innovation in malaysia budget 2010

1.0 INTRODUCTION

The government has played a crucial role in ensuring that the nation’s wealth

is enjoyed by the citizens in a fair and equitable manner. Thus, it’s becomes the

responsibility of the government to plan for the citizens. Due to the global economic

crisis that affected our countries, it makes difficult for the government to plan wisely.

However, today global economic crisis has showed a strong sign of recovery and this

requires the government to plan the resources wisely. The resources are plan and

present as a budget. Every year, Ministry of Finance is responsible for planning the

budget for the citizen.

Budget 2010 was presented by Minister of Finance or our Prime Minster,

Dato’ Sri Mohd Najib Tun Razak on 23rd October 2009 at Dewan Rakyat. The theme

of Budget 2010 is “1Malaysia, together we prosper. Budget 2010 is the last budget for

9th Malaysian Plan. It is the foundation of the development of new economic model

and a precursor to the 10th Malaysian Plan.

Malaysia has successful in transforming its economy form agriculture based to

the industrial based. Now, Malaysia is moving to the new economic model. This new

economic model is based on innovation, creativity and high-value added activities to

remain competitive in the global economies. Innovation is an important agenda for

Malaysia, as the government will transform Malaysia through comprehensive

innovation process. The innovation includes private and public sector governance,

societal, urban, rural, corporate, industrial, education, healthcare, transport, social

safety net, and branding innovation. The government is serious in implementing those

innovations to promote Malaysia to be in advanced economy.

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Budget 2010 focuses on the well-being of the citizens and achievements of

National Key Result Areas (NKRAs). This budget is also emphasize on advancing the

role private sector as the driver of economic growth, developing high-skill human

capital, and increase the efficiency of the public sector. There are three strategies that

are focused by the government on this budget which are driving the nations toward a

high income economy, ensuring holistic and sustainable development, focusing on the

well-being of the citizens. There are so many programs that are implemented by the

government to run those strategies such as strengthening ICT industry, PERMATA,

advancing agriculture sector, and so on.

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2.0 DEFINITION

Innovation is a change in the thought process for doing something, or the

useful application of new inventions or discoveries. It may refer to an emergent 

changes in thinking, products, processes, or organizations. The goal of innovation is

positive change, to make someone or something better. Due to innovation it may

leading to increasing in productivity which is the fundamental source of

increasing wealth in an economy (www.businessdictionary.com).

In the organizational context, innovation may be linked to performance and

growth through improvements in efficiency, productivity, quality, competitive

positioning, market share, etc. All organizations can innovate, including for example

hospitals, universities, and local governments. Each organization must constantly

change with the current situation. If it is still a long notch with no change to

excellence, then it would lose in competition.

While innovation typically adds value, innovation may also have a negative or

destructive effect as new developments clear away or change old organizational forms

and practices. Innovation can be described as the result of some amount of time and

effort into researching an idea, plus some larger amount of time and effort into

developing this idea, plus some very large amount of time and effort into

commercializing this idea into a market place with customers.

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3.0 FEDERAL GOVERNMENT BUDGET 2010

The pie chart above shows the Malaysian Federal Government budget for

2010. The components of government budget comprises of planned revenue and

expenditure of the government. The estimated revenue for the year 2010 was RM

189,499 million. This showed a decreased in government revenue as compared to year

2009. There are 6 sources of Malaysian government revenue which are from income

tax, borrowing and use of government assets, export duties, import duties, non tax

revenues and other taxes, and indirect taxes. The income tax was the largest sources

of revenue which is 38.3% from total revenue. Non-tax revenue was 25.4% of the

total revenue where it comes from various sources such as licensing, registration

payment, and permits, payment of services such as court, port, rental, and any others.

The income that gained from indirect taxes was about 12.9%. The government

borrowing and the use of government assets were about 21.7%. The other two

revenues were import and export duties, 0.9% and 0.8% each.

