1 00:00:00,509 --> 00:00:04,690 Speaker 1: This is a podcast from BFM 89.9. The business station, 2 00:00:05,800 --> 00:00:09,050 Speaker 1: the BFM breakfast grill connecting you to the top people 3 00:00:09,060 --> 00:00:13,970 Speaker 1: and ideas powered by you. Mobile five G makes Business sense. 4 00:00:15,850 --> 00:00:18,280 Speaker 1: Good morning. Welcome to the breakfast grill. I'm Phil C. 5 00:00:18,290 --> 00:00:21,340 Speaker 1: Now last Friday, the government announced its largest ever budget 6 00:00:21,350 --> 00:00:25,950 Speaker 1: in our country's history for 2024 at RM 390 plus billion. 7 00:00:25,959 --> 00:00:28,489 Speaker 1: This will be the unity government's first full budget. And 8 00:00:28,500 --> 00:00:31,030 Speaker 1: today I have the pleasure of welcoming into the studio, 9 00:00:31,600 --> 00:00:34,509 Speaker 1: Johan Mohamed me, who is the Secretary General of Treasury 10 00:00:34,520 --> 00:00:37,330 Speaker 1: for the Ministry of Finance. Welcome Joan. Nice to have 11 00:00:37,340 --> 00:00:37,708 Speaker 1: you here. 12 00:00:37,720 --> 00:00:39,759 Speaker 2: Thanks Philip. Good to be back. 13 00:00:39,779 --> 00:00:41,629 Speaker 1: Yes. And firstly, congratulations 14 00:00:41,750 --> 00:00:43,790 Speaker 1: or pulling this one off. But let's just talk a 15 00:00:43,799 --> 00:00:47,250 Speaker 1: bit about the process of developing this particular budget. I mean, 16 00:00:47,259 --> 00:00:50,400 Speaker 1: how different is the unity government's approach in building and 17 00:00:50,409 --> 00:00:55,029 Speaker 1: developing this budget versus previous administrations under B and MP? 18 00:00:55,040 --> 00:00:56,779 Speaker 1: I mean, it's easy to work with the finance minister 19 00:00:56,790 --> 00:00:59,619 Speaker 1: who is a career politician as opposed to an investment banker. 20 00:01:00,400 --> 00:01:03,860 Speaker 2: I think first and foremost, as you quite rightly pointed out, 21 00:01:03,869 --> 00:01:08,179 Speaker 2: this is the first full budget for the unity government. 22 00:01:08,190 --> 00:01:11,379 Speaker 2: The budget that was announced early in February, a lot 23 00:01:11,389 --> 00:01:15,220 Speaker 2: of the preparation and work was done prior to the 24 00:01:15,230 --> 00:01:18,179 Speaker 2: government coming in. So this is the first full budget. 25 00:01:18,400 --> 00:01:21,279 Speaker 2: And I think what the Prime Minister was very keen 26 00:01:21,290 --> 00:01:24,779 Speaker 2: on was seeing how this budget was perhaps the first 27 00:01:24,790 --> 00:01:27,519 Speaker 2: step to in terms of his reform agenda. So I 28 00:01:27,529 --> 00:01:27,738 Speaker 2: think 29 00:01:27,980 --> 00:01:30,739 Speaker 2: that's why in terms of sequencing you had the economy 30 00:01:30,750 --> 00:01:34,239 Speaker 2: Madani first announced, which was then obviously followed up by 31 00:01:34,589 --> 00:01:38,970 Speaker 2: um policy documents like the energy transition road map, the 32 00:01:38,980 --> 00:01:43,290 Speaker 2: industrial Master plan, the midterm review. But then certainly the 33 00:01:43,489 --> 00:01:48,599 Speaker 2: budget 2024 is then contextualized within the economy Madani framework. 34 00:01:48,819 --> 00:01:53,150 Speaker 2: But beyond the economy framework, prime minister is very committed 35 00:01:53,160 --> 00:01:56,510 Speaker 2: towards fiscal reform. And you know that the last time 36 00:01:56,519 --> 00:01:57,220 Speaker 2: we had a 37 00:01:58,029 --> 00:02:01,519 Speaker 2: budget was back when he was previously Minister of Finance. 38 00:02:01,529 --> 00:02:04,290 Speaker 2: So I think that's the second part and you know, 39 00:02:04,650 --> 00:02:07,849 Speaker 2: it also was very committed to its engagement so that 40 00:02:07,860 --> 00:02:10,809 Speaker 2: the Minister of Finance, we engage with all the ministers, 41 00:02:10,820 --> 00:02:14,639 Speaker 2: the minister, the respective ministers then all undertook engagements with 42 00:02:14,649 --> 00:02:17,539 Speaker 2: their respective stakeholders in terms of trying to get various 43 00:02:17,550 --> 00:02:21,149 Speaker 2: inputs and maybe that perhaps contributed to a relatively long budget. 44 00:02:21,880 --> 00:02:24,820 Speaker 1: Yes, I think two hours, 40 minutes in essence, so 45 00:02:24,830 --> 00:02:27,470 Speaker 1: a lot to unpack here, but let's focus on what 46 00:02:27,479 --> 00:02:30,190 Speaker 1: actually was not in the budget. And of course, everyone 47 00:02:30,199 --> 00:02:33,479 Speaker 1: thought the glaring element was GST of course a lot 48 00:02:33,490 --> 00:02:36,470 Speaker 1: of announcements on capital gains tax, sales service, tax, increase 49 00:02:36,479 --> 00:02:39,380 Speaker 1: luxury tax. But really all that pales in comparison to 50 00:02:39,389 --> 00:02:42,169 Speaker 1: GST is, I mean, it's the government just doing whatever 51 00:02:42,179 --> 00:02:44,970 Speaker 1: it takes to defer the implementation of GST. Then 52 00:02:45,410 --> 00:02:48,888 Speaker 2: I think the Prime Minister has been consistent on this topic. 53 00:02:48,940 --> 00:02:54,460 Speaker 2: He's always said yes. GST is the most efficient in 54 00:02:54,470 --> 00:02:58,500 Speaker 2: terms of a, of a tax system. But what's important 55 00:02:58,508 --> 00:03:03,639 Speaker 2: I believe for him is recognizing that GST, whatever you 56 00:03:03,649 --> 00:03:06,690 Speaker 2: do in terms of tweaking the parameters, there's an element 57 00:03:06,699 --> 00:03:09,539 Speaker 2: that it is a regressive tax by nature. And so 58 00:03:09,550 --> 00:03:14,690 Speaker 2: before in his mind, before one burdens the general yard, 59 00:03:15,029 --> 00:03:19,288 Speaker 2: he wanted to ensure that we plug whatever leakages and 60 00:03:19,300 --> 00:03:23,038 Speaker 2: ensure that certainly, that's, I think that's and certainly is 61 00:03:23,100 --> 00:03:25,889 Speaker 2: making sure that let us first look at those who 62 00:03:25,899 --> 00:03:30,440 Speaker 2: can afford first before, before really implementing GST. And I 63 00:03:30,449 --> 00:03:32,899 Speaker 2: think for that reason, you see that 64 00:03:33,880 --> 00:03:37,300 Speaker 2: the measures in terms of better targeting of the subsidies 65 00:03:37,679 --> 00:03:42,570 Speaker 2: and where his initial tax measures look at, for example, 66 00:03:42,589 --> 00:03:46,419 Speaker 2: capital gains tax on listed shares, luxury tax, even the 67 00:03:46,559 --> 00:03:50,789 Speaker 2: sales and service tax. I was very conscious on Prime 68 00:03:50,800 --> 00:03:55,460 Speaker 2: Minister's part to exclude food and drinks from the increase 69 00:03:55,470 --> 00:03:58,940 Speaker 2: from 6 to 8, you know, trying to avoid perhaps 70 00:03:58,949 --> 00:04:02,619 Speaker 2: those which were more right yet centric in terms of 71 00:04:02,630 --> 00:04:03,220 Speaker 2: widening that 72 00:04:03,324 --> 00:04:04,404 Speaker 2: tax based on SST. Sure. 73 00:04:04,414 --> 00:04:07,335 Speaker 1: But the impact will be that the opportunity to collect 74 00:04:07,345 --> 00:04:09,565 Speaker 1: revenue will be quite minimal, right? When you, when you 75 00:04:09,574 --> 00:04:13,255 Speaker 1: put all these exclusions in, so eventually GST will come 76 00:04:13,264 --> 00:04:14,895 Speaker 1: to us. I guess the question in my mind is 77 00:04:14,904 --> 00:04:17,774 Speaker 1: what are the conditions for us? Right? When we think 78 00:04:17,785 --> 00:04:20,544 Speaker 1: GST when this country is ready for GST, you said 79 00:04:20,553 --> 00:04:23,464 Speaker 1: that some pre prior conditions about being able to plug 80 