: greener growth, for example. So this concept of ecological fiscal transfers, 149 00:08:35,020 --> 00:08:37,630 Speaker 2: they increase there by 50 million to 200 million. I 150 00:08:37,659 --> 00:08:41,239 Speaker 2: think that's a good move the increase in the number 151 00:08:41,250 --> 00:08:42,080 Speaker 2: of ranges, 152 00:08:42,630 --> 00:08:45,239 Speaker 2: right from 1000 to 2000 to actually help patrol our 153 00:08:45,250 --> 00:08:48,030 Speaker 2: wildlife and protect our natural resources. I think those are 154 00:08:48,039 --> 00:08:49,880 Speaker 2: good movies because, you know, we are a country that's 155 00:08:49,890 --> 00:08:53,989 Speaker 2: heavily forested, you know, with, you know, like a million 156 00:08:54,109 --> 00:08:57,260 Speaker 2: year old tropical forests, et cetera and all that. I think, 157 00:08:57,270 --> 00:08:59,340 Speaker 2: you know, some focus on flood protection. 158 00:08:59,630 --> 00:09:01,809 Speaker 2: You know, we, we, it's, it's easy for us to 159 00:09:01,820 --> 00:09:03,969 Speaker 2: forget now. but you know, about a year ago, you know, 160 00:09:03,979 --> 00:09:06,619 Speaker 2: we had major floods on the east coast, et cetera 161 00:09:06,630 --> 00:09:09,579 Speaker 2: and all that. So those flood protection allocations of in 162 00:09:09,650 --> 00:09:12,890 Speaker 2: the in the high 20 or billions, you know, it's 163 00:09:12,900 --> 00:09:15,570 Speaker 2: also very important things first put in. 164 00:09:16,159 --> 00:09:19,760 Speaker 2: So maybe looking at it from the individual's perspective, I'm 165 00:09:19,770 --> 00:09:21,630 Speaker 2: sure a lot of the listeners out there will be 166 00:09:21,640 --> 00:09:23,909 Speaker 2: wondering what is, what is in it for them, right? 167 00:09:24,289 --> 00:09:27,609 Speaker 2: There is really no changes as far as the tax 168 00:09:27,619 --> 00:09:32,710 Speaker 2: rates are concerned. If you remember the tax rate reduction 169 00:09:32,719 --> 00:09:36,030 Speaker 2: of 2% was announced in the previous budget. Of course, 170 00:09:36,039 --> 00:09:39,929 Speaker 2: it was also coupled with an increase in tax rates 171 00:09:39,940 --> 00:09:42,380 Speaker 2: for the higher tax brackets. So I think it's an 172 00:09:42,390 --> 00:09:44,348 Speaker 2: approach of trying to make it more progressive. 173 00:09:44,679 --> 00:09:46,580 Speaker 2: But what I think the government has done this time 174 00:09:46,590 --> 00:09:51,219 Speaker 2: around is they have used the reliefs in terms of 175 00:09:51,229 --> 00:09:54,929 Speaker 2: trying to achieve certain outcomes out there, right. So they 176 00:09:54,940 --> 00:09:59,739 Speaker 2: have again, maybe enhanced, expanded some of the reliefs, et cetera, 177 00:09:59,830 --> 00:10:04,419 Speaker 2: hoping that people, it will change people's behavior. So among others, 178 00:10:04,429 --> 00:10:07,739 Speaker 2: you know, there is a lifestyle relief. I think majority 179 00:10:07,750 --> 00:10:10,239 Speaker 2: of the people claim that the 2, 2.5 1000 that, 180 00:10:10,250 --> 00:10:12,520 Speaker 2: you know, you can, you know, buy a device or 181 00:10:12,530 --> 00:10:13,659 Speaker 2: a phone, etcetera. 182 00:10:14,049 --> 00:10:19,030 Speaker 2: They have now expanded that to include self-improvement courses. So 183 00:10:19,039 --> 00:10:21,710 Speaker 2: if you decide to enroll in a self improvement course, 184 00:10:21,719 --> 00:10:23,729 Speaker 2: you can actually claim that as part of the 2.5 185 00:10:23,739 --> 00:10:28,719 Speaker 2: 1000 there's also a relief for purchase of sports equipment. 186 00:10:28,900 --> 00:10:31,260 Speaker 2: It used to be 500. They are increasing that to 187 00:10:31,289 --> 00:10:35,250 Speaker 2: 1000 ringgit and that now includes training as well. So 188 00:10:35,260 --> 00:10:36,829 Speaker 2: it's not just buying the equipment, 189 00:10:37,359 --> 00:10:40,299 Speaker 2: the medical relief. I think that's something that's quite popular. 190 00:10:40,580 --> 00:10:44,500 Speaker 2: They have expanded that to, they have actually increased the 191 00:10:44,510 --> 00:10:50,460 Speaker 2: amount from 8000 to 10,000 that covers things like serious diseases, vaccination, 192 00:10:50,469 --> 00:10:54,859 Speaker 2: fertility treatment, medical checkups, etcetera. So that's now increased to 10,000. 193 00:10:55,280 --> 00:10:59,419 Speaker 2: But within that 10,000, they have also earmarked 1000 ring 194 00:10:59,429 --> 00:11:03,940 Speaker 2: gate specifically for dental checkups and dental care. So you 195 00:11:03,950 --> 00:11:06,270 Speaker 2: can see that, you know, that's the kind of, you know, 196 00:11:06,280 --> 00:11:09,299 Speaker 2: behavior that they are trying to drive and maybe just 197 00:11:09,309 --> 00:11:13,250 Speaker 2: two others. You know, there was an incentive or relief 198 00:11:13,260 --> 00:11:14,299 Speaker 2: introduced for ev 199 00:11:15,229 --> 00:11:19,329 Speaker 2: and that's been extended for another four years. And the 200 00:11:19,340 --> 00:11:23,589 Speaker 2: last one, the childcare relief used to be 2400. I 201 00:11:23,599 --> 00:11:27,239 Speaker 2: think they've increased that to 3000, hopefully it will help 202 00:11:27,250 --> 00:11:29,710 Speaker 2: a lot more of the working women to go back 203 00:11:29,719 --> 00:11:34,080 Speaker 2: to work sooner because, you know, you can actually put 204 00:11:34,090 --> 00:11:36,348 Speaker 2: your child in a child care and claim a high 205 00:11:36,359 --> 00:11:39,239 Speaker 2: relief now. So I think some of those measures are 206 00:11:39,250 --> 00:11:40,130 Speaker 2: very targeted 207 00:11:40,469 --> 00:11:45,069 Speaker 2: and with an objective of achieving achieving a particular outcome. 