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The second component of budget is the expenditure. The expenditure of

Malaysian government was divided into two parts which are operating expenditure

and development expenditure

The operating expenditure is the expenses incurred by the government to

finance the operation of the government. The estimates operating expenditure for year

2010 was RM138, 279 billion. It covered the emolument (RM 42.2 million), debt

service charges (RM 15.9 million), supply and services (RM 20.8 million), pension

and gratuities (RM 10.8 million), grants and transfer to state government (RM 4.9

million), subsidies (RM 20.8 million), and other expenditure (RM 22.7).

In the other hand, for the development expenditure, the estimated expenditure

for 2010 was RM 53,220 million. The development expenditure refers to the expenses

incurred by the government to develop the country. The development expenditure is

divided into four major sectors which are economic, social, security, and general

administration. This development expenditure also includes government saving for

the contingencies. For the year 2010, government had allocated RM 25.4 billion for

economic sector that will cover infrastructure, industry, and agriculture development.

For social sector, a sum of RM 20.3 billion was provided to improve the education,

health, welfare, and community development. For security sector, RM 3.7 billion had

been provided by the government to develop the security system such as defence and

internal security. For general administration, government had allocated RM 1.8 billion

for the development of general administration of the country. Lastly, for the

contingencies, government had allocated RM 2000 billion. The purpose of these

contingencies is to prepare if something happen to our country.

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4.0 INNOVATION STRATEGIES IN BUDGET 2010

4.1 Innovation in Public and Private Sector Governance

The essence of the 2010 Budget a lot written and implied. To ensure that all the three

strategies it is achieved. First, to drive the country towards high-income

economies. Second, to ensure a holistic and sustainable development and final, well-

being of the people. In order to achieve the first and second strategy it requires the

close cooperation of public and private sectors. The result is the well-being of the

people.  Two factors that should be considered to be achieved first and second

strategy are to strengthen governance and boost innovation, creativity, productivity

and value added in the two sectors. In the context of public services, innovation can

be implemented in various aspects including customer management, work culture,

strategic management and organizational leadership, human resources, finance and

assets, information and communication technology (ICT), project management and

development

4.1.1 Implementation of Privatisation Initiatives

This initiative where government will reduce involvement in economic activities in

areas where it competes with private sector. This second wave of privatisation aim to

enables companies to operate more efficiently as well as reduce their financial

dependence on government. For this government will privatise companies under

Ministry Of Finance and other viable government agencies. Therefore, through this

privatisation it will enable government to enhancing governance as it will lessen the

burden of government as through privatization under Ministry of Finance, the GLC’s

and other agencies did not fully independent in government like in the past when its

end up to force government to help pay its debts receivables (bailouts), amounting to

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hundreds of millions of dollars. Thus government can focusing in providing a better

services in others fields that is more important such as education and so on.

4.1.2 Combating Corruption

The efforts aim at enhancing confidence and public perception, eliminating corruption

among enforcement and public officers as well as to ensure Government Procurement

procedure are followed.

First: Formulate a Whistle Blower Act to encourage informers to disclose

corruption and other misconduct.

Second: Establish 14 Special Corruption Sessions Court and 4 Special

Corruption Appeal High Courts.

Three: Enhance the image of Malaysian Anti- Corruption Commission and

also organising International Conference on combating corruption, and

also awareness campaign through mass media.

4.1.3 Intensifying Government Delivery System

In order to intensifying government delivery system, there are various innovation has

been made. Firstly, PEMANDU was established to monitor the implementation of

Government Transformation Programme. It aims at enhancing the efficiency and

transparency of government machinery. Secondly, government also will continue to

strengthen public training institution to produce high quality and knowledgeable civil

servants. On the ground of this INTAN Bukit Kiara will be upgraded to a school of

government with autonomy power. Last but not least, the establishment of cross

fertilisation program between government department and GLC’s that aim to provide

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exposure and understanding on roles and responsibilities between both parties.

Through this program it will place the government officers in private companies and

international agencies.

4.2 Education Innovation

As in the second strategy of budget 2010 is to ensure holistic and sustainable

development to enable the country to become a high-income economy, it requires a

high quality human capital with suitable skills. Thus to produce a high quality human

capital, innovation in education is important. In line with it,

4.2.1 Expanding access to quality and affordable education

Government will allocate RM 30 billion for primary and secondary education. The

allocation includes emolument, student assistance and scholarship program,

construction of 80 new schools as well as 1,100 additional blocks. In addition a sum

of RM 1.1 billion is provided to renovate and upgrade schools nationwide, especially

in Sabah and Sarawak. Through this 4 NKRA sub components will be given attention.