00:04:23,515 --> 00:04:26,964 Speaker 1: in holes in the past, you said something about income levels, 81 00:04:26,975 --> 00:04:29,765 Speaker 1: unemployment levels, even the economic growth, right? What are the 82 00:04:29,774 --> 00:04:31,933 Speaker 1: conditions for us to say? Look, we are ready for 83 00:04:31,945 --> 00:04:32,683 Speaker 1: GST then. 84 00:04:33,059 --> 00:04:36,500 Speaker 2: But I think again, you know, one needs to manage 85 00:04:36,510 --> 00:04:41,950 Speaker 2: the economy to ensure that reforms are both sequence and 86 00:04:41,959 --> 00:04:44,790 Speaker 2: and and and you know, in terms of gradual, you know, 87 00:04:44,799 --> 00:04:49,178 Speaker 2: it's probably not, I mean, we're not advisable in terms 88 00:04:49,190 --> 00:04:51,570 Speaker 2: of the extent of subsidy reforms that we want to 89 00:04:51,579 --> 00:04:54,040 Speaker 2: undertake to then do both subsidies and 90 00:04:54,799 --> 00:04:55,549 Speaker 2: subsequently 91 00:04:55,559 --> 00:04:58,959 Speaker 1: subsidies first and the GST next, right, that they don't 92 00:04:58,970 --> 00:04:59,320 Speaker 1: happen in 93 00:04:59,329 --> 00:05:04,149 Speaker 2: tandem. Certainly the key focus particularly for the government or 94 00:05:04,160 --> 00:05:08,570 Speaker 2: Ministry of Finance in the coming 2024 the key focus 95 00:05:08,579 --> 00:05:12,649 Speaker 2: will be for subsidy rationalization or better targeting of subsidies 96 00:05:12,660 --> 00:05:14,690 Speaker 1: and focusing on subsidies. Look, I think it's good that 97 00:05:14,700 --> 00:05:16,349 Speaker 1: the conversation has shifted, right? It's 98 00:05:16,424 --> 00:05:19,325 Speaker 1: now no longer whether but when how and who will 99 00:05:19,334 --> 00:05:22,565 Speaker 1: be targeted for these subsidies. But honestly with this budget, 100 00:05:22,575 --> 00:05:24,904 Speaker 1: many feel that you're nibbling in the fringes, right? We 101 00:05:24,915 --> 00:05:28,304 Speaker 1: talk about diesel lifting of chicken and eggs, but really 102 00:05:28,315 --> 00:05:31,625 Speaker 1: the big Kahuna, the biggest ticket item is fuel, right? 103 00:05:31,635 --> 00:05:34,755 Speaker 1: Petrol at 70% of your total subsidy. What is the 104 00:05:34,765 --> 00:05:38,404 Speaker 1: timeline and process to sort out that biggest ticket item? 105 00:05:39,399 --> 00:05:42,910 Speaker 2: You know, you would understand in terms of planning for 106 00:05:42,920 --> 00:05:47,329 Speaker 2: sequencing subsidies, in terms of its its impact. Um you 107 00:05:47,339 --> 00:05:51,470 Speaker 2: may say that they are small fry in relative terms, 108 00:05:51,640 --> 00:05:53,859 Speaker 2: but when you talk about a chicken egg subsidy, you know, 109 00:05:53,869 --> 00:05:56,950 Speaker 2: that's still 2 billion ringgit per year subsidy. 110 00:05:57,140 --> 00:06:01,029 Speaker 2: And it's important that we address it because in the 111 00:06:01,040 --> 00:06:04,839 Speaker 2: course of what was implemented previously, while you had the 112 00:06:04,928 --> 00:06:08,859 Speaker 2: good intention of controlling for prices to the to the public, 113 00:06:08,869 --> 00:06:11,779 Speaker 2: it had an impact in terms of supply chain. So 114 00:06:11,790 --> 00:06:14,899 Speaker 2: certainly that was something distortionary which we need to see 115 00:06:14,910 --> 00:06:17,130 Speaker 2: to remove you talk about 116 00:06:17,195 --> 00:06:19,214 Speaker 2: diesel subsidies. And and I think this comes back in 117 00:06:19,225 --> 00:06:21,274 Speaker 2: the context of Prime Minister wanting to focus first on 118 00:06:21,285 --> 00:06:25,054 Speaker 2: where are the leakages, diesel subsidies actually now are clocking 119 00:06:25,065 --> 00:06:28,614 Speaker 2: in around 1.5 billion per month. And what we're seeing 120 00:06:28,625 --> 00:06:31,803 Speaker 2: as well is that the volumes of subsidized diesel being 121 00:06:31,815 --> 00:06:34,553 Speaker 2: sold to our petrol stations, they are about 40% higher 122 00:06:34,565 --> 00:06:38,625 Speaker 2: than pre COVID despite you know, vehicles, diesel vehicles being 123 00:06:38,635 --> 00:06:40,135 Speaker 2: only up probably 2.5%. 124 00:06:40,390 --> 00:06:43,589 Speaker 2: So certainly there is a significant leakage on that which 125 00:06:43,600 --> 00:06:45,089 Speaker 2: which needs to be plugged more 126 00:06:45,100 --> 00:06:47,279 Speaker 1: urgently. But I mean, you just say the numbers right, 127 00:06:47,290 --> 00:06:49,808 Speaker 1: 2 billion, 1.5 billion. I mean, the context of our 128 00:06:49,820 --> 00:06:52,409 Speaker 1: subsidy bill for this budget is 53 and last year's 129 00:06:52,420 --> 00:06:55,488 Speaker 1: budget was 64 and many even have said could be 130 00:06:55,500 --> 00:06:57,769 Speaker 1: up to 80 billion at this current fuel price. So, 131 00:06:58,089 --> 00:07:00,010 Speaker 1: I mean, it just goes to show that yes, it's 132 00:07:00,019 --> 00:07:02,200 Speaker 1: important to do these two things, but you have to 133 00:07:02,209 --> 00:07:05,049 Speaker 1: address fuel, isn't it? There is no two ways about it. 134 00:07:05,589 --> 00:07:08,640 Speaker 2: No. But what I'm saying is that it's diesel is 135 00:07:08,649 --> 00:07:11,670 Speaker 2: an equally big. In fact, it's not far off from 136 00:07:11,679 --> 00:07:14,390 Speaker 2: our petrol, subsid, diesel subsidies have grown to be almost petrol. 137 00:07:14,399 --> 00:07:17,579 Speaker 2: But yes, you're right. But that requires further work. And 138 00:07:17,589 --> 00:07:20,079 Speaker 2: that's probably next in terms of the sequencing of 139 00:07:20,494 --> 00:07:21,355 Speaker 2: expectation and 140 00:07:21,434 --> 00:07:23,915 Speaker 1: the expectation is very high, isn't it? Because you have 141 00:07:23,924 --> 00:07:27,204 Speaker 1: really budgeted for a much lower subsidy bill for this year. 142 00:07:27,214 --> 00:07:29,674 Speaker 1: So you have to address petrol, isn't it? And the 143 00:07:29,684 --> 00:07:33,265 Speaker 1: question is, when will the government announce clear actions and 144 00:07:33,274 --> 00:07:35,575 Speaker 1: road maps for that? Because honestly, for many of us 145 00:07:35,584 --> 00:07:37,864 Speaker 1: in business and corporate and people, we have to plan 146 00:07:37,875 --> 00:07:40,325 Speaker 1: for next year, right? And if we have an opaque 147 00:07:40,334 --> 00:07:42,795 Speaker 1: approach without clear timelines, it's not helpful, right? 148 00:07:43,690 --> 00:07:46,549 Speaker 2: You know, some in I would have said the Prime 149 00:07:46,559 --> 00:07:48,989 Speaker 2: Minister probably said more than what they would have preferred. 