With the recent tabling of budget 2019 on the 2nd of November 2018 by Finance Manager, YB Lim Guan Eng has presented a well balanced budget by the government of the day. We will explore the budget from an innovative perspective.
Firstly, YB Lim Guan Eng has introduced the Zero Based Budgeting as a new mechanism in budgeting.
“Improved effectiveness, greater efficiency and higher cost- savings are achieved by firstly, ensuring spending is justified by objectives rather than the previous year’s budget; secondly, review alternative scenarios to achieve the same objectives; and thirdly, all discretionary spending is planned from zero, “YB Lim Guan Eng was quoted in the budget presentation.
Zero Based budgeting is designed to scrutinize every Ringgit. Technically, Zero-based budgeting is a way of budgeting where the income minus the expenditure equals zero. That does not mean you have zero Ringgit in your bank account. It just means your income minus all your expenses equals zero. The Indian government adopted Zero Based budgeting as a technique for determining expenditure budget in 1986.
In 1970s, President Jimmy Carter ordered for implementation of the Zero Based Budgeting in America amid recession in America. It was dropped when President Reagan was the president of America.
Secondly, the setting up of the world‘s first “Airport Real Estate Investment Trust (REIT)”. This is the mean to privatize infrastructure assets. “The investors of the Airport REIT will receive income arising from user fees collected from Malaysia Airports Holdings Bhd (MAHB) which has the concession to operate these airports. The Government hopes to raise RM4 billion from selling a 30% stake of the REIT to private investing institutions, while these investors will gain an invaluable opportunity to invest in top quality infrastructure assets. “
This finance structure is expected to lower down the Government debt burden. This financial structure can be utilized from similar funding and investment structure like hospital s and rail infrastructure.
Thirdly, the government has adopted the “Property Crowdfunding” by, which is a private sector driven platform to solve the housing dilemma. This serves as an alternative financing for first time home buyers, which is regulated by Securities Commission under the pear-to-pear financing framework.
“As an example, the buyer will be able to acquire a selected property for 20% of the price of the property, while the balance 80% will be fulfilled via potential investors who are interested to fund the acquisition in exchange for the potential appreciation in value of the property over a particular period of time. In simple terms, Ah Chong will be able to own and stay in a RM250, 000 property by paying up RM50, 000 without having to procure a mortgage. Ali who might be interested in investing in a new property for capital appreciation will fund the balance of the RM200, 000 via the peer-to-peer Property Crowfunding exchange. “, added YB Lim Guan Eng in his budget 2019 presentation.
Obviously there were many great initiatives proposed, but the above three are the most innovative, well-articulated and strategies that will propel the country forward in the midst of global uncertainties and possible financial collapse.
Congratulations to the new Pakatan machinery…