Malaysia’s 2023 budget seeks to woo fence sitters but no guarantee it will be a vote-winner: Analysts

KUALA LUMPUR: The budget for 2023 tabled by Prime Minister Ismail Sabri Yaakob’s government is a “populist” one and seems to be an attempt to woo fence-sitters in the upcoming 15th General Election (GE15). 

Analysts who spoke to CNA, however, added that there is no guarantee the various assistance schemes and cash handouts outlined in the budget would translate into votes.

Finance Minister Tengku Zafrul Tengku Abdul Aziz last Friday (Oct 7) unveiled a budget of RM372.3 billion (US$80.06 billion) for 2023.

About RM272.3 billion is allocated for operating expenditure and RM95 billion for development expenditure. 

Malaysia’s biggest budget was in 2022 when it was tabled last year at RM332.1 billion. It has since expanded to an estimated RM385.3 billion, after factoring in the fiscal support to protect people and businesses from rising inflation and cost of living.

Under budget 2023 a total of RM55 billion was allocated for government subsidies, aid and incentives. 

This includes RM7.8 billion under the cash handout programme for the Bantuan Keluarga Malaysia (BKM) aid, which is expected to benefit 8.7 million people.

Another RM2.5 billion in welfare aid is set to help about 450,000 low-income households.

Families with a household income of less than RM2,500 are qualified for cash handouts, and the amount will depend on the family size.

The finance minister also announced that the income tax rate for middle-income individuals will be reduced by two percentage points.

Those who earn taxable income of between RM50,001 and RM70,000 will see their tax rate reduced from 13 per cent to 11 per cent, while those in the income band between RM70,001 and RM100,000 will have their tax rate reduced from 21 per cent to 19 per cent. 

Under the 2023 budget, social spending and subsidies have roughly doubled with most of the allocations coming from funds diverted from the COVID-19 mitigation measures as the rate of infection falls.

“POPULIST BUDGET” TO WOO FENCE SITTERS: ANALYSTS

Mr Hafidzi Razali, a senior analyst with strategic advisory firm Bower Group Asia told CNA that the 2023 budget may be described as a “populist budget” as it involves cash handouts and reducing taxes to a large portion of the voters. 

“It will bring a lot of advantages to people who might be at the receiving front … including the voters who are typically UMNO (United Malays National Organisation) supporters and this can solidify support for Ismail (Sabri),” said Mr Hafidzi. 

He cited how subsidies for agro entrepreneurs, for example, fishermen and rice farmers, could be enticing, as many of the population in the Malay heartlands are dependent on this for sustenance. 

A total of RM1.8 billion will be allocated for the various subsidies and incentives for rice farmers, fishermen and smallholders, which include RM800 financial assistance for rubber smallholders and RM600 for paddy farmers. 

According to Mr Hafidzi, the increase in social assistance and subsidies could potentially address ground concerns over rising costs of living.

“The basic consideration here is that everyone is in survival mode, especially the B40 (bottom 40 per cent of Malaysian household income). 

“With this assistance, many voters would probably think - I’ll be able to cope with my costs of living slightly better, I will probably have more disposable income for the challenges ahead, especially with a global recession possibly happening soon,” he said. 

Political analyst Dr Sivamurugan Pandian of University Sains Malaysia (USM) said that the 2023 budget clearly looks like an election manifesto under the leadership of Mr Ismail Sabri.

“It is clear that it will be one of the documents that will be used during the elections to convince the people that this is what they would do if they are given a chance to form the government,” Dr Pandian told CNA.

He believes that the budget might be aiming to woo the fence-sitters to lean towards Barisan Nasional (BN) instead of the opposition. As for BN’s loyal supporters, they would vote for them in any case.

“We are looking at a post-pandemic situation now and with the rise of economic and inflationary issues, they would want to say that they would be able to address these issues,” he said.

On Monday, Mr Ismail Sabri announced that parliament has been dissolved, paving the way for national elections to be held before the end of the year.

Speaking during a televised national address, Mr Ismail Sabri said he sought consent from the king at noon on Sunday to dissolve parliament and his request was accepted. 

On Sep 30, the UMNO supreme council decided that parliament must be dissolved soon so that GE15 can be held this year, even though the five-year mandate of the current government will only expire in July 2023.

UMNO president Ahmad Zahid Hamidi, who is facing 47 charges of criminal breach of trust, corruption and money laundering, has been very vocal in pushing for snap polls, ostensibly to seek a fresh mandate from the people.

UMNO’s call for an early GE15 has been criticised by the opposition and Mr Ismail Sabri’s own Cabinet members as Malaysia’s Meteorological Department has warned of floods during the north-east monsoon season, which typically starts in November and ends in March.

WILL THE HANDOUTS TRANSLATE INTO VOTES?

Despite the handouts and tax cuts, it remains to be seen if these will directly translate into votes for BN and UMNO.

Mr Hafidzi of Bower Group Asia said: “I think voters will consider whether they trust this government to deliver on these promises. 

“They might also consider the alternative - what do the opposition like PH (Pakatan Harapan) have to offer? Could they introduce a stronger, alternative budget that would convince the people?”

Dr Oh Ei Sun, a political analyst with the Singapore Institute of International Affairs (SIIA) holds a similar view as to what extent budget 2023 will be a good inducement for most voters, especially among BN’s supporters.  

“Cash handouts are usually vote-winners … (But) it remains to be seen if this would add to the already quite sizable vote banks for BN,” said Dr Oh, adding that “in any case, UMNO is likely to win most seats and form the next government anyway.”