150 00:07:49,000 --> 00:07:52,239 Speaker 2: So I think you give credit where it's due. You know, 151 00:07:52,250 --> 00:07:54,959 Speaker 2: Prime Minister, you know, I think no one can probably 152 00:07:54,970 --> 00:07:57,480 Speaker 2: accuse him of coming up with a populist budget, you know, 153 00:07:57,489 --> 00:08:00,809 Speaker 2: it starts off, you know, hitting already with, you know, 154 00:08:00,820 --> 00:08:05,049 Speaker 2: higher taxes reducing subsidies and it really shows the Prime 155 00:08:05,059 --> 00:08:07,160 Speaker 2: Minister is very committed. You know, we made sure that 156 00:08:07,239 --> 00:08:10,570 Speaker 2: the Fiscal Responsibility Act was approved by parliament 157 00:08:10,790 --> 00:08:12,958 Speaker 2: before the tabling of the act. You know, the Prime 158 00:08:12,970 --> 00:08:14,339 Speaker 2: Minister is very serious about 159 00:08:14,809 --> 00:08:16,799 Speaker 1: that. You know, I mean, populism can be dressed in 160 00:08:16,809 --> 00:08:20,549 Speaker 1: so many ways, for example, right, he says about targeted subsidies, 161 00:08:20,750 --> 00:08:23,920 Speaker 1: but if he's going to say that 90% of people 162 00:08:23,929 --> 00:08:27,950 Speaker 1: will still enjoy electrical electric subsidies, that targeting is moved, 163 00:08:27,959 --> 00:08:28,410 Speaker 1: isn't it? It is 164 00:08:28,420 --> 00:08:32,819 Speaker 2: irrelevant. I think maybe I need to clarify on that. 165 00:08:32,909 --> 00:08:36,218 Speaker 2: I think what the Prime Minister was explaining was that 166 00:08:36,780 --> 00:08:40,750 Speaker 2: when we looked at the 2022 experience in terms of 167 00:08:40,760 --> 00:08:45,169 Speaker 2: the previous government had provided blanket subsidies for electricity. In 168 00:08:45,179 --> 00:08:50,659 Speaker 2: that context, the top 10% of the largest consumers of 169 00:08:50,669 --> 00:08:54,239 Speaker 2: electricity were actually taking up more than 50% of the subsidy. 170 00:08:54,510 --> 00:08:57,949 Speaker 2: So in that sense, that's why the current government, particularly 171 00:08:57,960 --> 00:09:02,809 Speaker 2: in terms of 2023 that's where subsidies were released for 172 00:09:02,820 --> 00:09:08,099 Speaker 2: larger companies. And in the second half also higher consuming households, 173 00:09:08,380 --> 00:09:13,210 Speaker 2: the intent is, for example, if subsidies were released for 174 00:09:13,219 --> 00:09:16,760 Speaker 2: households that were consuming above 1000 5 kilowatts in the 175 00:09:16,770 --> 00:09:20,750 Speaker 2: second half, our intention is really to broaden that further 176 00:09:20,760 --> 00:09:23,650 Speaker 2: in the coming year because certainly there is room 177 00:09:23,969 --> 00:09:26,390 Speaker 2: and it's not just for electricity, it's not just a 178 00:09:26,400 --> 00:09:30,020 Speaker 2: case of us wanting to save on subsidy. It's also 179 00:09:30,030 --> 00:09:32,409 Speaker 2: it also included in prime of speech is that it's 180 00:09:32,419 --> 00:09:34,939 Speaker 2: also about sending the right market signals. So if you're 181 00:09:34,950 --> 00:09:39,289 Speaker 2: a large consumer of electricity, you should be facing the 182 00:09:39,299 --> 00:09:42,770 Speaker 2: unsubsidized price or at least a price that perhaps gives 183 00:09:42,780 --> 00:09:45,640 Speaker 2: you a better incentive to invest in either energy efficiency 184 00:09:45,650 --> 00:09:47,010 Speaker 2: or even solar. And that's 185 00:09:47,119 --> 00:09:49,659 Speaker 2: tied again as well to what was announced that in 186 00:09:49,669 --> 00:09:53,289 Speaker 2: terms of the ministry and in terms of liberalizing in 187 00:09:53,299 --> 00:09:57,799 Speaker 2: terms of its n quotas and also in terms of 188 00:09:57,809 --> 00:10:01,099 Speaker 2: third party access to facilitate that transition as 189 00:10:01,109 --> 00:10:03,340 Speaker 1: well. Can you make a very interesting point? Because here, 190 00:10:03,349 --> 00:10:06,000 Speaker 1: when we talk about targeted subsidies, actually, the operative word 191 00:10:06,010 --> 00:10:08,989 Speaker 1: here is target, isn't it? Who is the target for 192 00:10:09,000 --> 00:10:10,218 Speaker 1: all the different subsidies that 193 00:10:10,330 --> 00:10:13,109 Speaker 1: we talk about? And as you rightly explain for different 194 00:10:13,119 --> 00:10:15,710 Speaker 1: types of subsidies is a very different definition of target, 195 00:10:15,719 --> 00:10:18,320 Speaker 1: which can be actually very confusing. But the big item 196 00:10:18,330 --> 00:10:21,010 Speaker 1: now is few. How do we define target? Right? Is 197 00:10:21,020 --> 00:10:25,099 Speaker 1: it going to be 90% 80% 70% right? At what point? 198 00:10:25,159 --> 00:10:28,270 Speaker 1: And what criteria do we have in defining that? Because 199 00:10:28,280 --> 00:10:30,799 Speaker 1: many of our listeners who are now driving to work, 200 00:10:30,979 --> 00:10:33,429 Speaker 1: they're going to ask whether am I eligible for that subsidy? 201 00:10:33,919 --> 00:10:36,659 Speaker 2: No, but you're you're right in that there would have 202 00:10:36,669 --> 00:10:41,579 Speaker 2: to be different targeting for subsidies. I think for example, 203 00:10:41,590 --> 00:10:42,640 Speaker 2: even for electricity, 204 00:10:42,969 --> 00:10:45,329 Speaker 2: yes, it would make sense for the poor to continue 205 00:10:45,340 --> 00:10:49,109 Speaker 2: to be to be subsidized. But should the middle income, 206 00:10:49,119 --> 00:10:53,020 Speaker 2: for example, be be subsidized on electricity? Because to some 207 00:10:53,030 --> 00:10:56,119 Speaker 2: extent not to sound harsh for electricity, there's more of 208 00:10:56,130 --> 00:10:58,869 Speaker 2: a choice, you know, in terms of what really contributes 209 00:10:58,880 --> 00:11:00,590 Speaker 2: to your bill at the end is for example, things 210 00:11:00,599 --> 00:11:03,270 Speaker 2: like air conditioning, right? You know, that's, that's really a 211 00:11:03,280 --> 00:11:04,320 Speaker 2: key driver of electric 212 00:11:04,505 --> 00:11:07,796 Speaker 2: bill. Whereas in contrast, petrol for those driving to work, 213 00:11:07,885 --> 00:11:10,415 Speaker 2: it's not that you have much option in terms of 214 00:11:10,426 --> 00:11:12,606 Speaker 2: where you live and where you work, it's not like 215 00:11:12,616 --> 00:11:16,606 Speaker 2: you can suddenly overnight change your transition so far such patterns. 216 00:11:16,616 --> 00:11:20,356 Speaker 2: And so almost by definition a subsidy for or targeting 217 00:11:20,366 --> 00:11:23,216 Speaker 2: a subsidy probably needs to cater for a wider group. 218 00:11:23,226 --> 00:11:25,606 Speaker 2: But again, you have subsidies like 219 00:11:26,011 --> 00:11:29,101 Speaker 2: cooking oil, the famous one kg pack which you buy 220 00:11:29,111 --> 00:11:31,841 Speaker 2: 2 50. Certainly that so again, really targeted at the very, 221 00:11:32,052 --> 00:11:35,242 Speaker 2: you know, the lower income segment. And so again, when 222 00:11:35,252 --> 00:11:38,101 Speaker 2: you target that's only a smaller segment. So so it 223 00:11:38,111 --> 00:11:43,861 Speaker 2: does vary according to the type of subsidy and you know, well, 224 00:11:43,910 --> 00:11:47,322 Speaker 2: apologies if that comes across as confusing, but I think 225 00:11:47,760 --> 00:11:50,650 Speaker 2: we can't take one size fits all 226 00:11:50,659 --> 00:11:52,869 Speaker 1: approach. I mean, it sounds like this really target is 227 00:11:52,880 --> 00:11:55,858 Speaker 1: multidimensional in nature. I think what even complicates thing now 228 00:11:55,869 --> 00:11:59,419 Speaker 1: is that whole tension between subsidies and cash transfers, conditional 229 00:11:59,429 --> 00:12:01,659 Speaker 1: cash transfers, right? I mean also in this budget and 230 00:12:01,669 --> 00:12:04,590 Speaker 1: increased allocation here for the conditional cash transfers. I mean, 231 00:12:04,770 --> 00:12:06,320 Speaker 1: how do you differentiate and 232 00:12:06,414 --> 00:12:10,945 Speaker 1: distinguish, right, when targeted subsidies work versus conditional cash transfers. 233 00:12:10,955 --> 00:12:13,515 Speaker 1: I mean, we're talking about behavioral economics here a bit now, right? 234 00:12:13,655 --> 00:12:18,094 Speaker 2: Actually, both when we say targeted subsidies encapsulates in terms 235 00:12:18,104 --> 00:12:21,755 Speaker 2: of what I would say, tiered pricing and cash transfers. 