First: Strengthening pre-school education, where government will

incorporate pre- school education as part of mainstream national

education system by increase participation rate of children 5 and 6

years old. For this an allocation of RM48 million will be provided to

renovate all facilities and pre school curriculum under KEMAS as well

as provide training and courses to government and private pre school

teachers.

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Second: Increase literacy and numeracy rate, this is where government aim to

ensure that 100% of all normal school children will master basic

literacy and numeracy after 3 years of schooling. The allocation of RM

32 million will be allocated to prepare special modules for student and

teachers and special training program for teachers.

Three: Creating High Performance School, government will identified

schools as high performance school (SBT) to focus on academic

excellence, overall student’s achievement, including discipline,

cleanliness as well as curriculum. The government targets 20 schools

as SBT with an allocation of RM 20 million.

Fourth: Recognizing school principals and head teachers, where government

will ensure that schools are managed and administered professionally

by principal or head teachers. In line with this, New Deal or Bai’ah

will be introducing as an appreciation of contribution and performance.

The government will determine the performance targets that must be

achieved and rewards in term of monetary and non-monetary as well as

autonomy will be given if achieved the targets.

4.2.2 Expanding PERMATA program

This program will emphasise on early childcare and education in an integrated and

organized. Government has provide allocation of RM100 million to implement the

following :

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First: PERMATA Negara involves early childcare and education program for

children under 5 years old. A guideline will b provided in coordinating

curriculum, training and qualifications of trainers at children centres.

Second: PERMATA Seni, which will provide training for talented students in

performing arts implemented by Ministry of Information,

Communication and Culture.

Third: PERMATA Pintar, to guide students with extraordinarily intelligence

to excel. This will be implemented by UKM in collaboration with the

university of Johns Hopkins US. The first intake will be on 2011.

Fourth: PERMATA Insan, aims to educate students to understand, and practice

the fundamental of Al-Quran. This program will be implemented by

Universiti Sains Islam Malaysia for students between 9 to 12.

4.2.3 Strengthening Public Higher Education Institution

This is an effort to strengthen public higher education institution (IPTA) in order to become

more competitive and improving in their world ranking. A greater autonomy will be given for

them in managing finance, human resource, administration, student intake and income

generation ie IPTA are allowed to establish subsidiaries to generate revenue. Government

also will linnet the rules and regulation and give opportunity to IPTA to generate their own

income. This also will reduce the financial dependence on government. But the income

generation activity by IPTA will be observed by government to ensure it not jeopardize their

core business of producing quality human capital.

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4.3 Economic Innovation

In advancing towards a high-income economy, government will take an approach that

based on innovation, creativity and high value added activities. This approach will

increase the more than double per capita income of citizen in the next 10 years.

4.3.1 intensifying Foreign Direct Investment

Through this strategy, Khazanah Malaysia Berhad and Permodalan Nasional Berhad

will enhance the collaboration with foreign investor. In line with this the government

will intensify efforts to attract FDI by allowing equity ownership in companies and

joint ventures in local project. Presently an aggressive step has been taken in order to

attract investors from Middle East, China and India. Currently investor from Saudi

Arabia has invested USD 1.5 billion in a high impact project in collaboration with 1

Malaysia Development Berhad (1MDB), a government-owned sovereign wealth fund.

GLC’s and Private sector companies also must enhance their social responsibility. In

line with this, 1MDB will establish fund total RM100million.

4.3.2 Advancing Agriculture Sector

This sector has significantly contributed to the income of people in rural area and to

economic growth. This sector has the potential to generating income for citizen. Thus

the transformation of this sector needs to be intensified from the cultivation to

marketing the products. On the ground of this, this program were aimed at attracting

more young entrepreneurs, encourage best practices agriculture, and upgrade

agriculture infrastructure. RM 6 billion will be allocating for this sector. the program

that will be taken under this program are:

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First: Implement the incubator Program; this is to train and guide youths and

graduates to be successful agro- entrepreneurs.

