KOTA KINABALU: While the National Budget 2013 is expected to boost economic activities in the immediate term, Federation of Sabah Manufacturers (FSM) believes it will come with inflation risk later down the track.
Expressing disappointment over the just unveiled budget by Prime Minister Datuk Seri Najib Tun Razak, FSM president Datuk Seri Panglima Wong Khen Thau said it only provided a short-term relief rather than tackling the real issues affecting businesses, among others, in Sabah.
Giving the Price Uniformity Programme as an example, he said it was moving towards the right direction, but it does not solve the underlying problem of price inequality between West and East Malaysia.
“This is caused by the high transportation costs due to Cabotage Policy and inefficient transportation network. And while we welcome the setting up of 57 Kedai Rakyat 1Malaysia (KR1M), we believe that in the long run, it would have direct challenge to commercial operators, especially those who run small-time sundry shops in the rural areas, who are normally operated by Bumiputeras.
“We hope the government would seriously look for long-term solutions. To have a one country, one price may be impossible, but they can always narrow down the price gap,” he said.
He stressed that the assistance given to the Small and Medium Enterprises (SMEs) are more passive in nature such as loans and tax deductions on expenses.
“FSM was expecting more direct assistance such as grants and subsidies to actively bring down the costs of doing business, especially with the implementation of the Minimum Wages.
“One good thing would be to extend the one per cent reduction in individual tax rate to corporate tax too,” he said.
Speaking to reporters, here, yesterday, Wong stressed the Budget did not allocate much for actual development projects.
“A long-term solution is needed for sustainable economic development, such as improving the state’s infrastructure such as roads, as our stretches are always not as good as those in Peninsular Malaysia. It is also better to channel allocation to reduce the shipping costs which would benefit all sectors and reduce the expenses of doing businesses in Sabah,” he said.
Wong added that the Budget had put more emphasis on expenditures, such as cash handouts for civil servants, which on the other hand would boost purchasing power.
“The public sector gets the largest allocation of the Budget. FSM would like to see corresponding improvement in efficiencies as exemplified by some of the Sabah government agencies, scoring four stars in the Auditor General’s (AG) report. We hailed as commendable the consistent rave reviews by the AG, of the financial management of Sabah, an achievement that the people should take pride in,” he said.
He said the one-and-a-half-month bonus would help lighten the burden of civil servants, but stressed that it should be awarded based on their performances, just to encourage them to work harder to meet the Key Performance Index (KPI) at their respective organisations.
“It would only discourage those who worked hard if the less performing are also getting the same amount of incentives as them. By taking their performances into account, it would create a healthy competition amongst employees,” he said.
On another development, FSM believed it was important that educational institutions work closely with the business sector to ensure compatibility of skill sets of workers with needs of industries.
“The skills should be industrial-focused, relevant and industrial-driven,” said Wong.
He added that skills enhancement and training for students and graduates would assist in improving the human capital, therefore contributing to economic activity.
“We, however, wish to congratulate Chief Minister Datuk Seri Musa Aman, who is also the Finance Minister, for his effective control of the state’s finances and resources, leading to the social and economic developments that we enjoy today,” he said.
Wong added that the Sabah business communities expect the same level of accountability and effectiveness from other state agencies, if not better, particularly where businesses can be greatly facilitated to attain greater efficiencies, reduce bureaucracy and greater transparency to enable a business-friendly environment.