Friday 29 Mar 2024
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KUALA LUMPUR (March 24): Malaysia's high operating expenditure (opex) and its tendency to spend more than initially budgeted is a growing concern, amid the challenges of a softening employment market, rising inflation, high cost of living and high household debt financing, said RHB Research Institute chief economist Lim Chee Sing.

Lim, who highlighted today that the government has been spending 99% of the revenue it earns on opex, besides having spent more than budgeted on opex for 2015 and 2016, also urged the government to restructure its budget allocation to focus more on growing the country's sliding revenue.

Lim also suggested cutting down the civil servant's population, though he acknowledged that would not be easy to do.

"Something has to be done [because] when you start to control operating expenditure, you have more room for developmental purposes in terms of funding from the revenue side," he added.

He was speaking at a panel discussion during a forum held by the Malaysian Economic Association.

Lim said the government's financials are very stretched now, which limit its ability to spend on developmental purposes to explore new sources of growth.

"There is obviously a need to cut down on unnecessary spending especially on the operating side," he said, adding that 59.5% of the operating expenditure is used to pay civil servants, for pension charges and debt service charges.

"Malaysia has to depend more on domestic demand, which is within the control of the government. External factors are beyond our control," Lim added.

He also noted that while consumer spending has been "very resilient" as it hovered at a growth of about 6%, private investment has sloped to just around 4%, which he attributed to lack of government spending because of budget constraints.

 

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