236 00:12:22,164 --> 00:12:24,794 Speaker 2: So electricity is an example of tiered pricing, 237 00:12:26,090 --> 00:12:30,000 Speaker 2: the higher you consume the higher tariff you pay. So 238 00:12:30,010 --> 00:12:33,380 Speaker 2: in a sense, you're using consumption as a proxy for 239 00:12:33,390 --> 00:12:36,659 Speaker 2: in terms. So those who are below 300 kilowatts, they 240 00:12:36,669 --> 00:12:38,539 Speaker 2: pay what we call a lifeline ban. So that's much 241 00:12:38,549 --> 00:12:41,218 Speaker 2: lower tariffs compared to those like yourself, you know, who 242 00:12:41,229 --> 00:12:44,270 Speaker 2: probably need to be charged a higher tariff. And we 243 00:12:44,280 --> 00:12:45,500 Speaker 2: proceed that by by 244 00:12:45,919 --> 00:12:48,770 Speaker 2: by consumption. So that's a form of tier pricing. We 245 00:12:48,780 --> 00:12:51,049 Speaker 2: hope to implement a form of tier pricing as well 246 00:12:51,059 --> 00:12:54,969 Speaker 2: for restructuring or better targeting the diesel subsidy because we 247 00:12:54,979 --> 00:12:58,729 Speaker 2: already have a mechanism where currently public transport companies, they 248 00:12:58,739 --> 00:13:01,968 Speaker 2: get a fleet card which enables them to buy fuel 249 00:13:01,979 --> 00:13:04,250 Speaker 2: at 1 88 per liter compared to the pump price 250 00:13:04,260 --> 00:13:04,978 Speaker 2: of 2 15. 251 00:13:05,520 --> 00:13:09,098 Speaker 2: Our plans basically to extend that six system to cover 252 00:13:09,109 --> 00:13:12,210 Speaker 2: also logistics companies so that if we then subsequently increase 253 00:13:12,219 --> 00:13:15,440 Speaker 2: pump prices, that the impact on price of goods also 254 00:13:15,450 --> 00:13:18,320 Speaker 2: will be mitigated. So that's another form of tiered pricing. 255 00:13:18,820 --> 00:13:21,010 Speaker 2: There are others which obviously like, you know, if you 256 00:13:21,020 --> 00:13:26,510 Speaker 2: decided to increase the price of chicken and eggs or 257 00:13:26,520 --> 00:13:26,830 Speaker 2: or um 258 00:13:27,330 --> 00:13:33,059 Speaker 2: of cooking oil. Those are probably less conducive to try 259 00:13:33,070 --> 00:13:36,539 Speaker 2: and come up with some fancy system to effect a 260 00:13:36,549 --> 00:13:39,469 Speaker 2: tiered pricing. Those probably if need be, it probably will 261 00:13:39,479 --> 00:13:42,309 Speaker 2: need to be mitigated by some form of cash transfer. 262 00:13:42,320 --> 00:13:46,468 Speaker 2: But one interesting approach which we've piloted in 2023 263 00:13:46,895 --> 00:13:51,255 Speaker 2: we've worked with my K on for, for at least 264 00:13:51,265 --> 00:13:55,905 Speaker 2: for the hardcore poor. We experimented with over 100,000 households 265 00:13:55,914 --> 00:13:59,294 Speaker 2: where they, they got 100 ringgit per month in their 266 00:13:59,304 --> 00:14:01,914 Speaker 2: effectively to their my cards which they can use to 267 00:14:01,924 --> 00:14:05,694 Speaker 2: go to a grocery store to buy basic goods, which 268 00:14:06,125 --> 00:14:08,604 Speaker 2: which I think is another factor that we wanted to 269 00:14:08,614 --> 00:14:10,515 Speaker 2: address in moving to target subsidies. 270 00:14:10,960 --> 00:14:14,390 Speaker 2: You know, one of the experience under T Badawi when 271 00:14:14,400 --> 00:14:17,340 Speaker 2: he floated the price of fuel and compensated through a 272 00:14:17,349 --> 00:14:20,109 Speaker 2: cash transfer was that the problem was that the consumer 273 00:14:20,119 --> 00:14:24,119 Speaker 2: just saw this 600 ringgit commerce vouchers, spent it on 274 00:14:24,130 --> 00:14:26,530 Speaker 2: a phone and then complained the rest of the year. 275 00:14:26,539 --> 00:14:29,590 Speaker 2: Why petrol prices higher? So how do you come back 276 00:14:29,599 --> 00:14:33,169 Speaker 2: to behavioral economics? How do you, how do you associate, 277 00:14:33,669 --> 00:14:37,630 Speaker 2: you know a cash transfer with the higher or or 278 00:14:37,640 --> 00:14:40,940 Speaker 2: rationalized subsidies? That continues to be a challenge whereas it was, 279 00:14:40,950 --> 00:14:42,950 Speaker 2: it was some form of e voucher or system like 280 00:14:42,960 --> 00:14:45,630 Speaker 2: Michael said that obviously helps the linkage. OK. We're 281 00:14:45,640 --> 00:14:46,880 Speaker 1: going to take a short break when we come back. 282 00:14:46,890 --> 00:14:51,109 Speaker 1: We continue our discussions with Johanan Secretary General of Treasury 283 00:14:51,119 --> 00:14:54,409 Speaker 1: Ministry of Finance. Stay tuned to BFM 89.9. You are 284 00:14:54,419 --> 00:14:57,270 Speaker 1: listening to the breakfast grill brought to you by you 285 00:14:57,280 --> 00:15:00,619 Speaker 1: Mobile five G makes business sense. 286 00:15:01,809 --> 00:15:03,900 Speaker 1: Welcome back with me in the studio is Johan Ma 287 00:15:04,049 --> 00:15:07,190 Speaker 1: American Secretary General of Treasury at the Ministry of Finance 288 00:15:07,200 --> 00:15:09,780 Speaker 1: as we unpack the unity government's first full year budget 289 00:15:09,789 --> 00:15:13,099 Speaker 1: for 2024. Now, Johan, let's talk about debt levels. You know, 290 00:15:13,109 --> 00:15:17,059 Speaker 1: while many have found this budget relatively prudent, definitely not 291 00:15:17,070 --> 00:15:20,119 Speaker 1: an election budget laden with goodies. We do have challenges 292 00:15:20,130 --> 00:15:22,700 Speaker 1: for improving our government's public finances. 293 00:15:23,289 --> 00:15:28,390 Speaker 2: Certainly that's the case if you talk about debt combined 294 00:15:28,400 --> 00:15:34,520 Speaker 2: with liabilities already 1.5 trillion. If talk about just debt 295 00:15:34,530 --> 00:15:38,549 Speaker 2: to GDP, we at 63.5% and preco we try to 296 00:15:38,559 --> 00:15:43,909 Speaker 2: keep within a 55% statuary debt limit. And we've articulated 297 00:15:43,919 --> 00:15:47,559 Speaker 2: in our Fiscal Responsibility Act that our medium term goal 298 00:15:47,570 --> 00:15:50,190 Speaker 2: is to bring it down to below 60%. 299 00:15:50,479 --> 00:15:53,419 Speaker 2: But sometimes, you know, you talk about affordability of debt. 300 00:15:53,429 --> 00:15:55,390 Speaker 2: It's not so much the debt to GDP, but more 301 00:15:55,400 --> 00:15:58,270 Speaker 2: really in terms of your debt service cover ratio. And 302 00:15:58,609 --> 00:16:00,239 Speaker 2: you know, for the longest time, even when I first 303 00:16:00,250 --> 00:16:02,460 Speaker 2: joined Ministry of Finance, we've always said that we mustn't 304 00:16:02,469 --> 00:16:05,719 Speaker 2: exceed 15%. And this year alone, we've already had 15, 305 00:16:05,799 --> 00:16:09,739 Speaker 2: 15.2 and next year project to be 16. So certainly 306 00:16:09,940 --> 00:16:13,690 Speaker 2: there's a need to rein in debt and deficits, I 307 00:16:13,700 --> 00:16:17,830 Speaker 2: think for that reason, we have obviously first, the commitment 308 00:16:17,909 --> 00:16:23,640 Speaker 2: for gradual fiscal consolidation from 5.6 in 2022 5% this 309 00:16:23,650 --> 00:16:27,340 Speaker 2: year 4.3% in 2024 with a commitment to below at 310 00:16:27,349 --> 00:16:27,780 Speaker 2: least 311 00:16:27,880 --> 00:16:31,460 Speaker 2: 0.5% in 2025. So that's a commitment to a graduate 312 00:16:31,469 --> 00:16:33,570 Speaker 2: reduction because we need to reach a point where your 313 00:16:33,580 --> 00:16:34,859 Speaker 2: deficit is below your growth 314 00:16:34,869 --> 00:16:37,890 Speaker 1: rate. And this naturally cost discipline is going to be 315 00:16:37,900 --> 00:16:40,299 Speaker 1: key right to make this work. And emoluments is something 316 00:16:40,309 --> 00:16:42,179 Speaker 1: that many are worried about. As you see in this 317 00:16:42,190 --> 00:16:45,000 Speaker 1: budget here, 31% nearly one third of the cost is 318 00:16:45,010 --> 00:16:47,429 Speaker 1: through emoluments. I remember last time you were saying actually, 319 00:16:47,440 --> 00:16:50,010 Speaker 1: it's not the number that counts but really the effectiveness 320 00:16:50,020 --> 00:16:52,460 Speaker 1: and the right ratio, right? One civil servant to about 321 00:16:52,469 --> 00:16:56,320 Speaker 1: 20 citizens. Are we there in actually delivering effective public 322 00:16:56,330 --> 00:16:57,059 Speaker 1: services then? 323 00:16:58,520 --> 00:17:00,429 Speaker 2: So as you quite rightly point out, actually, if you 324 00:17:00,440 --> 00:17:04,750 Speaker 2: take both emoluments, not just far statuary bodies and together 325 00:17:04,760 --> 00:17:08,589 Speaker 2: with pensions, actually, we're at 50% of our operating expenditure. 