Not many Malaysians spared a thought for the implications of our substantial national debt. Why should they, when there's little visible impact on their lives? That notion was shattered after the 1Malaysia Development Bhd (1MDB) scandal erupted into the public consciousness.
Suddenly, people were educated on the workings of national debt, especially after hearing about the culprits' cavalier spending on luxury items hoarded in swanky apartments. It would have been fortunate had the stolen 1MDB funds been limited to a shopping splurge. But the bulk of the funds were siphoned out of the country, totaling a mind-blowing RM48 billion, based on the government's report on its 2023 debt servicing.
Despite this, Malaysia has remained resilient, even with politicians and moguls seeking lucrative government contracts. The country hasn't collapsed despite the RM1.4 trillion debt reported by the Auditor General. However, another RM94.1 billion in debts was accrued in 2023. After all, money had to be spent on development, social welfare, healthcare, and education. This spending highlights the ongoing need for careful financial management.
Finance Minister Datuk Seri Anwar Ibrahim has maintained a firm grip on the country's purse strings. He has determinedly reduced new debt, first to RM100 billion in 2021 before paring it down to RM93 billion in 2023, and aims to cap it at RM86 billion this year. Anwar's efforts to control the national debt are part of a broader strategy to ensure financial stability and prevent future fiscal crises.
To achieve his mission of zero leakages or misappropriation, Anwar has implemented a broader crackdown on high-level corruption in the government. This approach involves stringent measures and comprehensive oversight to ensure public funds are used appropriately. Anwar has achieved these savings by deploying a bold debt restructuring plan and rolling out multi-pronged, albeit unpopular, reforms to reduce spending and reboot the economy. The much-maligned diesel subsidy rationalization will liberate RM4 billion in annual government spending.
In the 2024 Budget, a higher service tax, high-value goods tax, and new capital gains tax were proposed to diversify revenue sources and increase returns. These measures are crucial for building a more robust and sustainable fiscal framework. Additionally, a progressive wage policy promises to improve workers' wages, accompanied by productivity gains. This policy aims to balance economic growth with social equity, ensuring that the benefits of development are widely shared.
Anwar's introduction of the National Energy Transition Roadmap aims to shift from a traditional fossil fuel-based economy to a high-value green economy. This transition is part of a broader effort to align Malaysia's economic development with global environmental standards and trends. Anwar also conceived the New Industrial Masterplan 2030, which focuses on driving manufacturing while aiming to lift the gross domestic product by 6.5% annually. This plan is designed to boost Malaysia's competitiveness and innovation in the global market.
These bold initiatives spurred influential American investment bank JP Morgan to upgrade Malaysia's debt rating from underweight to neutral. Forbes agreed that the economy is moving towards a "high-growth and high-value" trajectory. These positive evaluations reflect growing confidence in Malaysia's economic management and future prospects. While these economic reforms are a bitter but necessary pill to swallow, they have understandably drawn public resistance from a populace unused to financial discipline.
Nonetheless, Anwar is resolute in remediating and realigning the economy after a maddening decade of notorious corruption. His commitment to transparency and accountability is a crucial element of his economic strategy. Citizens will need to temper their fury and pessimism, as these reforms will take time to materialize into direct benefits that will swell their pockets. The road to economic recovery is long, but with the right policies and perseverance, the benefits will eventually become evident to all.