208 00:11:45,179 --> 00:11:48,690 Speaker 2: So kind of goodies anyway. Right. So the one thing 209 00:11:48,700 --> 00:11:51,090 Speaker 2: that perhaps jumps out of people, the service tax is 210 00:11:51,099 --> 00:11:53,469 Speaker 2: going to go up from 6 to 8%. But I 211 00:11:53,479 --> 00:11:57,330 Speaker 2: understand it does not cover F and B or telecommunications, 212 00:11:58,299 --> 00:12:01,119 Speaker 2: but it will include things like logistics and brokerage. I mean, 213 00:12:01,130 --> 00:12:04,150 Speaker 2: can you give us a sense of what this actually 214 00:12:04,159 --> 00:12:07,309 Speaker 2: means and who exactly is going to be impacted by 215 00:12:07,320 --> 00:12:09,090 Speaker 2: the increase in service tax? 216 00:12:10,299 --> 00:12:13,098 Speaker 2: Yeah, this is really interesting. I think in the run 217 00:12:13,109 --> 00:12:16,270 Speaker 2: up to the budget, there was a lot of discussion 218 00:12:16,280 --> 00:12:18,270 Speaker 2: GST or no GST, right? 219 00:12:18,789 --> 00:12:21,729 Speaker 2: And I think the the approach the government has decided 220 00:12:21,739 --> 00:12:25,840 Speaker 2: to adopt is rather than going for GST, they are 221 00:12:25,849 --> 00:12:30,069 Speaker 2: going to tweak the existing service tax. So they are 222 00:12:30,080 --> 00:12:32,080 Speaker 2: not touching sales tax so much, but they're going to 223 00:12:32,090 --> 00:12:35,760 Speaker 2: tweak the service tax, they're going to increase the uh 224 00:12:35,859 --> 00:12:39,090 Speaker 2: the service tax rate for majority of the areas other 225 00:12:39,099 --> 00:12:42,450 Speaker 2: than FMB and telecommunication from 6 to 8%. 226 00:12:42,929 --> 00:12:46,599 Speaker 2: Um You know, this, this is quite a big change, 227 00:12:46,609 --> 00:12:49,909 Speaker 2: I must say because this is a transparent tax. It 228 00:12:49,919 --> 00:12:53,348 Speaker 2: appears on your invoice and every time you incur the expenditure, 229 00:12:53,359 --> 00:12:56,809 Speaker 2: you will see the instead of 6% previously, now you 230 00:12:56,820 --> 00:12:58,630 Speaker 2: will have to actually pay 8%. 231 00:12:59,090 --> 00:13:03,710 Speaker 2: So I think, ah, you know, maybe, maybe they, you know, 232 00:13:03,719 --> 00:13:07,140 Speaker 2: based on their calculations, majority of the, you know, the 233 00:13:07,150 --> 00:13:10,869 Speaker 2: B 40 will be spending on food and therefore, by 234 00:13:10,880 --> 00:13:14,020 Speaker 2: increasing to 8% hopefully it will not really hit the 235 00:13:14,030 --> 00:13:14,880 Speaker 2: B 40 group. 236 00:13:15,479 --> 00:13:20,690 Speaker 2: Um, the bid on logistics is an interesting one because 237 00:13:21,020 --> 00:13:23,489 Speaker 2: you know, the service tax, the sales tax and the 238 00:13:23,500 --> 00:13:27,130 Speaker 2: service tax by design is actually a single stage tax, 239 00:13:27,340 --> 00:13:31,140 Speaker 2: which means that whatever cost incurred by businesses, they will 240 00:13:31,150 --> 00:13:34,020 Speaker 2: naturally find a way to pass it on to the consumer. 241 00:13:34,450 --> 00:13:36,710 Speaker 2: And I think logistics is a big part of any 242 00:13:36,719 --> 00:13:40,218 Speaker 2: value chain, including essential items like food, etcetera. 243 00:13:40,729 --> 00:13:44,150 Speaker 2: And therefore, if you're going to impose a 6% service 244 00:13:44,159 --> 00:13:49,140 Speaker 2: tax on the logistics operations, you will see some impact 245 00:13:49,150 --> 00:13:51,218 Speaker 2: in terms of, you know, any of the goods that 246 00:13:51,229 --> 00:13:56,859 Speaker 2: are transported, including essential items and food items, etcetera. So, 247 00:13:56,869 --> 00:13:59,070 Speaker 2: um you know, but I don't think there's a lot 248 00:13:59,080 --> 00:14:02,260 Speaker 2: of room if you want to tinker around with the 249 00:14:02,270 --> 00:14:05,830 Speaker 2: service tax. So this is an attempt to do something 250 00:14:05,979 --> 00:14:07,390 Speaker 2: but not bring back GST. 251 00:14:07,960 --> 00:14:10,869 Speaker 1: So if we look at the service tax, how much 252 00:14:10,880 --> 00:14:13,859 Speaker 1: more money will it actually give the government, will it 253 00:14:13,869 --> 00:14:16,979 Speaker 1: do enough for instance to address the current fiscal deficit, 254 00:14:16,989 --> 00:14:19,820 Speaker 1: which is projected to fall to 4.3% next year. 255 00:14:21,039 --> 00:14:23,840 Speaker 2: OK. Very back of the envelope calculations. I think service 256 00:14:23,849 --> 00:14:26,700 Speaker 2: tax generates about 15 billion of revenue for the government. 