326 00:17:08,599 --> 00:17:09,550 Speaker 2: So are you implicitly 327 00:17:09,560 --> 00:17:12,390 Speaker 1: adopting progressive policy in the process of this? 328 00:17:13,699 --> 00:17:17,169 Speaker 2: And as you quite like, we, we've moved away from this, 329 00:17:17,180 --> 00:17:22,329 Speaker 2: this is a complete freeze in hiring towards managing the 330 00:17:22,339 --> 00:17:25,040 Speaker 2: civil service numbers in terms of a ratio, the 1 331 00:17:25,050 --> 00:17:28,729 Speaker 2: to 20. Recognizing that whilst perhaps when you look at 332 00:17:28,739 --> 00:17:32,079 Speaker 2: a macro, it might seem that there's room to trim, 333 00:17:32,089 --> 00:17:34,209 Speaker 2: but at the same time, certainly there's still 334 00:17:34,599 --> 00:17:38,180 Speaker 2: greater needs, whether in terms of education, health care. So 335 00:17:38,189 --> 00:17:40,390 Speaker 2: we need to ensure that we manage it in a 336 00:17:40,400 --> 00:17:44,129 Speaker 2: way that does still cater for the needs of the people. 337 00:17:44,140 --> 00:17:47,869 Speaker 2: I think that's also another reason why Prime Minister one 338 00:17:47,880 --> 00:17:50,579 Speaker 2: in terms of focusing on the effectiveness of expenditure, you know, 339 00:17:50,589 --> 00:17:52,119 Speaker 2: the policy has been to 340 00:17:52,670 --> 00:17:55,520 Speaker 2: tender out, you know, there's not been any, there's not 341 00:17:55,530 --> 00:17:58,510 Speaker 2: been any direct negotiated contract in the nature that we've 342 00:17:58,520 --> 00:18:02,599 Speaker 2: had before, even in the urgent flood mitigation projects, those 343 00:18:02,609 --> 00:18:05,169 Speaker 2: were done by what we call a pre qualified tender, 344 00:18:05,180 --> 00:18:08,209 Speaker 2: which which probably accelerates the process. But still at the 345 00:18:08,219 --> 00:18:12,688 Speaker 2: end of the day, it is a tender and going forward, 346 00:18:12,699 --> 00:18:15,439 Speaker 2: you know, we really price is really focusing a lot 347 00:18:15,449 --> 00:18:16,520 Speaker 2: in terms of how can we 348 00:18:16,599 --> 00:18:20,129 Speaker 2: improve in terms of ease of doing business. The Chief 349 00:18:20,140 --> 00:18:24,089 Speaker 2: Secretary Tan has been tasked to hit this initiative called 350 00:18:24,099 --> 00:18:26,919 Speaker 2: Star which tries to see how can we better deliver. 351 00:18:27,069 --> 00:18:32,969 Speaker 2: They've already made inroads in terms of reducing hospital queues 352 00:18:33,060 --> 00:18:35,300 Speaker 2: in terms of, you know, one of the projects which 353 00:18:35,310 --> 00:18:37,530 Speaker 2: the Prime Minister undertook this year. He said, look, he's 354 00:18:37,540 --> 00:18:39,750 Speaker 2: one that's not for skyscrapers. He wants to get the 355 00:18:39,760 --> 00:18:40,459 Speaker 2: basics right. 356 00:18:40,660 --> 00:18:42,680 Speaker 2: And he did this project where he said, let's just 357 00:18:42,719 --> 00:18:44,900 Speaker 2: make sure all the toilets in school are sorted out. 358 00:18:44,910 --> 00:18:47,669 Speaker 2: And with that, when it's focused on one particular item, 359 00:18:47,689 --> 00:18:50,520 Speaker 2: we've had more than 8000 toilets fixed. So it shows 360 00:18:50,729 --> 00:18:52,719 Speaker 2: that the delivery system can 361 00:18:52,729 --> 00:18:54,800 Speaker 1: work quickly. But I think the issue here is that 362 00:18:54,810 --> 00:18:56,900 Speaker 1: it's patchy, right. The delivery, I mean, there's still so 363 00:18:56,910 --> 00:18:59,920 Speaker 1: much complaints that you have the budget but execution is 364 00:18:59,930 --> 00:19:03,680 Speaker 1: still room for improvement. Right? I mean, even just over 365 00:19:03,689 --> 00:19:07,869 Speaker 1: the weekend announcement of another subcomittee budget monitoring committee to 366 00:19:07,880 --> 00:19:10,520 Speaker 1: ensure allocations are well dispersed, so much frustration that, 367 00:19:10,739 --> 00:19:12,510 Speaker 1: you know, the agencies on the ground hardly get the 368 00:19:12,520 --> 00:19:14,709 Speaker 1: money or it takes very very long, right, you're kind 369 00:19:14,719 --> 00:19:16,780 Speaker 1: of begging at the mercies of different ministries. How do 370 00:19:16,790 --> 00:19:18,909 Speaker 1: you improve the implementation process? Then 371 00:19:20,130 --> 00:19:23,339 Speaker 2: I think there has been admittedly some issues this year 372 00:19:23,349 --> 00:19:28,750 Speaker 2: in terms of the implementation of development expenditure projects, perhaps one, 373 00:19:28,760 --> 00:19:32,380 Speaker 2: there was this not say a delayed budget but because 374 00:19:32,390 --> 00:19:34,510 Speaker 2: it was ret February price warrants were a bit slow 375 00:19:34,890 --> 00:19:38,670 Speaker 2: in terms of they now focus towards tendering but 376 00:19:38,969 --> 00:19:43,170 Speaker 2: certainly going forward. You know, the Prime Minister has emphasized 377 00:19:43,239 --> 00:19:45,939 Speaker 2: time and time again, that projects must must must run. 378 00:19:46,069 --> 00:19:48,649 Speaker 2: We at at least at the Ministry of Finance. You know, 379 00:19:48,660 --> 00:19:51,189 Speaker 2: this obviously requires us to ensure that for example, you know, 380 00:19:51,979 --> 00:19:55,468 Speaker 2: allocation warrants are out quickly. We try to facilitate as 381 00:19:55,479 --> 00:19:59,729 Speaker 2: much as possible in terms of procurement flexibilities where it's warranted. 382 00:19:59,739 --> 00:20:02,229 Speaker 2: In addition to that, I think my colleagues in the 383 00:20:02,329 --> 00:20:05,130 Speaker 2: Ministry of Economy, I think really in terms of deciding 384 00:20:05,140 --> 00:20:07,670 Speaker 2: which were the development expenditure projects for 2024 and beyond 385 00:20:07,680 --> 00:20:09,849 Speaker 2: really trying to see what they would deem as chunk 386 00:20:09,880 --> 00:20:12,510 Speaker 2: ready those which were ready to take off. Whereas, you know, 387 00:20:12,520 --> 00:20:15,069 Speaker 2: as you probably recall from your time in government, sometimes 388 00:20:15,079 --> 00:20:16,978 Speaker 2: we have an approved project by even the land has 389 00:20:16,989 --> 00:20:19,060 Speaker 2: not been quite sorted out. So these are some of 390 00:20:19,069 --> 00:20:21,119 Speaker 2: the things that need to be addressed. I'm not saying 391 00:20:21,130 --> 00:20:24,699 Speaker 2: that it's all been addressed, but the focus on implementation is, is, 392 00:20:24,709 --> 00:20:25,550 Speaker 2: is there and, 393 00:20:26,439 --> 00:20:29,079 Speaker 2: and you know, I think it's not unusual to have 394 00:20:29,089 --> 00:20:33,130 Speaker 2: a committee. In fact, if anything it needs when you 395 00:20:33,160 --> 00:20:34,899 Speaker 2: used to be in command and this needs to that 396 00:20:34,910 --> 00:20:39,119 Speaker 2: very rigorous PM O approach in delivering particularly in terms 397 00:20:39,130 --> 00:20:41,339 Speaker 2: of the government and Prime Minister's priorities. And what 398 00:20:41,349 --> 00:20:42,239 Speaker 1: stuck? I think with 399 00:20:42,354 --> 00:20:44,765 Speaker 1: this budget is when you look actually at the development expenditure, 400 00:20:44,775 --> 00:20:47,573 Speaker 1: you don't see all these large mega projects now they 401 00:20:47,584 --> 00:20:50,155 Speaker 1: kind to be smaller nature, this is a nature and 402 00:20:50,165 --> 00:20:53,275 Speaker 1: progression moving forward, right? Actually that moving forward, Malaysia doesn't 403 00:20:53,285 --> 00:20:55,324 Speaker 1: need any of these mega projects or if we do right, 404 00:20:55,334 --> 00:20:58,175 Speaker 1: it's going to be privately financed, moving forward 100%. 