This article first appeared in The Edge Malaysia Weekly on October 21, 2019 - October 27, 2019

SEVENTEEN months into the job, Finance Minister Lim Guan Eng reckons he and fellow Pakatan Harapan leaders are getting a better hang of balancing disparate demands. The recently tabled Budget 2020, he says, is a fruit of that fine balance where the economy and the people’s best interests are taken care of without undue strain on the nation’s finances.

“Don’t you see [change] happening? I feel the earth move under my feet,” Lim says, humming a line from the song by Carole King. “This is policymaking working not for private companies, but for the people. We reject the previous government’s policy of privatisation of profits and socialisation of losses.”

Lim was speaking on how the current administration is open to proposals by private parties for government assets and partnership projects but is making decisions based on what is best for the people and country in the longer run, rather than just giving in to populist demands to please the electorate. Or worse, kicking the barrel down the road and dishing out favours to enrich the select few, rather than pursuing policies to attain equitable outcome and shared prosperity for all Malaysians.

“We are trying our best to change Malaysia. The fact is that this government wants to roll up our sleeves and get work done. Budget 2020 is about putting Malaysia back in business and putting Malaysians back to work. That’s why I feel very passionate about it. We are making that difference, whether it is the work programme, [the country’s] digitisation, the reduction of toll rates, mySalam (takaful insurance programme to cover Malaysians earning below RM100,000 a year for critical illness and hospitalisation allowance), targeted fuel subsidies and ensuring more equitable distribution,” Lim tells The Edge in an interview at his office in Putrajaya.

Lim being appointed finance minister is one change that would not have been possible had the previous administration continued in power — he is the first finance minister who is not also prime minister since June 2001. Tun Dr Mahathir Mohamad, who was the country’s first prime minister to also be finance minister in 1998, righted this wrong when he was appointed prime minister for the second time in May 2018.

Those closely following 1Malaysia Development Bhd (1MDB) developments would recall how the same line from the Carole King song was posted by Seet Li Lin, an associate of Low Taek Jho and chief investment officer of Good Star Ltd, on Facebook in November 2009, about the time US$700 million of 1MDB money was diverted to Seychelles-registered Good Star.

The difference here is in the direction of the flow — money is now coming back into the nation’s coffers. As at July 2019, about RM1.45 billion in misappropriated funds had been returned to Malaysia from international authorities, including from the sale of Low’s former luxury yacht Equanimity. In May, Attorney-General Tan Sri Tommy Thomas said the US Department of Justice (DoJ) will return close to US$200 million to Malaysia — being proceeds recovered from the sale of Park Lane Hotel in New York (formerly owned by Low) as well as money linked to Red Granite Pictures, the film company co-founded by former prime minister Datuk Seri Najib Razak’s stepson, Riza Shahriz Abdul Aziz, that produced The Wolf of Wall Street — a fraction of the assets allegedly bought using money misappropriated from 1MDB, which the DoJ says totalled US$4.5 billion. Lim is also confident of the government’s case against Goldman Sachs yielding positive results for the nation’s coffers.

To be sure, the war to rid the country of decay from past complacency and lapses in oversight is far from over. Government officials are still in the process of cataloguing and tracking down all of the country’s assets, even as legislation is being drafted to have better oversight on public resources and prevent future abuses.

“Remember the units? That [units parked by 1MDB somewhere outside the country] is still ours. What value should we place on Bandar Malaysia [all that is being worked out]. We have an idea [of how much Malaysia’s total assets are worth] but … should it be replacement cost? [Figures could vary, depending on assumptions made] we want to let the whole process to be completed first,” Lim says, noting that a figure on the country’s assets will be disclosed in due course as part of the country’s preparation of the shift from cash to accrual accounting, targeted to happen from 2021.

“We’ve put a lot of thought into [Budget 2020]. As finance minister, you’ve got to see the big picture, consider other aspects,” Lim says, when asked to comment on the need for Malaysia to generate more income to fill its coffers.

“The rate of returns is limited [locally]. To get higher returns, we always have to go overseas and that’s a double-edged sword … [the answer is clear] if we’re just thinking pure investment, but it is the duty of the government to also think about creating jobs, creating the right environment for business [when faced with questions like] why the government is investing overseas instead of in our own country. That’s why I prefer to talk about exports,” he says, noting the emphasis of Budget 2020 to strengthen and vary the country’s export potential and capabilities.

Budget allocations are not just for the electrical and electronics sector to boost exports but also for the non-traditional sectors, including research and development to yield new agricultural produce.