257 00:14:26,950 --> 00:14:32,299 Speaker 2: So if 15 billion at 6% that means each percentage 258 00:14:32,309 --> 00:14:36,820 Speaker 2: point is worth about 2.5 billion. So 2% increase will 259 00:14:36,830 --> 00:14:41,260 Speaker 2: give you 5 billion maximum. But that is on the 260 00:14:41,270 --> 00:14:44,469 Speaker 2: basis it is for everything. But now you're excluding F 261 00:14:44,489 --> 00:14:47,489 Speaker 2: and B and Telecommunication. So it will actually be a 262 00:14:47,500 --> 00:14:48,539 Speaker 2: lot lesser than that. 263 00:14:49,349 --> 00:14:51,270 Speaker 2: I mean, Patrick, can I since you have the economists 264 00:14:51,280 --> 00:14:54,830 Speaker 2: in the room, right? Um ultimately, when you look at 265 00:14:54,840 --> 00:14:56,869 Speaker 2: the kind of long term plans, I know this is 266 00:14:56,880 --> 00:14:58,919 Speaker 2: just for a year, right? Budget just for a year. 267 00:14:58,989 --> 00:15:01,219 Speaker 2: But in things of long term plans, I mean, 268 00:15:01,570 --> 00:15:05,630 Speaker 2: um how um how brave is this as a move? 269 00:15:05,640 --> 00:15:08,099 Speaker 2: How far do they have to go to actually address 270 00:15:08,109 --> 00:15:11,390 Speaker 2: the cause structural issues that we have in the country? 271 00:15:11,750 --> 00:15:14,729 Speaker 2: So when you talk about structural issues, if we be helpful, 272 00:15:14,739 --> 00:15:16,880 Speaker 2: if we narrow it down. So, since we are talking 273 00:15:16,890 --> 00:15:21,630 Speaker 2: about taxes now, right? So it's well known, you know, 274 00:15:21,640 --> 00:15:24,630 Speaker 2: we have a narrow tax base, right? We have very 275 00:15:24,640 --> 00:15:25,059 Speaker 2: low 276 00:15:27,570 --> 00:15:29,849 Speaker 2: rate of taxes, right? That we are raising et cetera 277 00:15:29,859 --> 00:15:31,849 Speaker 2: and all that. So I think, you know, in that regard, 278 00:15:31,859 --> 00:15:34,940 Speaker 2: you know, I would, I'm very, I'm a hawk on this. 279 00:15:35,000 --> 00:15:37,739 Speaker 2: I would want, I would have wanted to see signaling 280 00:15:37,750 --> 00:15:42,820 Speaker 2: of GST reforms, you know, instead of tinkering with a 68% tax, 281 00:15:42,830 --> 00:15:45,150 Speaker 2: et cetera and all that I would want to see, 282 00:15:46,229 --> 00:15:48,869 Speaker 2: you know, bravery to actually say no, we're going to 283 00:15:48,880 --> 00:15:52,789 Speaker 2: impose a pollution tax, carbon tax to actually accelerate the 284 00:15:52,799 --> 00:15:55,109 Speaker 2: transition towards that to raise the funds 285 00:15:55,510 --> 00:15:57,809 Speaker 2: um for, for um 286 00:15:58,760 --> 00:16:01,530 Speaker 2: investing in the right sort of infrastructure. 287 00:16:02,270 --> 00:16:06,229 Speaker 1: Now, other initiatives have also been introduced as a way 288 00:16:06,239 --> 00:16:09,530 Speaker 1: to drive revenue. This includes the capital gains tax specifically 289 00:16:09,539 --> 00:16:12,830 Speaker 1: on the disposal of unlisted shares by companies, as well 290 00:16:12,840 --> 00:16:15,729 Speaker 1: as the implementation of e invoicing for business tax records 291 00:16:15,739 --> 00:16:18,169 Speaker 1: among others. How do you anticipate all this panning out? 292 00:16:19,400 --> 00:16:22,570 Speaker 2: So capital gains tax is not new, it was announced 293 00:16:22,580 --> 00:16:25,210 Speaker 2: in the previous budget. They have now come out to 294 00:16:25,219 --> 00:16:28,609 Speaker 2: share a few more details including the rate and the 295 00:16:28,619 --> 00:16:33,289 Speaker 2: implementation timeline. I think it's a good starting point but 296 00:16:33,299 --> 00:16:36,219 Speaker 2: it is not going to really help to generate revenue 297 00:16:36,229 --> 00:16:36,890 Speaker 2: in the near term. 298 00:16:37,179 --> 00:16:40,969 Speaker 2: So these are reforms that the government has to undertake 299 00:16:40,979 --> 00:16:44,119 Speaker 2: in order to put us on a better base moving forward. 300 00:16:44,380 --> 00:16:46,830 Speaker 2: So you know, in a couple of years time when 301 00:16:46,840 --> 00:16:51,440 Speaker 2: you have a stable regime for capital gains tax and 302 00:16:51,450 --> 00:16:54,200 Speaker 2: hopefully you expand it to cover more areas et cetera 303 00:16:54,469 --> 00:16:57,989 Speaker 2: that will build a solid base of revenue for the government. 304 00:16:58,289 --> 00:17:01,299 Speaker 2: But I think as an immediate measure, I don't think 305 00:17:01,309 --> 00:17:03,190 Speaker 2: that it is going to bring us a lot of 306 00:17:03,200 --> 00:17:03,719 Speaker 2: revenue 307 00:17:04,229 --> 00:17:08,129 Speaker 2: E invoicing again is something that you know, has already 308 00:17:08,140 --> 00:17:11,810 Speaker 2: been announced. In fact, it's already work in progress for 309 00:17:11,819 --> 00:17:15,790 Speaker 2: many companies. Uh The there's a slight deferment in terms 310 00:17:15,800 --> 00:17:19,569 Speaker 2: of the date of implementation um just by a month 311 00:17:19,579 --> 00:17:22,900 Speaker 2: or two, which I think is necessary because it's quite 312 00:17:22,910 --> 00:17:25,409 Speaker 2: a task for some companies to come on board. 313 00:17:25,839 --> 00:17:30,149 Speaker 2: But there's also some mention about getting everyone into the 314 00:17:30,160 --> 00:17:34,709 Speaker 2: net by 2025 versus the longer timeline that was shared earlier. 