405 00:20:59,109 --> 00:21:02,150 Speaker 2: I don't think it's necessarily accurate to say there's no 406 00:21:02,170 --> 00:21:06,630 Speaker 2: big projects, but it's true that Prime Ministers again said that, 407 00:21:06,640 --> 00:21:08,599 Speaker 2: you know, he does not want to be a prime 408 00:21:08,609 --> 00:21:10,949 Speaker 2: minister known for yet another skyscraper and he wants to 409 00:21:10,959 --> 00:21:13,089 Speaker 2: get the basics, right. So for that reason, you know, 410 00:21:13,099 --> 00:21:14,958 Speaker 2: you seem focusing on some of the 411 00:21:15,500 --> 00:21:17,439 Speaker 2: some might say the simple things. But he says these 412 00:21:17,449 --> 00:21:20,479 Speaker 2: are important, you know, getting school toilets fixed and then 413 00:21:20,489 --> 00:21:23,500 Speaker 2: this this coming year, he said he really wants to 414 00:21:23,510 --> 00:21:25,910 Speaker 2: address things like, you know what the public often complains 415 00:21:25,920 --> 00:21:32,649 Speaker 2: about road potholes, social investment clearly. So that certainly is 416 00:21:32,660 --> 00:21:34,410 Speaker 2: one area where he wants to really make sure that 417 00:21:34,420 --> 00:21:36,449 Speaker 2: the basics are done, right? 418 00:21:36,719 --> 00:21:40,310 Speaker 2: But beyond that, there are still major projects being announced. 419 00:21:40,319 --> 00:21:42,719 Speaker 2: You know, the Penang LRT was a commitment to go 420 00:21:42,729 --> 00:21:46,089 Speaker 2: to the mainland. You know, there's a Saba in Saba, 421 00:21:46,599 --> 00:21:49,139 Speaker 2: the flood mitigation projects which are going to be awarded 422 00:21:49,150 --> 00:21:50,859 Speaker 2: by the end of this year, you know, 11 billion. 423 00:21:51,050 --> 00:21:54,579 Speaker 2: So they're not small projects by by any means. 424 00:21:55,084 --> 00:21:58,155 Speaker 1: I think what's also interesting is huge budgets for health 425 00:21:58,165 --> 00:22:00,274 Speaker 1: and education going forward, right? How are we going to 426 00:22:00,285 --> 00:22:03,125 Speaker 1: make sure that it hits actually the intended targets? Right, 427 00:22:03,135 --> 00:22:07,175 Speaker 1: because it was meant to be eventually hitting close to 5% 428 00:22:07,185 --> 00:22:09,694 Speaker 1: of GDP. We are heading in the right direction. But 429 00:22:09,704 --> 00:22:13,073 Speaker 1: is there a different implementation mechanism for these huge budgets 430 00:22:13,084 --> 00:22:17,343 Speaker 2: there? Health Ministry as you know, is the largest increase 431 00:22:17,354 --> 00:22:19,563 Speaker 2: in months. And I think that's an important 432 00:22:19,780 --> 00:22:23,060 Speaker 2: as we transition to a post COVID where we need 433 00:22:23,069 --> 00:22:25,839 Speaker 2: to shift as what articulated the health white paper moving 434 00:22:25,849 --> 00:22:29,420 Speaker 2: away from this treatment towards prevention in primary health care. 435 00:22:29,430 --> 00:22:32,629 Speaker 2: So hence the need to ensure that health care or 436 00:22:32,640 --> 00:22:35,079 Speaker 2: public health care is restructured. But you know, in addition 437 00:22:35,089 --> 00:22:36,739 Speaker 2: to that. It's also trying to see how can we 438 00:22:36,750 --> 00:22:39,800 Speaker 2: also better optimize on the entire healthcare system including 439 00:22:39,885 --> 00:22:42,395 Speaker 2: private health care. And that's why you see elements of 440 00:22:42,586 --> 00:22:45,336 Speaker 2: what we did in COVID is decanting to private sector. 441 00:22:45,345 --> 00:22:47,696 Speaker 2: There also things which will be continued in terms of 442 00:22:47,705 --> 00:22:52,176 Speaker 2: optimizing the scheme, Madani beverages on the network of private gps. 443 00:22:52,286 --> 00:22:55,526 Speaker 2: So again, how do you then really deliver on the 444 00:22:55,765 --> 00:22:58,046 Speaker 2: right in terms of health care overall? 445 00:22:58,296 --> 00:22:59,906 Speaker 1: All right, on today's extended breakfast. 446 00:23:00,271 --> 00:23:02,991 Speaker 1: I have the pleasure of speaking to Johan American Secretary 447 00:23:03,001 --> 00:23:06,371 Speaker 1: General of Treasury at the Ministry of Finance on budget 2024. 448 00:23:06,452 --> 00:23:09,052 Speaker 1: After the 8:30 a.m. news bulletin, we shift our attention 449 00:23:09,061 --> 00:23:12,890 Speaker 1: to the resilience of budget 2024. Stay tuned to BFM 89.9. 450 00:23:13,311 --> 00:23:16,081 Speaker 1: You are listening to the breakfast grill brought to you 451 00:23:16,092 --> 00:23:19,962 Speaker 1: by you Mobile five G makes business sense. 452 00:23:20,680 --> 00:23:22,619 Speaker 1: Welcome back today on the morning run to help us 453 00:23:22,630 --> 00:23:26,170 Speaker 1: unpack budget 2024 in more detail and to share his perspective, 454 00:23:26,199 --> 00:23:28,708 Speaker 1: we have the immense pleasure of speaking to that Johan 455 00:23:28,719 --> 00:23:31,639 Speaker 1: Mahmud Merian who is the Secretary General of Treasury at 456 00:23:31,650 --> 00:23:34,160 Speaker 1: the Ministry of Finance Johan. I'm not joking. It is 457 00:23:34,170 --> 00:23:35,619 Speaker 1: an immense pleasure. Thank you. 458 00:23:35,630 --> 00:23:36,420 Speaker 2: Thank you so much. 459 00:23:37,310 --> 00:23:39,879 Speaker 1: Now, just focus on one key item in the budget 460 00:23:39,890 --> 00:23:43,050 Speaker 1: that really caught my attention, which was this clear, reduced 461 00:23:43,060 --> 00:23:46,448 Speaker 1: reliance on patronizes dividend now only at 32 billion ring 462 00:23:46,500 --> 00:23:49,400 Speaker 1: it right? And so really also with a potentially reduce 463 00:23:49,410 --> 00:23:52,119 Speaker 1: subsidized bill, subsidy bill as well. I want to get 464 00:23:52,130 --> 00:23:56,910 Speaker 1: your thoughts right. Was this reduction of the patron division dividend? 