While Budget 2020 does not yet show sizeable difference in terms of reducing the federal government’s operating expenditure — which still takes up over 81% of total budget allocation and more than 98% of total government revenue — Lim assures that a lot of thought is being put in restructuring expenses without putting undue pressure on the people, civil service or the economy.

“Already the government has said we are trying not to increase the size of the civil service. That in itself is a very important step. At the same time, we must find jobs for people. That’s partly why we came up with the Malaysia@Work programme,” Lim explains, when asked about the cost of maintaining civil service emolument and pension.

Civil servants can heave a sigh of relief, though — none already in the civil service will be deprived their pensions, although the government is looking at various models to make costs more sustainable. “It is unfair, as they (new civil servants who have yet to attain pensionable status) joined with expectations of getting a pension,” says Lim.

Indeed, by not increasing the size of the civil service, the government is no longer absorbing new graduates who could not find suitable jobs in the private sector. And it is not just fresh graduates. Investments in the childcare sector and incentives to make it more attractive for women to return to the workforce raise not only their contribution to the economy but also their own retirement savings.

“Don’t forget the multiplier effect on the local economy [from hiring locals and curbing corruption]. Money is not being repatriated overseas [by foreign workers] … corruption is worse [as] the money is not even spent here but taken to London, Paris, Milan for shopping. That’s why we are tracking them down. It’s a continuing process [closing the shadow economy and tax gap],” Lim says, noting that the Inland Revenue Board, Customs Department and Malaysian Anti-Corruption Commission officials have been tasked to close the gaps.

“Let’s give some time for this rationalisation process to work out. You cannot unravel 61 years of neglect and misdeeds in a short period of time. You need 10 years ... 61 months at least,” he adds.

Since Malaysia is looking to close revenue gaps and seeking ways to find sustainable revenue sources, why has the government been cutting “special draws” by number forecast operators for two years in a row?

“Yes, I want to take care of the nation’s coffers … but [as a wakil rakyat, I’ve] faced people complaining about their husbands or wives spending money, not just in my kawasan but everywhere … the money can be used to buy goods [instead of betting]. If it goes to A, the gambling company, you lose out on B, the children gets less food. So, what you take the family will be deprived of. I want to abolish [special draw]. Why have them? Normal draws three times a week enough lah. We do give up some revenue, but there’s just so much sinning that can be done and so much sin taxes that can be collected,” Lim says.

Whatever little is lost here is more than compensated if children are getting better food or education, and grow up to having better job opportunities. “We’ve put in a lot of thought, done a lot of industry consultation and gathered feedback to arrive at the best pro-growth solutions towards shared prosperity and equitable outcomes,” Lim says, noting that civil servants are also being challenged and incentivised to get more bang for their buck.

“There are always savings to be found. In order to encourage this, all savings from administrative reforms will be channelled back so that they can enjoy the benefits of their innovation and creativity. We hope this will be a game changer in terms of administrative reform,” he says, noting how the civil service needs to be energised to do what was achieved in Penang when the auditor-general found it to have 99.75% project implementation rate on 55% of spending, thanks to open tenders. Not only is there prize money for innovation, there are also awards for integrity and whistle-blowing.

“That’s my problem. We don’t have money. Money that I thought we had was stolen, so that’s the price we have to pay … how to deliver [all the promises in Pakatan Harapan’s election manifesto]? We never knew so much was gone!” Lim laments.

On the much-publicised propositions on toll highways, he says the solution of choice must be one that is fiscal positive — one that does not add to the nation’s debt burden, have zero effect on debt service charges, no compensation for freezing toll hikes and yields substantial savings for consumers. He stops short of saying the government will nationalise all toll roads, which will cost RM303 billion. “If we had half the amount, we could gear the other half. That half was stolen by 1MDB and 1MDB-related entities. So, where to find money to abolish tolls?”

Still, being tight on finances also challenges the minister and Ministry of Finance to think outside the box, including tapping on resources at other ministries and mobilising expertise at various government-linked institutions to derive greater benefits for the people and the country. The allocation to expand digital infrastructure under the National Fiberisation and Connectivity Plan, for instance, is pooled from the Malaysian Communications and Multimedia Commission as well as industry players. The Employees Provident Fund is also being tapped to administer the salary incentives to get more Malaysians@Work while Khazanah Nasional Bhd, which has been at the forefront of Industry 4.0 development, is being tapped to administer the digital wallet boost. Malaysia can expect to see more of these, says Lim.

He encourages everyone to pore over the budget speech to identify incentives to join the government’s effort to reawaken Malaysia as an Asian Tiger. “Please read the budget closely. It is a very factual budget. There is a programme or assistance available in almost every sentence. Very few frills, just facts.”

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