315 00:17:34,979 --> 00:17:37,530 Speaker 2: So it'd be good to see the details of that. 316 00:17:37,640 --> 00:17:40,790 Speaker 2: I personally feel e invoicing is the right way to go. 317 00:17:41,040 --> 00:17:44,869 Speaker 2: It will really help to weed out the great economy, 318 00:17:44,880 --> 00:17:47,569 Speaker 2: et cetera and it will also put us in a 319 00:17:47,579 --> 00:17:51,150 Speaker 2: strong footing if we bring back GST at some point, 320 00:17:51,880 --> 00:17:54,239 Speaker 2: at least the system, some of the systems will be 321 00:17:54,250 --> 00:17:57,400 Speaker 2: in place for us to you know, deal with the 322 00:17:57,410 --> 00:18:00,640 Speaker 2: previous issues of late refunds, et cetera. 323 00:18:01,099 --> 00:18:04,489 Speaker 1: Now as expected, the government is increasingly moving towards a 324 00:18:04,500 --> 00:18:08,250 Speaker 1: targeted approach to subsidies. What do you make of the 325 00:18:08,260 --> 00:18:09,969 Speaker 1: initiatives that were announced in this area? 326 00:18:11,650 --> 00:18:16,250 Speaker 2: Thanks, the Prime Minister did make a lot of reference 327 00:18:16,260 --> 00:18:19,319 Speaker 2: to it. In the speech, talked about how our petrol 328 00:18:19,329 --> 00:18:21,150 Speaker 2: prices are one of the cheapest in the region, our 329 00:18:21,160 --> 00:18:23,739 Speaker 2: neighbors are paying double what you're paying, etc and it's 330 00:18:23,750 --> 00:18:27,469 Speaker 2: costing us a lot in order to do that. However, surprisingly, 331 00:18:27,479 --> 00:18:29,520 Speaker 2: he didn't touch on 332 00:18:30,140 --> 00:18:34,438 Speaker 2: uh petrol rationalization. It certainly focused more on things like 333 00:18:34,449 --> 00:18:36,849 Speaker 2: chickens and eggs in a way it allows the price 334 00:18:36,859 --> 00:18:38,609 Speaker 2: to float up, you know, and also sort of diesel 335 00:18:38,619 --> 00:18:44,099 Speaker 2: subsidy rationalization. Yeah. So that was surprising. Yeah. Yeah. Can 336 00:18:44,109 --> 00:18:46,020 Speaker 2: I just follow up on that? Because I think with 337 00:18:46,030 --> 00:18:50,069 Speaker 2: the egg and chicken issue, letting prices float, it really 338 00:18:50,079 --> 00:18:53,119 Speaker 2: has to do with supply that somehow in capping the 339 00:18:53,130 --> 00:18:56,699 Speaker 2: price of eggs, that, in fact, it's affected production of food. 340 00:18:56,709 --> 00:18:59,948 Speaker 2: Isn't that the way the logic of his argument was? 341 00:19:00,410 --> 00:19:03,129 Speaker 2: Yeah. So, so actually uh on, on that front, it's 342 00:19:03,140 --> 00:19:08,189 Speaker 2: quite interesting because uh the the and the 343 00:19:09,489 --> 00:19:12,139 Speaker 2: egg and chicken supplies, et cetera and all that, we 344 00:19:12,150 --> 00:19:14,359 Speaker 2: are part of a global value chain. So we are 345 00:19:14,369 --> 00:19:17,579 Speaker 2: affected by that. We are also affected by the shortages 346 00:19:17,650 --> 00:19:19,760 Speaker 2: of eggs globally, etcetera and all that kind of thing 347 00:19:20,199 --> 00:19:22,889 Speaker 1: you mentioned diesel. And so yes, there are plans to 348 00:19:22,900 --> 00:19:27,419 Speaker 1: rationalize diesel subsidies in phases and they've allowed it for 349 00:19:27,430 --> 00:19:31,060 Speaker 1: select users like logistics companies but not normal users. How 350 00:19:31,069 --> 00:19:32,909 Speaker 1: do you see this being received by the public? 351 00:19:34,250 --> 00:19:37,688 Speaker 2: Yeah, it's interesting that they've decided to just focus on 352 00:19:37,699 --> 00:19:41,829 Speaker 2: diesel and then there's the exclusion for all the logistics 353 00:19:41,839 --> 00:19:46,680 Speaker 2: and transportation services. So if I mean, if you exclude that, 354 00:19:46,689 --> 00:19:49,609 Speaker 2: I suppose there will not be many people who will 355 00:19:49,619 --> 00:19:51,739 Speaker 2: be impacted by this. If you look at, you know, 356 00:19:51,750 --> 00:19:56,099 Speaker 2: the public at large, I think motorcycles generally don't use 357 00:19:56,109 --> 00:19:59,649 Speaker 2: diesel and the number of cars using diesel has also 358 00:19:59,660 --> 00:20:00,699 Speaker 2: decreased over time. 359 00:20:01,170 --> 00:20:07,109 Speaker 2: So I suppose this is really a small step in 360 00:20:07,119 --> 00:20:12,469 Speaker 2: terms of, you know, starting some form of subsidy rationalization. 361 00:20:12,770 --> 00:20:15,680 Speaker 2: I think the big one still remains to be the 362 00:20:15,689 --> 00:20:19,520 Speaker 2: around 95 subsidy. And that is the one that will 363 00:20:19,530 --> 00:20:23,109 Speaker 2: have a larger impact. So the approach here could be 364 00:20:23,119 --> 00:20:24,699 Speaker 2: to maybe test the water 365 00:20:25,010 --> 00:20:30,020 Speaker 2: to try out with something smaller because subsidy rationalization is 366 00:20:30,030 --> 00:20:34,198 Speaker 2: not easy. And you know, if you particularly if you 367 00:20:34,209 --> 00:20:37,229 Speaker 2: take away the subsidies and you want to give it 368 00:20:37,239 --> 00:20:40,270 Speaker 2: back to the B 40 perhaps some of the M 369 00:20:40,280 --> 00:20:44,319 Speaker 2: 40 as well, you need a very robust system to 370 00:20:44,329 --> 00:20:46,989 Speaker 2: sort of be able to capture the data, et cetera 371 00:20:47,239 --> 00:20:50,790 Speaker 2: and find a way to do the necessary cash transfers. 