465 00:23:56,920 --> 00:24:01,389 Speaker 1: A result of youth of patron channeling a large sum 466 00:24:01,400 --> 00:24:03,430 Speaker 1: to the Sarawak state government to set up their own 467 00:24:03,439 --> 00:24:04,290 Speaker 1: sovereign wealth fund? 468 00:24:05,569 --> 00:24:08,040 Speaker 2: Well, thank you for that question. I think first, it's 469 00:24:08,050 --> 00:24:13,030 Speaker 2: really important to recognize the importance of reducing our reliance on, 470 00:24:13,150 --> 00:24:16,770 Speaker 2: on oil revenues. And so as you quite rightly pointed 471 00:24:16,780 --> 00:24:20,079 Speaker 2: out in 2022 we had dividends of 50 billion, we 472 00:24:20,160 --> 00:24:22,880 Speaker 2: reduce that this year to 40 billion. And our target 473 00:24:22,890 --> 00:24:27,540 Speaker 2: for next year is 32 billion. I think the reason 474 00:24:27,550 --> 00:24:28,510 Speaker 2: why it's important 475 00:24:28,680 --> 00:24:32,310 Speaker 2: to achieve perhaps a sustainable level of dividends. It is 476 00:24:32,319 --> 00:24:35,599 Speaker 2: not just in terms of government's fiscal position, but in 477 00:24:35,609 --> 00:24:38,609 Speaker 2: terms of patronage, they also need to play an important 478 00:24:38,619 --> 00:24:42,959 Speaker 2: role in investing in expanding the activities, not just in 479 00:24:42,969 --> 00:24:46,129 Speaker 2: terms of their core activities, but also in terms of 480 00:24:46,140 --> 00:24:49,849 Speaker 2: their green agenda. So as you probably aware, in terms 481 00:24:49,859 --> 00:24:51,790 Speaker 2: of Gena, you announce that you know 482 00:24:51,890 --> 00:24:56,919 Speaker 2: their commitments in terms of investing in renewables, even in 483 00:24:56,930 --> 00:25:00,069 Speaker 2: terms of ammonia, hydrogen, I think one area which has 484 00:25:00,079 --> 00:25:03,199 Speaker 2: proven to be a good area of collaboration with the 485 00:25:03,520 --> 00:25:05,819 Speaker 2: state government is in terms of, you know, how do 486 00:25:05,829 --> 00:25:08,688 Speaker 2: we then explore the potential for hydrogen? How do we 487 00:25:08,699 --> 00:25:12,250 Speaker 2: also in terms of cc in terms of carbon capture, 488 00:25:12,260 --> 00:25:14,760 Speaker 2: capture and storage? I think it's important patron, 489 00:25:15,229 --> 00:25:19,670 Speaker 2: a fortune 500 organization to really ensure that its portfolio 490 00:25:19,680 --> 00:25:23,099 Speaker 2: is moves towards you. So your 491 00:25:23,290 --> 00:25:25,790 Speaker 1: answer suggest that it's actually a mixture of both, right? 492 00:25:25,800 --> 00:25:28,510 Speaker 1: I mean, there is a reduced dividend partly to reinvest 493 00:25:28,520 --> 00:25:30,689 Speaker 1: and a lot of that reinvestment is in Sarawak. Is 494 00:25:30,699 --> 00:25:32,879 Speaker 1: that fair that when you think about the channeling of 495 00:25:32,890 --> 00:25:36,510 Speaker 1: the funds, it actually is still with patrons to reinvest 496 00:25:36,699 --> 00:25:38,469 Speaker 1: but mostly in Sarawak. Then 497 00:25:40,150 --> 00:25:42,619 Speaker 2: I think, I think you need to probably get the 498 00:25:42,630 --> 00:25:45,609 Speaker 2: details from, from from better us. But certainly the agenda 499 00:25:45,619 --> 00:25:51,629 Speaker 2: is to invest domestically to really also contribute towards growing 500 00:25:51,640 --> 00:25:54,569 Speaker 2: of economy, creating of jobs and particularly in terms of 501 00:25:54,579 --> 00:25:57,800 Speaker 2: some of these downstream areas. But the green agenda certainly 502 00:25:57,810 --> 00:26:00,650 Speaker 2: is nationwide. I think that's something that we certainly look 503 00:26:00,660 --> 00:26:04,849 Speaker 2: forward to them contributing towards the agenda, particularly articulated in 504 00:26:04,859 --> 00:26:07,599 Speaker 2: our energy transition road map. But it's not just Malay, 505 00:26:07,910 --> 00:26:11,229 Speaker 2: you know, patron is Fortune 500 is a global organization. 506 00:26:11,369 --> 00:26:13,489 Speaker 2: There are also areas where they also need to invest 507 00:26:13,589 --> 00:26:18,560 Speaker 2: globally in terms of also ensuring that sustainability and diversification 508 00:26:18,569 --> 00:26:19,659 Speaker 2: of their revenue base. 509 00:26:19,670 --> 00:26:21,439 Speaker 1: Yeah, I mean, it's very clear, right? This budget is 510 00:26:21,449 --> 00:26:23,969 Speaker 1: a very green budget. It's a very clear green agenda. 511 00:26:23,979 --> 00:26:27,510 Speaker 1: 11 sees the whole litany of incentives that came out 512 00:26:27,800 --> 00:26:31,300 Speaker 1: lots of carrots but not enough sticks in my view, right? 513 00:26:31,310 --> 00:26:33,829 Speaker 1: When will we start thinking about putting sticks like carbon 514 00:26:33,839 --> 00:26:34,909 Speaker 1: tax in place 515 00:26:35,500 --> 00:26:39,419 Speaker 2: again? You know, it's yes many of us about carbon tax, 516 00:26:39,430 --> 00:26:42,680 Speaker 2: but we effectively have a negative carbon tax to subsidies. 517 00:26:42,689 --> 00:26:44,959 Speaker 2: So I think the important thing is really to address 518 00:26:44,969 --> 00:26:48,239 Speaker 2: the electricity subsidy, the diesel subsidy, petrol subsidies. I think 519 00:26:48,250 --> 00:26:50,599 Speaker 2: those are the first step before we we're talking about 520 00:26:50,609 --> 00:26:51,400 Speaker 2: carbon tax. But 521 00:26:51,609 --> 00:26:53,670 Speaker 2: as you quite rightly pointed out, there are a lot 522 00:26:53,680 --> 00:26:56,189 Speaker 2: of things announced on the green gender. And I think 523 00:26:56,199 --> 00:26:59,430 Speaker 2: it's so important to highlight how this budget is not 524 00:26:59,439 --> 00:27:02,479 Speaker 2: just about allocations. It also has a series of reforms 525 00:27:02,489 --> 00:27:05,339 Speaker 2: and one of the important reforms identified in terms of 526 00:27:05,349 --> 00:27:09,339 Speaker 2: how en intends to improve on its third party access. 527 00:27:09,349 --> 00:27:12,119 Speaker 2: And also in terms of also loosening up in terms 528 00:27:12,130 --> 00:27:17,188 Speaker 2: of its nn meeting to ensure that it does facilitate 529 00:27:17,199 --> 00:27:21,150 Speaker 2: more private sector investment in energy transition. 530 00:27:21,680 --> 00:27:24,609 Speaker 1: But I think still the debate here is you know, 531 00:27:24,619 --> 00:27:26,560 Speaker 1: when you see so many moving parts, right, all the 532 00:27:26,569 --> 00:27:29,530 Speaker 1: big big ticket items still to help assure our public 533 00:27:29,540 --> 00:27:31,810 Speaker 1: finances is still there, right? We have to get the 534 00:27:31,819 --> 00:27:35,810 Speaker 1: subsidies rationalized next year in some phase. Then you think 535 00:27:35,819 --> 00:27:38,389 Speaker 1: about putting in place the GST and then we have 536 00:27:38,400 --> 00:27:40,650 Speaker 1: carbon tax once you get that normalized, right? 537 00:27:40,939 --> 00:27:43,109 Speaker 1: I think the question in my mind is look, it 538 00:27:43,119 --> 00:27:46,000 Speaker 1: sounds like 2024 budget is a stepping stone to a 539 00:27:46,010 --> 00:27:48,879 Speaker 1: bigger road map. When will we see clarity about that 540 00:27:48,890 --> 00:27:51,810 Speaker 1: bigger road map right towards getting to that number? And 541 00:27:51,819 --> 00:27:54,439 Speaker 1: when do these timelines come into place? Because I think 542 00:27:54,449 --> 00:27:56,430 Speaker 1: that's what we all want to see, right? We appreciate 543 00:27:56,439 --> 00:27:59,500 Speaker 1: the short term efforts here, but this has to lead 544 00:27:59,510 --> 00:28:00,629 Speaker 1: to a bigger picture, right? 