Budget 2024 faces criticism for missing economic targets

SHAH ALAM - Budget 2024 is slammed for its misalignment with economic targets and a lack of details on certain programmes, including funding for Technical and Vocational Education and Training (TVET) and the gig-economy training allowance, according to an economist.

University of Science and Technology Provost for Research and Innovation Professor Geoffrey Williams raised concerns about transparency and effectiveness.

"The RM44 billion allocated for finance and loans to micro-enterprises may not be useful as very small businesses tend to resist taking on loans.

"I do not expect these schemes to be effective; they appear more like avenues for channeling funds to intermediaries rather than micro-enterprises," he told Sinar Daily.

Williams pointed out that the financial assistance programmes for micro, small, and medium enterprises (MSMEs) suffer from restrictive conditions and target specific groups like youths, women, and ethnic communities, which have been in place for a long time without significant results.

On venture capital (VC) incentives, Williams argued that only high-value projects are likely to benefit, but equity stakes may be expected in return.

This condition poses risks and may discourage start-ups from staying in the country.

Additionally, Williams rebuked the RM40 million allocated for the Shop Malaysia Online programme, suggesting that it appears to favor specific website or application designers, making the selection process unclear. He also questioned the RM27 million Buy Malaysia campaign's transparency and suggested that it may serve as pre-awarded compensation for marketing and branding agents.

While the reforms for Development Finance Institutions were deemed interesting, Williams requested more details to assess their impact.

"There is a need for reforms to improve their performance, eliminate duplication, and enhance investment returns," he said.

Williams also raised concerns about TVET funding, saying that the allocated RM6.8 billion seems to be insignificant value.

"The RM100 million allocated for TVET certification unnecessary, as similar certifications are already widely available," he said.

He also denounced the allocation of RM1.6 billion by the Human Resources Development Corporation (HRD Corp) to train 1.7 million people, considering it insufficient to provide quality training.

The economist noted that the gig-economy training allowance, with RM35 million allocated for 9,000 people, is more generous but questioned its efficiency.

Williams also expressed disappointment with the allocation of RM180 million for TVET loans, suggesting that the amount may not provide quality training and may instead benefit TVET center owners.

Similarly, the RM17 million tahfiz TVET programme was criticised for potentially channeling funds to institution owners rather than students.

Williams questioned the RM2 billion in government spending and RM200 billion in loans for carbon reduction, urging the need for details on expected benefits.

He also highlighted significant tax incentives for Electric Vehicles (EVs) and EV infrastructure, suggesting that these incentives may be necessary but could have been achieved without government support.

While he welcomed the increase in cash payments to Rahmah to RM10 billion, Williams considered it insufficient for robust social protection.

He also raised concerns about the allocation of RM2.4 billion for the social welfare department, which equates to RM440 per month for the poorest and most vulnerable individuals, signaling limited improvements in social protection.

On education, Williams questioned the allocation of RM2.5 billion for 26 new schools, which he considered costly compared to allocations for special education blocks and preschools.

Despite his critiques, Williams acknowledged some positive aspects, such as the overall fiscal framework, which he deemed fiscally responsible.

He appreciated the focus on areas where the government should spend and the effort to minimise excessive borrowing.

He also commended changes in tax policies for their focus on higher earners and their protection of low-income groups.

However, he noted that the budget needed to fully align with the Economy Madani targets, lacked specifics on the progressive wage system, and largely ignored structural issues related to pensions and social protection.