372 00:20:51,119 --> 00:20:55,179 Speaker 2: So, you know, starting small with something that maybe has 373 00:20:55,189 --> 00:20:59,020 Speaker 2: a less widespread impact, maybe the way to go. And 374 00:20:59,030 --> 00:21:01,379 Speaker 2: that's how I read it. I do want to ask 375 00:21:01,390 --> 00:21:03,369 Speaker 2: you though and push you push a little on this 376 00:21:03,380 --> 00:21:06,639 Speaker 2: question on diesel because he does mention it, it costs 377 00:21:06,650 --> 00:21:10,109 Speaker 2: the taxpayer about 1.5 billion ring it. And he said 378 00:21:10,119 --> 00:21:12,989 Speaker 2: the difference in cost is about 60 cents. And he 379 00:21:13,000 --> 00:21:16,910 Speaker 2: did mention leakages. I mean in, in talking about diesel, 380 00:21:16,920 --> 00:21:18,510 Speaker 2: he talked about the 381 00:21:18,614 --> 00:21:21,915 Speaker 2: need for trust for the system to work. He talked 382 00:21:21,925 --> 00:21:24,984 Speaker 2: about the need for enforcement and you know what's happening 383 00:21:24,994 --> 00:21:28,155 Speaker 2: in terms of leakages. Katan, I think is the word 384 00:21:28,165 --> 00:21:32,734 Speaker 2: he kept using to describe the problem. What is the 385 00:21:32,744 --> 00:21:37,405 Speaker 2: reality of designing a system where you still have subsidies 386 00:21:37,415 --> 00:21:39,714 Speaker 2: that people can game and use? 387 00:21:41,219 --> 00:21:45,739 Speaker 2: Yeah, it's, yeah, it's really difficult to sort of implement 388 00:21:45,750 --> 00:21:49,599 Speaker 2: something partially in this space. And at the same time 389 00:21:49,609 --> 00:21:54,920 Speaker 2: trying to deal with the Cyan because you know, if 390 00:21:54,930 --> 00:21:59,079 Speaker 2: you allow some sectors of the economy to continue benefiting 391 00:21:59,089 --> 00:22:00,079 Speaker 2: from the subsidies, 392 00:22:00,380 --> 00:22:03,650 Speaker 2: you're still going to allow for those kind of leakages. 393 00:22:03,890 --> 00:22:06,689 Speaker 2: And I think it's quite difficult to control those level 394 00:22:06,699 --> 00:22:11,119 Speaker 2: of leakages unless you have a multi agency approach in 395 00:22:11,130 --> 00:22:13,079 Speaker 2: terms of trying to deal with the matter. 396 00:22:13,729 --> 00:22:16,650 Speaker 2: The maybe the more pragmatic way if you are to 397 00:22:16,660 --> 00:22:20,239 Speaker 2: rationalize subsidies across the board would be to get them 398 00:22:20,250 --> 00:22:23,479 Speaker 2: to a market price and then find ways to do 399 00:22:23,489 --> 00:22:29,459 Speaker 2: cash transfers to the appropriate groups that is always easier 400 00:22:29,469 --> 00:22:33,500 Speaker 2: because then, you know, any anyone who wants to smuggle 401 00:22:33,729 --> 00:22:37,300 Speaker 2: diesel or around 95 or whatever will have to actually 402 00:22:37,310 --> 00:22:39,639 Speaker 2: purchase it at the full price. So there's no longer 403 00:22:39,650 --> 00:22:40,719 Speaker 2: incentive to do that. 404 00:22:41,199 --> 00:22:43,890 Speaker 2: Um But I think trying it out in a smaller 405 00:22:43,900 --> 00:22:46,819 Speaker 2: way like this, ah unless you're going to get a 406 00:22:46,829 --> 00:22:52,419 Speaker 2: very strong level of enforcement by the different authorities may 407 00:22:52,430 --> 00:22:55,270 Speaker 2: not quite achieve the objective of trying to deal with 408 00:22:55,280 --> 00:22:55,719 Speaker 2: the c 409 00:22:56,880 --> 00:23:00,829 Speaker 1: there were a number of allocations that address long standing 410 00:23:00,959 --> 00:23:03,680 Speaker 1: day to day concerns things that come up actually frequently 411 00:23:03,689 --> 00:23:07,219 Speaker 1: when we do shows on these topics, for instance, upgrading 412 00:23:07,229 --> 00:23:11,810 Speaker 1: public toilets, fixing potholes, making government services accessible in rural areas, 413 00:23:11,910 --> 00:23:16,359 Speaker 1: addressing scams. Do you see um allocations to these sorts 414 00:23:16,369 --> 00:23:17,938 Speaker 1: of issues resonating with the right yet 415 00:23:20,530 --> 00:23:22,409 Speaker 2: Patrick um 416 00:23:23,219 --> 00:23:27,170 Speaker 2: as a user of the Plus highway, right, whenever I 417 00:23:27,180 --> 00:23:29,859 Speaker 2: have to use a public toilet, it basically I have 418 00:23:29,869 --> 00:23:32,430 Speaker 2: to hold my breath for two minutes. So in that sense, 419 00:23:32,439 --> 00:23:34,479 Speaker 2: I think a lot of people would welcome it. But 420 00:23:34,489 --> 00:23:38,020 Speaker 2: I think the answer is actually probably, you know, this 421 00:23:38,030 --> 00:23:41,260 Speaker 2: is a good short term fix. But answer is again, 422 00:23:41,270 --> 00:23:46,020 Speaker 2: you know, like, you know, the true design solutions through education, 423 00:23:46,030 --> 00:23:49,339 Speaker 2: etcetera and all that finding those right, long term fixes. 424 00:23:50,219 --> 00:23:52,879 Speaker 2: I think if I just add on to that point, right? 425 00:23:53,199 --> 00:23:56,419 Speaker 2: Um You know, I think I touched earlier a little 426 00:23:56,430 --> 00:23:59,390 Speaker 2: bit about, you know, again, the government looking at the 427 00:23:59,400 --> 00:24:02,880 Speaker 2: revenue and expenditure side of things and also whether we 428 00:24:02,890 --> 00:24:06,359 Speaker 2: have enough to spend on development expenditure, if you, if 429 00:24:06,369 --> 00:24:08,930 Speaker 2: you want to get to world class infrastructure in some 430 00:24:08,939 --> 00:24:11,319 Speaker 2: of these areas, you need a lot more money. That's 431 00:24:11,329 --> 00:24:14,439 Speaker 2: a reality, right? And that money has to come from somewhere. 