Economy, rakyat will suffer if development expenditure is cut, says Mustapa

KUALA LUMPUR: The allocation for development expenditure under Budget 2021 for construction projects cannot be cut as it will have an adverse impact on the country's economic network and the people, said Minister in the Prime Minister's Department (Economy) Datuk Seri Mustapa Mohamed.

He said more than 40 per cent of the development projects under the budget were continuation of half-completed projects such as the construction of schools, hospitals and highways.

If the projects are immediately halted, the people will suffer, he said.

"The government does not have the option to cut the allocation as it is unreasonable.

"I am sure the people will understand, what is important we have to explain to them that it is difficult for the government to cut this allocation because the projects already exist," he said in an interview on TV3's "Soal Rakyat" programme today.

He was asked why the government did not postpone construction projects and channelled the development allocation to other matters that needed more focus such as dealing with the COVID-19 pandemic.

Mustapa said the move to reduce development expenditure would also affect the country's economic growth as about 200 other sectors, including that of architects, lawyers, banking institutions, hardware stores, and consultants, depended on the construction sector.

Citing Budget 2019 as an example, he said many professionals lost their source of income as the government cut the allocation for the construction sector,

"The construction sector has a large multiplier factor, it will adversely affect many quarters and thousands of contractors will lose their jobs," he added.

"The government has allocated a total of RM322.5 billion or 20.6 per cent of gross domestic product (GDP) for Budget 2021, increasing from the total expenditure allocation for 2020, which was revised upwards to RM314.7 billion from the initial allocation of RM297 billion.

"Of the total Budget 2021, RM236.5 billion (73.3 per cent) will be channelled to operating expenditure, RM69 billion (21.4 per cent) to development expenditure and RM17 billion (5.3 per cent) to the COVID-19 fund," he said.

-- BERNAMA