A revised budget should be the right course of action
Posted October 30, 2008on:
What the Pakatan Rakyat has said all along finally got into the head of Umno-BN? But Umno-BN can no longer be trusted to implement anything now for the best interest of the people…they just want to stay in power to finish off the nation’s riches…unless something else enters their head…justice for all people and at all times – no ISA/OSA with freedom to express, assemble, to give alternative views…fair coverage in mass media…freedom of information…clean up SPR, and the rest of the government machinery…converging to a transparent government and governance of the country
|Economists: Fall in oil prices, gov’t should revise budget|
|Beh Lih Yi | Oct 29, 08 5:17pm|
|Is there any immediate risk of the government running out of money?
This question is increasingly being raised as the government’s revenue estimation in Budget 2009 may be significantly affected by the plunge in global oil prices.
In Budget 2009, tabled on Aug 29 by then finance minister and premier Abdullah Ahmad Badawi, the government had used US$125 per barrel as the benchmark to estimate the revenue it would earn from sales of crude oil.
However, global oil prices have since dropped by half – to about US$65 per barrel – and this is expected to adversely affect the government’s income as over 40 percent of the federal budget comes from state-owned oil company Petronas.
Economist Lim Teck Ghee, who is director of think-tank Centre for Policy Initiatives, said the government would run a “great risk” of running out of money if the global economic meltdown is prolonged.
“Government revenue will fall drastically if the recession continues for a few years. Not only would Budget 2009 have to be revised but the entire Ninth Malaysia Plan will have to be reviewed,” he told Malaysiakini.
Lim urged the finance minister to immediately revise the budget by taking into account the fall in oil revenue, which contributes close to half the national revenue.
The government’s basis for projected oil revenue in Budget 2009 appears to have been a misjudgement.
Unlike Malaysia, the world’s largest oil producer, Saudi Arabia, had used oil prices of US$65 per barrel in planning next year’s budget.
Given the global economic slowdown, most economists do not expect oil prices to go beyond US$100 per barrel anytime soon.
‘Revise Budget figures’
Another economist, Dr Yeah Kim Leng, argued that it is crucial for the government to slash its spending as announced by Abdullah yesterday.
Abdullah said that all ministries would be required to put on hold all non-essential projects.
“It’s not an issue of running out of money. It’s either the fiscal deficit will increase or the government will have to reduce its spending and look for new resources,” the chief economist of rating agency Ram Holdings Bhd said when contacted.
“The impact will not be that great because the amount of the oil subsidy (the government pays) will be much less (when the world oil price drops) – there are some compensating elements,” he noted.
Citing the example of Abdullah’s decision to put on hold the RM1.7 billion Eurocopter deal, Yeah said it was essential for the government to cut down its expenditure.
He echoed Lim’s statement that the government should re-examine its spending in Budget 2009 or the fiscal deficit would balloon.
The opposition has called on the government to table a new budget to take into consideration the fall in oil prices and the global economic crisis.
|Audit underway into PKFZ scandal|
|Kuek Ser Kuang Keng | Oct 29, 08 10:46am|
|International accounting firm PricewaterhouseCoopers (PWC) has begun auditing the controversial government ‘soft loan’ provided to Port Klang Free Zone (PKFZ), among other contentious issues.
Port Klang Authority (PKA) chairperson Lee Hwa Beng told Malaysiakini that a six-member team led by a PWC senior manager has been conducting the probe.
“Auditing started this month and is expected to be completed by year’s end. Whether or not the report will be made public will be decided by the transport minister,” he said.
He said the audit team has been given authority to interview all current and former staff members as well as board members. Letters have been sent to all relevant parties and individuals involved in the probe.
“We hope everyone will cooperate with the auditors,” Lee said.
He also said the appointment of an international audit firm is to build confidence that the probe is being conducted by an independent entity.
On why auditing has been delayed – when an announcement on this had been made in May – he attributed it to procedural requirements.
“PKFZ engaged the services of PWC by direct appointment instead of calling an open tender, he said. As such, approval had to be subsequently sought from the Finance Ministry.
The audit exercise was announced by Transport Minister Ong Tee Keat, following a public outcry over a RM4.6 billion ‘soft loan’ given by the government.
Ong said details of repayment would be properly audited and disclosed at the appropriate time, to avoid any misconception of a government bailout.
The project came to public attention after news reports raised issues linked to land acquisition and questioned if the project would become a ‘white elephant’.
PKFZ, owned by PKA, was conceptualised as a regional hub for export and transhipment of manufactured goods costing RM1.85 billion. But the cost rose to RM4.6 billion by the time the project was completed.
‘Business picking up’
On PKFZ’s performance, Lee claimed that business has picked up. Since May, proceeds from annual rental have doubled from RM7 million to RM15 million.
“Besides operating the port, our job is to get more tenants to occupy the industrial buildings in PKFZ,” he said.
Lee and new general manager Lim Thean Shiang were appointed to the PKA in April.
Ong had entrusted Lee with appointing the auditor and to assist the parliamentary Public Accounts Committee (PAC) should the latter conduct a probe.
Lee, however, said there has not been any follow-up on the matter by the PAC since he took over the post