The Budget and the story of Shahrazad

It was a little bit like listening to my late father reciting the "Hikayat 1001 Malam" aka The Arabian Nights. You were not sure whether Shahrazad was the victim of an evil Sultan or was the ultimate female manipulator.

But thanks to a handful of desperate, confused but well-intentioned souls who approached me with interpretations of the Oct. 25 budget, I can now belatedly put in my two sen worth of thoughts down.

Incidentally, two cents is worth nothing these days. Even RM1 buys very little. Inflation you see. Incidentally too, the Finance Minister, Mohd Najib Abdul Razak, said little about the ringgit, which a lot of people say has declined in value against major global currencies.

A Malay lawyer with officers in Kuala Lumpur and Jakarta approached me on Sunday at my favourite kopitiam in Damansara Utama. He said it was not the taxation that concerns him but the manner in which government spends public money is worrying him.

He did not think Mohd Najib argued the case on expenditure strongly and convincingly. He sees the government as extravagant and wasteful – giving token handouts to the millions and spending hundreds of millions funding the renovating official residents, officers and foreign trips of a handful of ministers and their shopaholic spouses.

Incidentally, soon after presenting his so-called "bite the bullet" Finance Minister, who is also the Prime Minister, took off to London to attend the World Islamic Economic Forum.

Several former MPs, including those who had served as Ministers, saw the budget as a letdown, in particular over the claim that the Government is biting the bullet.

"What biting the bullet, the Prime Minister is still trotting the globe and billions of ringgit are still being handed out?" asked one former Minister who had his salary cut by (Tun) Daim Zainuddin, during the economic crisis of the mid-1980's.

He recalled how the civil service unions threatened to strike if their salaries were frozen and perks reduced. Daim called them for a meeting and showed them the near empty government coffer. They believed and supported the austerity drive that followed.

Maybe the PM isn't biting the real bullet. He is biting a dud one.

Only two things are worth mentioning, said the former Minister. One is the Goods and Services Tax (GST) and the other is the re-imposition of the Real Property Gains Tax (RPGT) for short-term property deals. The RPGT isn't new. It has been there for a long time but was withdrawn in the post-Mahathir era in favour of stamp duty.

The concern, said the ex-minister was speculation and not collecting stamp duty. After the RPGT was done away with, speculation shot up, property glut worsened and very few genuine buyers could now afford to buy houses. He suspects that property-based non-performing loans (NPLs) are high but the Bank Negara is hiding it. What say our award-winning Governor?

I have said a zillion times that time will sooner or later come when the property bubble bursts and the financial system sees the repeat of the 1997/98 financial meltdown.

GST too is not original to Najib. It was first proposed by Daim back in the 1980's when he was the Finance Minister for the first time, but was not agreed to by (Tun) Dr Mahathir Mohamad.

Fortunately then the government had other sources of revenue and also assets it could sell to the private sector or transfer to the off-the-budget agencies to lessen government's financial burden.

What about debts then? Both government and private debts are mounting. And the softening of the exchange rates of the ringgit will automatically worsen our debt situation.

Maybe the ageing ex-ministers and MPs are nostalgic about the days when they, the civil servants and the ordinary rakyat tightened the belt and eventually save the country.

Another old-timer remembers how ministers were barred from travelling abroad unless absolutely necessary and to bring only one or two officers. Today they travel in droves.

Also, those days, except on rare occasions, a Prime Minister did not double up as Finance Minister. People who were well versed in money matters were appointed Finance Minister.

Today, it appears that whoever is the Prime Minister (good, bad or indifferent) is also the Finance Minister – a very dangerous and dicey situation for the country's economy and finances. Wallahualam.