432 00:24:14,859 --> 00:24:19,479 Speaker 2: So unless we do large scale reforms to really increase 433 00:24:19,489 --> 00:24:22,280 Speaker 2: the level of revenue that the government has access to 434 00:24:22,530 --> 00:24:25,819 Speaker 2: and then use that money wisely to spend on, you know, 435 00:24:25,829 --> 00:24:29,609 Speaker 2: some of these infrastructure projects that matter to us in 436 00:24:29,619 --> 00:24:32,859 Speaker 2: our day to day lives. It will be a challenge 437 00:24:33,060 --> 00:24:35,920 Speaker 2: and you know, it's difficult to tweak some of these 438 00:24:35,930 --> 00:24:38,880 Speaker 2: things along. And even if you allocate extra money to 439 00:24:38,890 --> 00:24:42,030 Speaker 2: some of these initiatives, like what Patrick said, it will 440 00:24:42,040 --> 00:24:44,359 Speaker 2: never be enough to move to world class. 441 00:24:44,829 --> 00:24:46,639 Speaker 2: I do want to touch on the question of the 442 00:24:46,650 --> 00:24:50,089 Speaker 2: cost of living. It's a deeply political issue and drives 443 00:24:50,099 --> 00:24:52,650 Speaker 2: a resentment. So there was an announcement of an increase 444 00:24:52,660 --> 00:24:58,680 Speaker 2: to 10 billion ringgit for Cash Rama. The Rama T 445 00:24:58,819 --> 00:25:01,369 Speaker 2: I think in fact, it's called, what do you make 446 00:25:01,380 --> 00:25:04,250 Speaker 2: of that? Will it be enough when you think of it? 447 00:25:04,260 --> 00:25:07,000 Speaker 2: It's four tranches for the year. Patrick? 448 00:25:08,099 --> 00:25:11,459 Speaker 2: Yeah. Well, it's definitely better than nothing. Right. So if 449 00:25:11,469 --> 00:25:15,698 Speaker 2: you are in the position of the B 40 right, 450 00:25:15,709 --> 00:25:18,959 Speaker 2: you would very much welcome this. And, you know, I 451 00:25:18,969 --> 00:25:22,449 Speaker 2: being in a position of fortunately being in a position 452 00:25:22,459 --> 00:25:25,500 Speaker 2: of the T 20 I would not be grudge, right. 453 00:25:25,510 --> 00:25:28,900 Speaker 2: That them getting that cash transfer, right? I would much 454 00:25:28,910 --> 00:25:32,239 Speaker 2: rather have a program of cash transfers, you know, and then, 455 00:25:32,500 --> 00:25:33,400 Speaker 2: you know, like 456 00:25:34,239 --> 00:25:38,650 Speaker 2: reduced leakages because those leakages only enrich people that are 457 00:25:38,660 --> 00:25:40,739 Speaker 2: in the 3.5% for example. 458 00:25:41,760 --> 00:25:44,959 Speaker 2: Yeah, maybe if I, if I just provide a slightly 459 00:25:44,969 --> 00:25:48,129 Speaker 2: different perspective to that. Right. You know, I think, I 460 00:25:48,140 --> 00:25:51,839 Speaker 2: think cash transfers are very important because, you know, you 461 00:25:51,849 --> 00:25:56,060 Speaker 2: have a large population that is below the living wage 462 00:25:56,410 --> 00:25:58,938 Speaker 2: and you've got, you know, a lot of people in 463 00:25:58,949 --> 00:26:01,979 Speaker 2: the B 40 the M 40 group that you struggle 464 00:26:01,989 --> 00:26:04,109 Speaker 2: to meet the day to day cost of living. 465 00:26:04,790 --> 00:26:08,189 Speaker 2: But at the same time, I think if you unilaterally 466 00:26:08,199 --> 00:26:11,389 Speaker 2: keep increasing the cash transfers, people are just going to 467 00:26:11,400 --> 00:26:14,750 Speaker 2: get used to it. So maybe one way is to 468 00:26:14,760 --> 00:26:17,750 Speaker 2: be a little bit more targeted about the cash transfers, 469 00:26:17,760 --> 00:26:20,780 Speaker 2: maybe keep the current cash transfers where they are at 470 00:26:20,790 --> 00:26:24,750 Speaker 2: the current levels, but you can introduce new cash transfers 471 00:26:24,760 --> 00:26:28,099 Speaker 2: with specific intentions. So for example, if you're going to 472 00:26:28,109 --> 00:26:30,149 Speaker 2: rationalize subsidies in a bigger way, 473 00:26:30,430 --> 00:26:32,679 Speaker 2: and then you have a separate crash transfer for the 474 00:26:32,689 --> 00:26:36,569 Speaker 2: target groups in terms of, you know, compensating them for 475 00:26:36,579 --> 00:26:39,629 Speaker 2: the increase in cost. And same goes with, let's say 476 00:26:39,640 --> 00:26:42,750 Speaker 2: if you, you know, at some point, you implement GST, 477 00:26:43,020 --> 00:26:48,010 Speaker 2: you may want a specific cash transfer to again, you know, 478 00:26:48,020 --> 00:26:50,968 Speaker 2: pay back the GST that you collect from some of 479 00:26:50,979 --> 00:26:54,560 Speaker 2: these lower income groups. But you know, it becomes more 480 00:26:54,569 --> 00:26:58,390 Speaker 2: and more challenging if the base cash transfer keeps increasing. 481 00:26:58,869 --> 00:27:01,969 Speaker 2: And then at some point when you need to provide 482 00:27:01,979 --> 00:27:06,050 Speaker 2: that specific top up, it will become a bit more challenging. 483 00:27:06,060 --> 00:27:11,139 Speaker 1: Let's talk about businesses, particularly micro, small and medium enterprises. 484 00:27:11,219 --> 00:27:13,400 Speaker 1: What were some of the main takeaways for this group? 