IDS describes State Budget as visionary

KOTA KINABALU: The Institute for Development Studies (Sabah) or IDS describes the 2013 Sabah State Budget as comprehensive and visionary while noting that it is the largest in the state’s history.
IDS chairman, Datuk Seri Panglima Clarence Bongkos Malakun said the slightly expansionary nature of the budget is most appropriate at a time when there is much uncertainties associated with the external environment.

“With a projected expenditure of RM4.1 billion against projected revenue of RM3.8 billion the state is projected to run a budget deficit of 6.8 per cent in 2013.

“This should give the domestic economy a boost without upping inflationary pressures,” he said in a press statement issued here yesterday.

He noted the Chief Minister’s statement when revealing the budget that the state’s financial position is strong with a Consolidated Account of more than RM3 billion.

“The strong financial position of the state is not achieved overnight, but over many long years of painstaking efforts and prudent management,” said Clarence.

He said the 2013 Sabah State Budget should bode well for the state and rakyat because it various measures to, inter alia, eradicate poverty, strengthen human capital, expand utilities supply and amenities and enhance infrastructure, as well as investments in the various economic sectors, such as tourism, agriculture and manufacturing.

“More notably, good financial management by the State Government under Datuk Seri Panglima Musa Haji Aman has put the state on a strong financial footing, thus allowing the government more leeway to undertake fiscal measures for the good of the state,” he added.

Clarence commended the state’s good financial management which led to a number of government departments and agencies in Sabah achieving a four-star rating under the Accountable Index which has increased two fold for the year 2011 while the RAM Rating Service Berhad again gave the “AAA” rating to the state.

“The good financial management of the state has borne fruit that should benefit the rakyat. For one, it means that a larger budget can be achieved without undue stress on the state’s financial position.
“And secondly, it also means that the state can borrow at a lower cost from the financial market if need be,” he added.

Clarence said a larger budget allowed the government more fiscal leeway in achieving its stated objectives, particularly for a budget aimed at sustainable growth and development for the benefit of the rakyat.

He commended the government for committing a high level of investments in infrastructure saying that it showed the government was very cognisant of the constraints limiting growth in the state.
For 2013, the government allocated the economic sector 57.2 per cent of planned expenditures and within the economic sector, a high 85.7 per cent of the budget has been allocated for infrastructure and land development.

Likewise, in 2013, 54.0 per cent of the government’s revenue is expected to come from the sales tax on crude palm oil and petroleum royalty.

“While some people have suggested that Sabah may be too reliant on these two sources of revenue, we cannot but feel blessed that we have such an abundance of these two resources,” he said while adding that making investments in critical growth ‘enablers’ will unlock the state’s growth potential.

“This will strengthen Sabah’s position as an investment destination of choice in the region, and spurring domestic growth in the process,” he said.

Being internationally traded commodities, the price of both crude palm oil and petroleum will be affected by external developments but he does not believe the heavy reliance on CPO and crude petroleum to be a major issue at the moment.

“In fact, the performance of our domestic economy is very much affected by international developments because it is such an open economy. In any case, the ability of the government to raise revenue through taxation will be affected by external factors impacting on the domestic economy,” he said.

He however, proposed that the government diversify its revenue base to be consumption-derived rather than export-derived.

“Before we reach this stage, it is important that the state continues to maintain its ‘AAA’ rating, which it has done so successfully for four consecutive years. This will ensure that we can have unfettered access to other funding sources if the need arises,” he suggested.


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