November 2 – Budget 2019 will show what the new Pakatan Harapan (PH) government’s priorities are, at least for next year.
Politics is simply the allocation of resources. What is it that PH thinks deserves or does not deserve funding?
In my column last week, I wrote about how the government should increase spending on health care and education and resist introducing any new taxes.
Today’s column will argue for Budget 2019 to focus on making wealth creation equal, promoting women leaders, and affordable housing.
Equality in wealth creation
It is grossly unfair that Malays get far bigger returns of between 7 and 8 per cent annually by investing in Amanah Saham Bumiputera (ASB), an income equity fund exclusively for Bumiputera. The government guarantees investment returns under the low-risk ASB. Amanah Saham Nasional Berhad (ASNB) is a wholly-owned subsidiary of government-linked company Permodalan Nasional Berhad (PNB).
Although ASNB has other products open to other Malaysians, their average rate of return is less than ASB at about 6 per cent. These funds for non-Bumiputera are also limited and subject to quotas for each ethnic group, so your first attempt to invest may not be successful. Fixed deposits at banks only generate interest rates of about 3.2 per cent.
I am an honest and hardworking Malaysian. I pay income tax and contribute to the economy. I am middle class but I am not rich, as I only have a regular job.
Why should I be discriminated against based on my skin colour when it comes to growing my wealth?
Investment vehicles like ASB are for the middle class because only they will have enough savings to invest, unlike the poor. Therefore, so-called affirmative action should not apply to ASB because it has nothing to do with the B40.
I get angry seeing my middle class Malay friends enjoy such high returns from a low-risk product simply because they were born in the right family, while I am stuck with pitiful FDs.
The PH government should remove all race requirements in ASB and other ASNB funds to promote equality.
Creating women bosses
One of the main hindrances to women staying in the workforce and climbing the ladder after giving birth is the lack of affordable child care services.
Small and medium businesses say they cannot afford to build child care centres at their workplace. The government should provide tax exemptions to corporations with office crèches and maybe even partially fund operations of child care facilities at smaller companies.
The government should also convert the third month of paid maternity leave into paternity leave that must be used by fathers or otherwise be lost. The solution to raising women’s labour force participation rate (a mere 53.5 per cent) is not by increasing the amount of time women spend away from work, but by encouraging their husbands to stay home so that women can go to work.
To promote women in leadership, the government could also give tax breaks to public listed companies that have at least 30 per cent women on their boards or in senior management.
Making homes affordable
Housing is clearly still unaffordable. A good affordable house in the suburbs or city should cost no more than RM300,000.
The National House Buyers Association (HBA) has called for a rent-to-own scheme and price control mechanism for affordable homes.
The Real Estate and Housing Developers’ Association Malaysia (Rehda) wants easier loan approvals for Malaysians, lower legal fees for houses below RM500,000, and reduced cost of doing business like getting rid of unnecessary charges by utility companies.
Price controls are a no-no to me. As it is, there are way too many regulations governing prices and profits, and the prime minister wonders why businesses are not making money.
What the government should do instead is to help correct the housing market by getting rid of Bumiputera quotas and discounts. First of all, such quotas are discriminatory. Secondly, the quotas and discounts are pointless if no one is buying those properties anyway.
Perhaps, instead of fixating on home ownership, the government could promote a culture of renting. This of course needs to be accompanied by stricter laws that protect tenants.
The Najib administration, in tabling Budget 2018, announced tax exemption on half of home rental income up to RM2,000 monthly for Malaysians, with the exemptions effective from Year Assessment 2018 to 2020. The PH government should continue this policy.