485 00:27:15,140 --> 00:27:17,629 Speaker 2: Yeah, maybe I'll, I'll start on that. Uh you know, 486 00:27:17,640 --> 00:27:22,359 Speaker 2: there isn't like a lot of broad based initiatives for businesses, 487 00:27:22,369 --> 00:27:26,119 Speaker 2: I think for the SME group, it remains to be 488 00:27:26,130 --> 00:27:29,089 Speaker 2: trying to address some of their pain points which is 489 00:27:29,099 --> 00:27:33,079 Speaker 2: trying to get financing to expand their business and for 490 00:27:33,089 --> 00:27:36,040 Speaker 2: some of them, you know, to continue to be in business. 491 00:27:36,270 --> 00:27:41,750 Speaker 2: So the uh the budget has you know allocated 44 492 00:27:41,760 --> 00:27:42,319 Speaker 2: billion 493 00:27:42,689 --> 00:27:46,969 Speaker 2: in terms of some of these financing activities, some of 494 00:27:46,979 --> 00:27:50,459 Speaker 2: the measures that are already there remain. So that is 495 00:27:50,469 --> 00:27:54,000 Speaker 2: the Dana impact I think that was there previously. So 496 00:27:54,010 --> 00:27:58,420 Speaker 2: they are allocating another 600 million towards that. Um What 497 00:27:58,430 --> 00:28:02,900 Speaker 2: is interesting is there is a digitalization grant to the 498 00:28:02,910 --> 00:28:05,130 Speaker 2: SME S. So there is you can claim up to 499 00:28:05,140 --> 00:28:06,020 Speaker 2: 5000 ringgit 500 00:28:06,500 --> 00:28:09,319 Speaker 2: and the government is setting aside, you know, 100 million 501 00:28:09,329 --> 00:28:12,188 Speaker 2: ringgit for that. So that should, you know, be fairly 502 00:28:12,199 --> 00:28:15,579 Speaker 2: broad based about 20,000 businesses should be able to benefit 503 00:28:15,589 --> 00:28:20,718 Speaker 2: from that. Um And I think on a wider basis, 504 00:28:20,729 --> 00:28:25,400 Speaker 2: they have now allowed for ICT assets to be claimed 505 00:28:25,410 --> 00:28:28,819 Speaker 2: over a three year period rather than the four years 506 00:28:28,829 --> 00:28:31,060 Speaker 2: as it is at this point in time. So I 507 00:28:31,069 --> 00:28:35,510 Speaker 2: think these are maybe some of the specific measures for businesses. 508 00:28:35,819 --> 00:28:38,439 Speaker 2: If you look at the labor market side of things, 509 00:28:38,449 --> 00:28:42,209 Speaker 2: the government is putting aside 100 million ringgit to incentivize 510 00:28:42,219 --> 00:28:47,250 Speaker 2: private companies to a TVET training. Now, how impactful do 511 00:28:47,260 --> 00:28:48,449 Speaker 2: you think this is going to be? 512 00:28:49,599 --> 00:28:50,750 Speaker 2: Uh I I think 513 00:28:51,869 --> 00:28:52,410 Speaker 2: there is 514 00:28:53,930 --> 00:28:57,849 Speaker 2: strong move in the right direction. I think TVET training 515 00:28:57,859 --> 00:29:02,170 Speaker 2: technical skills is absolutely critical in this world that we're 516 00:29:02,180 --> 00:29:07,160 Speaker 2: living in now. Malaysia, we are blessed by being in 517 00:29:07,170 --> 00:29:12,030 Speaker 2: a right geographic spot, right? But in order to unlock 518 00:29:12,040 --> 00:29:16,630 Speaker 2: and unleash those potential benefits, we need to have the 519 00:29:16,640 --> 00:29:19,699 Speaker 2: technical skills to compete on par with the best in 520 00:29:19,709 --> 00:29:20,109 Speaker 2: the world. 521 00:29:21,319 --> 00:29:23,739 Speaker 1: I did want to talk about Saba and because a 522 00:29:23,750 --> 00:29:27,449 Speaker 1: number of allocations were announced for them specifically and the 523 00:29:27,459 --> 00:29:31,060 Speaker 1: PM actually links this to his administration's intention to honor 524 00:29:31,069 --> 00:29:34,709 Speaker 1: Ma 63. What stood out to you and how impactful 525 00:29:34,719 --> 00:29:35,780 Speaker 1: do you think these will be? 526 00:29:36,290 --> 00:29:39,339 Speaker 2: So if you look at the specific locations, you know 527 00:29:39,349 --> 00:29:41,709 Speaker 2: there was an increase, I think from SARS case, I 528 00:29:41,719 --> 00:29:44,589 Speaker 2: think it was a 5 billion to 5.8 billion jump. 529 00:29:44,750 --> 00:29:47,459 Speaker 2: But over and above that, I think there were a 530 00:29:47,469 --> 00:29:49,099 Speaker 2: few other interesting things. 531 00:29:50,439 --> 00:29:53,900 Speaker 2: So Saba and Sarah has always been what I would 532 00:29:53,910 --> 00:29:57,579 Speaker 2: call long skinny countries. So they suffer from the tyranny 533 00:29:57,589 --> 00:30:00,550 Speaker 2: of distance as well as density, right? So they are 534 00:30:00,560 --> 00:30:04,540 Speaker 2: far away from the major trade roads, etcetera and all that. 535 00:30:04,550 --> 00:30:07,329 Speaker 2: So of course logistics is high, etcetera and all that, right? 536 00:30:07,439 --> 00:30:10,930 Speaker 2: So I think these investments in the Pennon Highway, for example, 537 00:30:11,000 --> 00:30:13,239 Speaker 2: and also in the Saba Sara, what link route I 538 00:30:13,250 --> 00:30:17,920 Speaker 2: think are really important things that will help increase their 539 00:30:18,329 --> 00:30:21,109 Speaker 2: ability to connect much better. 