Published in Free Malaysia Today 21 October 2016
KUALA LUMPUR: If Najib Razak wants to leave a legacy as a responsible prime minister, he must move beyond debt to solve problems, said the Institute for Democracy and Economic Affairs (IDEAS).
The relaxation of debt ceilings for civil servants, for example, will only increase household debt, cautioned IDEAS CEO Wan Saiful Wan Jan.
Already, Malaysia’s household debt-to-gross domestic product (GDP) ratio has increased to 89.1 per cent in 2015 from 86.8 per cent in the previous year.
“Malaysia has one of the highest household debts in the region,” said Wan Saiful.
IDEAS was commenting on Prime Minister Najib Razak stressing in his Budget 2017 speech that his administration will address the population’s needs through targetted welfare programmes such as the Bantuan Rakyat 1Malaysia (BR1M).
“We are astonished the government appears to be proud that increasingly more people are depending on welfare,” said Wan Saiful. “Success should not be measured by more people being on the programme.”
He warned there’s concern on the increased allocation each year for BR1M.
BR1M is at risk of becoming a permanent entitlement, said Wan Saiful, noting that Najib moved away from blanket subsidies.
When his predecessors introduced such measures, the intentions were noble and appropriate for the time, said Wan Saiful.
“However, such subsidies resulted in long term problems of affordability and sustainability.”