Economic Report 2013/2014: Subsidies to be trimmed

ALLOCATION for subsidies will decline to RM39.4bil or 18.1% of operating expenditure, due to lower provision of fuel subsidies. On the other hand, development expenditure will be allocated RM44.5bil, 17% of the total operating expenditure next year.

The economic services sector will be allocated RM28.8bil, to focus on transport and infrastructure.

Major projects planned for the year include phase three of the Kuala Terengganu Bypass and Feeder Road, as well as upgrading road works from Gambang in Pahang to Segamant in Johor and the Pulau Indah Highway.

The construction of road and bridges in rural areas, including in Sabah and Sarawak, will be given a boost through a sum of RM4.7bil while infrastructure development in southern Johor will be upgraded to enhance its attractiveness as a multi-sectoral investment hub.

A sum of RM10.6bil or 23.8% of total development expenditure is allocated for the social services sector for areas such as education and training, health, welfare services and housing. Out of this, the education and training sub-sector is provided the largest sum at RM4.9bil or 11% of the total expenditure.

Meanwhile, RM4bil will be allocated to the security sector to address national security and public safety concerns.


General administration is allocated some RM1.1bil to computerise government departments, and for the wider use of ICT applications, among others.

Domestic demand and an improving external sector should support economic growth in the range of 5% to 5.5% next year.

The country’s fiscal deficit is projected to decline to 3.5% of gross domestic product (GDP) next year, due to more favourable Federal Government revenue of RM224.1bil on account of stronger economic activity, better tax administration and revenue collection.

Tax revenues have been projected to come in 5.2% higher to RM172bil from corporate earnings; access to financing; favourable labour market conditions; and rising disposable incomes.

Meanwhile, non-tax revenue, which comprises investment income, licences, registration fees and permits, is projected to be lower at RM52.1bil.

Total Federal Government expenditure is expected to remain flat at RM262.2bil due to efforts to rein in non-productive expenditure.

About RM2.8bil has been allocated for projects under the rolling plans (RPs) and National Key Economic Areas (NKEAs), while RM219mil is for strategic reform initiatives (SRI).

The Government Transformation Programme will be given RM4bil for programmes under the seven National Key Results Areas (NKRAs). An additional RM4bil has also been set aside for new and ongoing strategic projects.

Operating expenditure is expected to grow at a slower pace of 0.7% to RM217.7bil. Meanwhile, emoluments will be provided a higher sum of RM63.6bil for salary adjustments of civil servants and Armed Forces in July this year.

Supplies and services as well as asset acquisition will be allocated RM36.6bil and RM1.4bil respectively to ensure the civil service is well equipped to meet service standards.