THE 2018 Budget is a document with very good news. Being an election budget, it is understandably so. If a narrative is needed to summarise the fiscal document, then nursing the now and nurturing tomorrow would be it. For nursing the now, the budget provided 11 items of allowances and reliefs. As a visioneering document, the 2018 Budget takes a long range view, paving the way for a future that is some 32 years away. No doubt the future of National Transformation 2050 (TN50) is some distance off, but that distant destination needs to be shaped now. Going into the future, the government is helped by much positive news this year. One is the good news of the latest gross domestic product figure of 5.7 per cent for the first half of this year, a figure that will help the country turn in between 5.2 and 5.7 per cent when the year is done. Domestic private investment alone was RM211 billion, a record never achieved before.
The global economy story is also bringing strong narratives for the government. The bleak world of the oil and gas industry signalled by the low crude oil prices is beginning to turn positive. Brent, the marker crude, took a hit from an average of US$100 per barrel in 2014 to an average of US$45 per barrel last year. Deputy Finance Minister Datuk Johari Abdul Ghani told a Parliament session in April last year that the government loses around RM300 million in oil revenue for every US$1 per-barrel drop in crude oil prices. That is a big opportunity cost. But, the price is on the upswing, and the government is taking a view that crude oil prices will hover around US$50 per barrel. The US$50 per barrel is a reasonable assumption to make as the market moves north. Prime Minister Datuk Seri Najib Razak has decided to err on the side of caution, and advisedly so. Also, Malaysia is not as dependent on oil revenue as it did in the past, reducing the dependence from 41 per cent to 14 per cent today. People may not know the story behind this figure, but the fact is diversification away from oil has enabled the government to shield the man-in-the Metrobus from the full brunt of the devastatingly low oil prices.
The 2018 Budget gives TN50 a good space. Najib is laying the foundation for the TN50 generation, who will be born between next year and 2022. For the TN50 generation, the 2018 Budget is going the way of the world of Internet of Things. It is Najib’s way of promoting Industry 4.0 to grow automation, robotics and big data computing. This is the world of the future, for the millennials and post-millennials. In 2050, when the post-millennials reach the third decade of their lives, some of them will be at the table where others of similar age from the top 20 nations in the world will be seated.
The finance minister has given the country a people-friendly budget that is, at the same time, a prudent one, paving the way for a balanced budget in 2020.