Selangor Journal
The Selangor State Secretariat Building in Shah Alam. — Picture by SELANGOR.GOV.MY

Hopes for a brave, resilient #Selangor2022 budget

By Alang Bendahara

AS Malaysia reemerges from the Covid-19 shroud, the Golden State of Selangor prepares to present a post-pandemic 2022 Budget slated for tabling at the State Legislative Assembly on Nov 26. In anticipation of this, Selangor Journal speaks to an academician and an economist on the formula that has previously worked, and on what to expect from Malaysia’s economic powerhouse.

Business development manager and Associate Professor Dr Ahmed Razman Abdul Latiff from the Putra Business School thinks Selangor should have multiple areas of focus in its upcoming budget.

“The budget focus should be on several areas, such as in ensuring that no individual or group is left out from receiving Covid-19 related assistance, kickstarting the state economy by ensuring a smooth recovery process especially for micro and small- and medium-entrepreneurs (SMEs) and embarking on attracting sustainable investments to
the state,” he said.

Ahmed Razman added that the state should also be more aggressive in creating more opportunities for its citizens to embrace new economies. The digital economy, the Industrial Revolution 4.0 and other creative industries must be explored.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the Selangor government should maintain its expansionary stand in order to allow a more consistent economic recovery going into 2022 and beyond.

“It would be wise to maintain an expansionary fiscal policy as the economic recovery is still preliminary and vulnerable to any shocks. At the moment, there seems to be a concern on rising inflationary pressures following the supply bottleneck globally,” he said.

The people’s wishlist

Afzanizam said what the people want are cash transfers, business grants and microfinancing.

He said these will continue to be relevant as Selangor citizens, especially those who are still reeling from Covid-19, are still highly dependent on assistance for their own recovery.

Putra Business School Business development manager and Associate Professor Dr Ahmed Razman Abdul Latiff. — Picture by Putra Business School

“Beyond financial aid, skills upgrading via training as well as job matching are also critically important as capacity building is always good for long-term benefits,” he added.

Ahmed Razman agreed that the Selangor people want more upskilling and reskilling opportunities to get higher paying jobs since the cost of living keeps increasing each year.

He said there is a concern that the urban poor population is increasing, as well as the income gap between those living in urban and rural areas.

“Therefore, attracting the right kind of investment is very important, as the state can no longer depend on its labour-intensive manufacturing industry. Focus should now be on the services-based industry and possibly the agro-food industry that specialises in urban farming.

“If the state government can attract this kind of investment and embark on these types of industries, the rakyat will be able to increase their income through high skilled and high paying jobs,” he said.

A digital future

Afzanizam said the state’s focus on digitalisation should be continued as it is here for the long haul.

“Several areas that will always be the mainstay in respect to digitalisation are the ownership of smart devices, affordability in internet subscription, and data speed and coverage,” he said.

Ahmed Razman said digitalisation is very much relevant as a report by the United Nations titled ‘World Digital Economy Report 2021’ highlighted that digitalisation is being embraced by all the world’s economies.

“In order to attain competitveness and improve communications and networking within the states in the country, digitalisation should remain the main focus or thrust in next year’s budget,” he said

The right focus

The Selangor Menteri Besar, Dato’ Seri Amirudin Shari, has said that the 2022 Budget will focus on increasing the state’s revenue, on education and also initiatives to assist those affected by Covid-19.

Ahmed Razman said it is wise for Selangor to make that focus.

“The state should continue to allocate aid packages to help micro and SMEs to grow. It is important to continue to assist them as it takes time for a business to start generating revenue like before.

“Emphasis should be given to the kind of assistance that will ensure the sustainability of the businesses instead of a one-off assistance,” he said.

On revenue matters, Afzanizam said the state’s income will be closely correlated with the GDP (Gross Domestic Product) growth.

“Given the improvement in global trade, Selangor will stand to benefit and eventually be able to collect more taxes,” he said.

As for education, he commended Selangor’s focus on entrepreneurship training.

“More training on entrepreneurship should be encouraged, especially when digitalisation is at the forefront of every business now.”

Afzanizam also said grants and microfinancing will help these micro and SMEs to navigate their business, especially in areas relating to working capital.

“Given the improvement in global trade, Selangor will stand to benefit and eventually be able to collect more taxes,” he said.

Checks and balances

Both experts agreed that the budget must concentrate on providing aid to those whose livelihood is affected by Covid-19.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid. — Picture via FACEBOOK

“The welfare programmes should be continued as there are many people in need of assistance and the number of unemployment is still high.

“However, there should be more collaborative efforts between the state government, private sectors, non-governmental organisations, trade associations and individuals,” said Ahmed Razman.

As for Afzanizam, he thinks the state government should reevaluate some of its welfare programmes.

“It also makes sense to assess the recipients of financial aid this year and how they will fare next year.

He highlighted that the state’s method of providing aid using income level as a gauge may be a problem as it may not represent a true picture of the recipient’s financial situation.

“The point is, we have to be granular in assessing the recipients’ background in order to avoid wastage and leaks,” he added

A sustainable budget

As of Sept 30, 2021, Selangor has recor#Selangor2022 ded RM1.79 billion in revenue collection or 81.48 per cent of its target of RM2.2 billion this year.

To date, approximately RM819.57 million or 67.18 per cent has been spent on management, while development expenditure amounts to 47 per cent or RM523.45 million. The additional cash on the books is estimated to be RM449.15 million.

Both Ahmed Razman and Afzanizam said the state did right in its handling of the economy during a very challenging period.

“This is good fiscal management by the state government, given the fact that a big part of 2021 was spent under restricted conditions and an economic recession,” said Ahmed Razman.

He is confident that the 2022 Selangor Budget will continue to be people and business friendly.

“I hope that the budget will be a sustainable and a brave one, meaning that the government
will be willing to explore more new economies to diversify and generate more income next
year,” he said.

As for Afzanizam, he said the good fiscal performance is not surprising as Selangor
is the largest GDP contributor to the country and therefore, its performance would
mimic the national level.

“Judging from such numbers, the Selangor government has the financial muscle to prescribe an expansionary budget. The way I see it, it has what it takes to grow further, well into next year and beyond.”

 

This article first appeared in the Selangor Journal monthly November edition, published on November 1, 2021.

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