545 00:28:01,109 --> 00:28:03,290 Speaker 2: In some respects. I think that's as you, as we 546 00:28:03,300 --> 00:28:06,989 Speaker 2: started off this interview, the Prime Minister first laid out 547 00:28:07,000 --> 00:28:09,979 Speaker 2: the economy Madani framework which sets out a medium term 548 00:28:10,209 --> 00:28:12,459 Speaker 2: and it was very important for Prime Minister also set 549 00:28:12,469 --> 00:28:16,629 Speaker 2: out very holistic framework. You know, it perhaps in the 550 00:28:16,640 --> 00:28:18,569 Speaker 2: past you'd be very familiar with new model. A lot 551 00:28:18,579 --> 00:28:21,989 Speaker 2: of emphasis was let's get to the US GNI 15,000 552 00:28:22,099 --> 00:28:24,310 Speaker 2: per capita. You notice Prime Minister has taken an approach 553 00:28:24,319 --> 00:28:27,500 Speaker 2: where it's not just about growing income, it's about competitiveness, 554 00:28:27,510 --> 00:28:31,000 Speaker 2: it's about social targets, it's also about governance targets, you know, 555 00:28:31,010 --> 00:28:33,199 Speaker 2: so primary has set out this. So we say a 556 00:28:33,209 --> 00:28:36,800 Speaker 2: holistic frame of where he sees the country heading. And 557 00:28:36,810 --> 00:28:40,619 Speaker 2: as you rightly pointed out, budget 2024 is really seen 558 00:28:40,630 --> 00:28:42,630 Speaker 2: as you use the word stepping. So, but I see 559 00:28:42,640 --> 00:28:43,199 Speaker 2: it as really 560 00:28:43,680 --> 00:28:47,969 Speaker 2: a very credible commitment to those framework that he's announced. 561 00:28:47,979 --> 00:28:51,640 Speaker 2: So at least it's seeded with various reforms. So in 562 00:28:51,650 --> 00:28:54,050 Speaker 2: terms of whether it's fiscal reform, you got the Fiscal 563 00:28:54,060 --> 00:28:57,920 Speaker 2: Responsibility Act, you talk about targeted subsidies in terms of 564 00:28:57,930 --> 00:28:59,959 Speaker 2: even some of the institutional reform we're talking about in 565 00:28:59,969 --> 00:29:04,079 Speaker 2: the consolidation of GLC S. There's even you know, administration 566 00:29:04,089 --> 00:29:05,609 Speaker 2: proceeding of Freedom of Information 567 00:29:05,880 --> 00:29:09,630 Speaker 2: Act, there's also a key part about empowerment and in 568 00:29:09,640 --> 00:29:12,250 Speaker 2: terms of being open for business. You know, there's reforms 569 00:29:12,260 --> 00:29:14,709 Speaker 2: in terms of even on immigration, that's normally something that 570 00:29:14,790 --> 00:29:17,390 Speaker 2: many don't want to touch with you talking about visa 571 00:29:17,400 --> 00:29:19,739 Speaker 2: and arrivals. So the Middle East China and India is 572 00:29:19,750 --> 00:29:23,290 Speaker 2: even talking about mm two H being even the implementation 573 00:29:23,300 --> 00:29:25,189 Speaker 2: of this multitude levy which have been talking a long 574 00:29:25,199 --> 00:29:26,099 Speaker 2: time as also 575 00:29:26,194 --> 00:29:29,114 Speaker 2: another stepping stone towards providing, I'm not sure that's seen 576 00:29:29,125 --> 00:29:31,755 Speaker 2: as a stick in your parlance. But this is where 577 00:29:31,824 --> 00:29:35,285 Speaker 2: if an employer that employs more foreign workers, they would 578 00:29:35,295 --> 00:29:38,114 Speaker 2: then be imposed a higher foreign levy and that extra 579 00:29:38,125 --> 00:29:40,694 Speaker 2: revenue we're committing to them saying that's not just to 580 00:29:40,704 --> 00:29:43,594 Speaker 2: add to our coffers but actually to be used for 581 00:29:43,604 --> 00:29:46,395 Speaker 2: industry to then reinvest in automation or training. 582 00:29:46,709 --> 00:29:49,729 Speaker 1: And so, ok, there are a lot of initiatives here. 583 00:29:49,739 --> 00:29:53,209 Speaker 1: I wonder when you construct this budget, right? How do 584 00:29:53,219 --> 00:29:55,930 Speaker 1: you build resilience into this budget? How do you make 585 00:29:55,939 --> 00:29:59,880 Speaker 1: sure that we can withstand another economic shock? The question 586 00:29:59,890 --> 00:30:01,869 Speaker 1: in my mind is that in view that really if 587 00:30:01,880 --> 00:30:03,890 Speaker 1: you look at our public finances, we are close to 588 00:30:03,900 --> 00:30:04,770 Speaker 1: even the limits as 589 00:30:04,875 --> 00:30:08,814 Speaker 1: established in the Fiscal Responsibility Act. Can we take in 590 00:30:08,824 --> 00:30:11,444 Speaker 1: another fiscal shock? Right? I think that's the worry for 591 00:30:11,454 --> 00:30:14,694 Speaker 1: many people because this looks like we assume that the 592 00:30:14,704 --> 00:30:16,744 Speaker 1: economy is going to humdrum, we're going to have 4% 593 00:30:16,755 --> 00:30:19,094 Speaker 1: even though there's going to be likely an economic recession 594 00:30:19,104 --> 00:30:22,935 Speaker 1: next year. How resilient are we in managing external shocks. 595 00:30:23,609 --> 00:30:27,150 Speaker 2: But I think it's exactly for that reason that the 596 00:30:27,160 --> 00:30:30,410 Speaker 2: government is committed to fiscal reform, bringing it down its 597 00:30:30,420 --> 00:30:34,239 Speaker 2: deficit towards the 3%. In addition to that, you know, 598 00:30:34,250 --> 00:30:37,119 Speaker 2: even the fact of reducing dividends that also gives us 599 00:30:37,130 --> 00:30:40,829 Speaker 2: that cushion in terms of a future potential shock. But 600 00:30:40,839 --> 00:30:42,880 Speaker 2: another lesson that we've learned from the COVID crisis is 601 00:30:42,890 --> 00:30:46,410 Speaker 2: the importance of ensuring the strengthening of the social protection system. 602 00:30:46,420 --> 00:30:48,650 Speaker 2: You know, we saw that during the COVID crisis, how 603 00:30:48,660 --> 00:30:51,099 Speaker 2: those were not covered by whether 604 00:30:51,189 --> 00:30:54,239 Speaker 2: so or EPF you know, certainly bought the brunt of 605 00:30:54,250 --> 00:30:57,040 Speaker 2: the crisis. So you do see continued measures in terms of, 606 00:30:57,050 --> 00:31:00,810 Speaker 2: for example, so so expanding or promoting the informal sector, 607 00:31:00,819 --> 00:31:04,199 Speaker 2: the gig riders government giving 90% subsidy for those who 608 00:31:04,209 --> 00:31:07,040 Speaker 2: are gig riders to subscribe to sock. So we see 609 00:31:07,050 --> 00:31:09,709 Speaker 2: also the increase in terms of the ceiling from 5 610 00:31:09,719 --> 00:31:14,579 Speaker 2: to 6000 to enhance the coverage for so, so KWS 611 00:31:15,140 --> 00:31:18,010 Speaker 2: is announcing measures like introducing a flexible account also to 612 00:31:18,020 --> 00:31:18,849 Speaker 2: allow for the 613 00:31:19,060 --> 00:31:23,270 Speaker 2: shocks. And we also try to corporate to support like 614 00:31:23,280 --> 00:31:25,910 Speaker 2: even a measure like the our JK P. You know, 615 00:31:26,000 --> 00:31:29,489 Speaker 2: it's where we provide a 10 billion guarantee to enable 616 00:31:29,500 --> 00:31:31,910 Speaker 2: especially those who don't have fixed income to be able 617 00:31:31,920 --> 00:31:34,770 Speaker 2: to get access to finance institutions. So we're trying to 618 00:31:34,780 --> 00:31:38,030 Speaker 2: build not just in terms of resilience in terms of 619 00:31:38,040 --> 00:31:42,550 Speaker 2: the fiscal position, but also ensuring terms of the Social 620 00:31:42,560 --> 00:31:46,550 Speaker 2: Protection system also better caters for future shocks. 621 00:31:46,880 --> 00:31:48,729 Speaker 1: All right. On the breakfast grill today, I have the 622 00:31:48,739 --> 00:31:52,479 Speaker 1: pleasure of speaking to Johan American Secretary General of Treasury 623 00:31:52,489 --> 00:31:54,609 Speaker 1: and the Ministry of Finance. As we have a wide, 624 00:31:54,619 --> 00:31:59,319 Speaker 1: wide ranging conversation on budget 2024. I'm Philip CBFM. 89.9 625 00:31:59,569 --> 00:32:03,020 Speaker 1: the BFM breakfast grill brought to you by you Mobile 626 00:32:03,030 --> 00:32:05,770 Speaker 1: five G Makes Business Sense. 627 00:32:07,180 --> 00:32:11,300 Speaker 1: You have been listening to a podcast from BFM 89.9 628 00:32:11,310 --> 00:32:14,280 Speaker 1: the business station for more stories of the same kind. 629 00:32:14,290 --> 00:32:15,839 Speaker 1: Download the BFM app.