Second: Modernize the aquaculture industry; this also will provide a training

scheme for aquaculture breeders with focus on production of fish fry

and ornamental fish

Third: Develop basic infrastructure: This step will develop a basic

infrastructure of livestock farm and establish supply chain for

production of beef and mutton.

Fourth: Upgrade and improve drainage and irrigation infrastructure in paddy

fields involving 180,000 farmers with an allocation of RM137 million.

In line with all the programs, efforts are being undertaken to establish Federal Land

Development Authority (FELDA) will be as national food storehouse and settlement

for large scale food production. FAMA will facilitate the marketing of these products.

In addition to ensure agriculture products are marketed abroad effectively, the cargo

Facilities will be upgraded, and MAScargo will upgrade air cargo facilities for export

Of perishable agriculture products.

4.3.3 Enhancing Implementation of Public-Private Partnership Initiatives

Public- Private Collaboration will be enhanced to enable the private sector to

spearhead economic growth. The high impact project will be taken jointly with the

cooperation among private and public sector. The role of the government is in order to

provide and facilitate the provision of basic infrastructure to ensure the project

viability. The project that will be undertaken in 2010 is the development of an

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Integrated Immigration, Customs and Quarantine Complex (CIQ) in Bukit Kayu

Hitam, construction of 6 UiTM Campuses and the development of MATRADE

Centre.

4.4 Societal Innovation

The government is very serious towards the welfare of the citizens. This is the

essential responsibility of the government towards the citizens. The government

should gives priority to the citizens either in social or economic sector.

4.4.1 Expanding Public Health Facilities

The health problem becomes the important agenda of the government. That is why the

government allocated RM 14, 783 billion on the public health. This allocation is to

manage, build, and upgrade the hospital ad clinic in Malaysia. For year 2010,

government had planned to construct and upgrade the hospitals in certain areas. The

construction and upgrading the hospitals covered the area of Kluang, Bera, Shah

Alam, Alor Gajah, and Tampoi. Besides that, Malaysian government will introduce

community clinic service in the urban area known as 1Malaysia clinic. This

community clinic service is similar with the “klinik desa” at the rural area. The

1Malaysia clinic is located at the housing area to enable the people to get basic health

treatments.

4.4.2 Improving Public Transport

Malaysian government also place the urban public transportation as one of the

NKRA to assist the public I their daily activities. This is because the effective and

efficient public transportation can increased productivity and reduced the traffic

congestion. Among the step taken by government in enhancing public transport is by

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speed up the establishment and operation of the “Suruhanjaya Pengangkutan Darat

Awam (SPAD) as the authority to monitor and enforce service standards and planned

for the long term urban public transportation. The SPAD is expected to operate in

2010. Besides that, government had set up new 8 Electric Multiple Unit (EMU) and

upgrading the 9 EMU. This is done by the KTMB to increase the efficiency of the

commuter service. Furthermore, “Syarikat Prasarana Negara Berhad will be

responsible to acquire 35 units of Light Rail Transit (LRT) for Kelana Jaya-Taman

Melati line. There are 4 units of train that have been delivered and currently operating,

while 22 units will be delivered in 2010, and the remaining will be delivered in 2011.

4.4.3 Eradicate Hardcore Poverty

The government is committed in eradicating hardcore poverty in Malaysia I

the year 2010. In order to eradicate poverty, government had identified 50,000 units

of hardcore poor households and 4,000 “Orang Asli” household that are registered

under eKasih program. Government had provided the opportunities for skill training

and income generating program to reduce hardcore poverty. Some of the measures

taken by the government are distributing federal welfare assistance on the first day in

every month starting on 1st September 2009 for peninsular Malaysia, and 1st January

2010 for Sabah and Sarawak. Besides that, government is also continuing “Skim

Program Lonjakan Mega” in Batang Sadung and Batang Lupar, Sarawak. The

government has allocated RM 141 million for this program. This program will help

5,600 family from hardcore poverty.

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5.0 ISSUES

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