540 00:30:22,780 --> 00:30:25,729 Speaker 2: Yes. So if we can look now at something maybe 541 00:30:25,739 --> 00:30:28,500 Speaker 2: of interest to us in the Klang Valley and you know, 542 00:30:28,510 --> 00:30:33,099 Speaker 2: who consume entertainment, the removal of entertainment tax for the 543 00:30:33,109 --> 00:30:36,589 Speaker 2: Federal territories is expected to happen next year with full 544 00:30:36,599 --> 00:30:39,989 Speaker 2: exemption to be provided for local performers. Do you see 545 00:30:40,000 --> 00:30:44,290 Speaker 2: this as a major move? Will it boost? I think 546 00:30:44,300 --> 00:30:49,469 Speaker 2: the ability to turn entertainment to a thriving business. Hopefully, 547 00:30:49,479 --> 00:30:51,359 Speaker 2: as I was coming up to 548 00:30:51,729 --> 00:30:54,579 Speaker 2: this interview, you know, I saw down there big plastering 549 00:30:54,599 --> 00:30:58,250 Speaker 2: Douglas Lim and all that kind of thing. So, you know, 550 00:30:58,260 --> 00:31:00,890 Speaker 2: I think, you know, encouraging more of that will keep 551 00:31:00,900 --> 00:31:05,780 Speaker 2: us entertained and driving industry. But of course, you know, 552 00:31:05,790 --> 00:31:07,869 Speaker 2: we do need to look at the ecosystem as a 553 00:31:07,880 --> 00:31:11,270 Speaker 2: whole to actually ensure that we don't. On the one hand, 554 00:31:11,280 --> 00:31:13,400 Speaker 2: try to encourage it, on the other hand, try to 555 00:31:13,410 --> 00:31:16,589 Speaker 2: discourage it, smile and laugh through our tears. 556 00:31:18,150 --> 00:31:21,939 Speaker 1: Well, I mean, they did cautiously cautiously give the budget 557 00:31:21,949 --> 00:31:24,199 Speaker 1: not too bad a grade, so perhaps not so many 558 00:31:24,209 --> 00:31:28,400 Speaker 1: tears just we have a few minutes left. Final thoughts 559 00:31:28,410 --> 00:31:29,150 Speaker 1: from each of you. 560 00:31:30,619 --> 00:31:35,800 Speaker 2: Yeah. So, you know, I think, I think they have overall, 561 00:31:35,810 --> 00:31:38,520 Speaker 2: I think the budget seems to be trying to address 562 00:31:38,530 --> 00:31:42,339 Speaker 2: some of the issues that we have at hand coming 563 00:31:42,349 --> 00:31:46,630 Speaker 2: up with various measures within the existing constraints. 564 00:31:47,060 --> 00:31:52,119 Speaker 2: There are some elements of, you know, hopefully driving growth. 565 00:31:52,270 --> 00:31:54,760 Speaker 2: So I think we didn't get to cover things. Like 566 00:31:54,770 --> 00:31:59,339 Speaker 2: for example, they have remodeled the tax incentives. So they 567 00:31:59,349 --> 00:32:01,800 Speaker 2: are now on a very tiered approach, 568 00:32:02,119 --> 00:32:05,209 Speaker 2: some of the incentives that have expired. So for example, 569 00:32:05,219 --> 00:32:08,939 Speaker 2: the global trading hub, you know, that had expired, they 570 00:32:08,949 --> 00:32:11,229 Speaker 2: have now actually brought it back, that one has a 571 00:32:11,239 --> 00:32:16,329 Speaker 2: lot of interest and we do compete quite aggressively with 572 00:32:16,339 --> 00:32:19,089 Speaker 2: one of our neighboring countries that is trying to attract 573 00:32:19,099 --> 00:32:21,849 Speaker 2: a lot of these global hubs. So in that sense, 574 00:32:21,859 --> 00:32:24,829 Speaker 2: I think there are quite a few of those, you know, 575 00:32:24,839 --> 00:32:27,540 Speaker 2: little pieces within the budget which are exciting. 576 00:32:28,130 --> 00:32:33,680 Speaker 2: Um but maybe, you know, if the expectation was for 577 00:32:33,689 --> 00:32:38,189 Speaker 2: large scale reforms, we may not really see all of 578 00:32:38,199 --> 00:32:40,010 Speaker 2: that in the budget Patrick 579 00:32:40,810 --> 00:32:44,949 Speaker 2: and just echoing what Jack ended on, I think, you know, 580 00:32:44,959 --> 00:32:48,439 Speaker 2: like somebody tweeted to say that this was a brave budget, 581 00:32:48,609 --> 00:32:50,229 Speaker 2: you know, like, well, I would say, you know, like 582 00:32:50,239 --> 00:32:54,790 Speaker 2: it should have been a braver budget because the challenge 583 00:32:54,800 --> 00:32:56,900 Speaker 2: and the issue that we have is that, you know, 584 00:32:56,910 --> 00:33:00,219 Speaker 2: we are neither here nor there. You know, there was saying, 585 00:33:00,229 --> 00:33:01,680 Speaker 2: you know, we're not cold, we're not hot, we are 586 00:33:01,689 --> 00:33:04,390 Speaker 2: somewhere in between, right? And I think, you know, like 587 00:33:04,400 --> 00:33:05,790 Speaker 2: a lot of us see that 588 00:33:06,050 --> 00:33:09,760 Speaker 2: has not been good enough if I refer to a 589 00:33:09,770 --> 00:33:13,239 Speaker 2: publication that came out recently that says our t 20 590 00:33:13,359 --> 00:33:20,030 Speaker 2: median income was 15,867 right? Well, you know what Singapore's, 591 00:33:20,040 --> 00:33:20,390 Speaker 2: you know, 592 00:33:21,430 --> 00:33:26,430 Speaker 2: median income, right? About 10,000 sing, right? So neither here 593 00:33:26,439 --> 00:33:31,079 Speaker 2: nor there. It's not good enough. We want something better. 594 00:33:31,089 --> 00:33:32,849 Speaker 2: So a braver budget would have been 595 00:33:33,989 --> 00:33:37,239 Speaker 1: J Patrick. Thanks for speaking with us today. Thank you. 596 00:33:37,750 --> 00:33:40,939 Speaker 1: That was Jagdev Singh tax leader and Patrick Tay Deals 597 00:33:40,949 --> 00:33:45,640 Speaker 1: partner of economics and policy, both from PWC Malaysia helping 598 00:33:45,650 --> 00:33:51,099 Speaker 1: us analyze budget 2024 which was unveiled just earlier today 599 00:33:51,109 --> 00:33:53,579 Speaker 1: by Prime Minister Daan Brahim. 600 00:33:53,839 --> 00:33:57,020 Speaker 1: Uh There will be more analysis coming your way next week. 601 00:33:57,030 --> 00:34:03,109 Speaker 1: So stay tuned BFM. 89.9. 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