Malaysian Prime Minister Najib Razak on Friday unveiled his country’s largest-ever spending plan as he moved to pump up voter support in the run-up to general elections that must be held by August.
Najib gave an upbeat assessment of the nation’s economy as he presented a 280 billion ringgit (U.S. $66.1 billion) spending plan for next year that he called “the mother of all budgets.”
The proposed expenditure would include aid packages for key voters for his ruling Barisan Nasional (BN) coalition, said the prime minister, who came to office in 2009 and whose term expires in June 2018.
“This budget has never been crafted so well, even during the last 22 years or the past 60 years of our own nation,” Najib, who is also the finance minister, said during a three-hour budgetary speech before parliament.
Najib underscored the approaching election.
“Let’s together ensure a big victory for Barisan Nasional in the 14th General Election,” said Najib, who wore a blue traditional Malay attire known as Baju Melayu. Blue is the official color of BN, the ruling coalition that has dominated local politics for decades.
The proposed budget surpassed the 2017 spending allocation by 19.45 billion ringgit ($4.58 billion). By contrast, Najib’s first proposed budget, in 2009, was 191.5 billion ringgit ($45.2 billion).
“This budget is the most vital as it summarizes all the initiatives that have spurred the economy since I took office in 2009,” Najib said. “Indeed it is one of my main report cards.”
Ahmad Zahid Hamidi, the deputy prime minister, said Malaysia had never seen such a budget in its 60-year history.
“It will be the biggest budget so far, there has been increase of almost 20 billion ringgit,” he told reporters, according to the Malay Mail.
He acknowledged that the proposed spending plan was tied to upcoming elections.
“Yes, it is,” Zahid said. “What else can be said about it?”
Malaysia, a multi-ethnic nation of more than 30 million people, has grown into one of Southeast Asia’s most vibrant economies since gaining independence from Britain in August 1957. The Malaysian economy is expected to grow at between 5.2 and 5.7 percent this year, rebounding from 4.2 percent in 2016.
Malaysia’s consumer price index (CPI) – the nation’s main barometer of inflation – rose 4.3 percent in September from 3.7 percent in the preceding month, according to latest figures from the Department of Statistics.
CPI spiked at a faster-than-expected pace mostly because of higher retail oil prices, but economists told the New Straits Times that they predicted the full-year inflation to be around 3.7 percent.
Higher oil prices spurred economic growth and revenue this year, allowing Najib to propose hefty spending ahead, according to economists, who are also projecting a lower fiscal deficit for next year compared to 2017.
Subject to parliamentary approval
The 2018 budget, which will now be sent for approval by Malaysia’s parliament, includes an allocation for transport subsidies and 6.8 billion ringgit ($1.6 billion) for an annual cash-handouts program.
Najib also proposed aid packages of 6.5 billion ringgit ($1.5 billion) for farmers, fisherman and rubber tappers, who are among key constituents for the ruling coalition.
In addition, the proposed budget will cover special payments next year of up to 1,500 ringgit ($353) each to the 1.6 million civil servants in the country, who historically have been among the ruling coalition’s most dependable supporters, the Wall Street Journal reported.
The prime minister is under pressure to shore up electoral support as he has faced controversies involving the scandal-ridden state fund 1Malaysia Development Berhad (1MDB), which he founded in 2009 as a vehicle for attracting investments and spurring economic growth.
Najib has been implicated after investigators said almost $700 million of money linked to 1MDB was deposited into his private banks accounts in 2013. But Najib has denied any criminal wrong doing, saying the money was donated by the Saudi royal family and not used for his personal gain.
Opposition’s spending plan
Earlier in the week, Malaysian opposition coalition Pakatan Harapan (Alliance of Hope) unveiled an alternative proposed budget.
Among other things, it seeks to scrap the country’s unpopular Goods and Services Tax (GST), which Najib introduced at a rate of 6 percent in 2015, and an increase in oil royalties from 5 percent to 20 percent in the oil-producing states of Sabah, Sarawak, Kelantan and Terengganu.
As a result of the 1MDB scandal, Najib was expected to present a budget that is widely popular among the voting masses.
In his speech, Najib also said he had allocated 24 billion ringgit ($5.6 billion) for Malaysia’s 2018 defense and security forces, about 9.1 billion ringgit ($2.14 billion) less than the 2017 allotment.
But the country’s police anti-terrorism unit will be allocated 50 million ringgit ($11.78 million) to upgrade its weaponry, he said.
“Two hundred and fifty million ringgit ($58.9 million) to ESSCOM to enhance security control in Sabah and Sarawak border areas, including 50 million ringgit ($11.7 million) for coastal surveillance radar,” he said, referring to the Eastern Sabah Security Command.
ESSCOM was created in the aftermath of a foiled incursion four years ago by an armed group from the Sulu archipelago in the southern Philippines.
In February 2013, about 200 men arrived in a flotilla of rickety boats from the nearby Sulu islands, and occupied part of the coastline of Sabah, which lies in Malaysian Borneo, for several weeks as they asserted the Sultan of Sulu’s claim of historical rule over Sabah. More than 70 people died in ensuing gun battles.
Hadi Azmi, N. Nantha and Hata Wahari contributed to this report.