Photograph: Benson Kua

It was a fairly significant moment when the Selangor and Penang Pakatan state governments tabled and passed their final budgets of their first five-year term in power for the year ahead. It was an opportunity to showcase the success stories of the respective states over the last five years, and to set out plans for the future – in the hopes that voters will continue to place their trust in the same parties.

FINANCIAL HEALTH:
Both states placed a similar emphasis on achieving financial health. Penang projected an increase in revenue as high as 83.6% in 2013 compared to RM385.9mil in 2012. It also recorded a budget surplus of RM138mil for 2011, an increase of 312% compared to RM33mil in 2010 when there was a 95% reduction of debt. In the meantime, Selangor too recorded positive results with an increase in revenues from RM1.57bil (2010) to RM1.634bil (2011), as well as a 22% increase in its consolidated fund from RM1.58bil (2010) to RM1.944bil (2011). Both Penang and Selangor did well in managing their financial health.

ECONOMY-CENTRIC THEMES:
The Penang budget was themed Agenda Ekonomi Saksama (AES) or Equitable Economic Agenda, which Chief Minister Lim Guan Eng used as a sarcastic quip to draw comparison with the federal government’s way of managing the economy, exemplified by their Automated Enforcement System (AES), a traffic monitoring system privatised to two companies (see this column in December 2012). Selangor’s budget was given the theme Selangor Peneraju Ekonomi Malaysia or Selangor at the Forefront of Malaysia’s Economy. The emphasis on the economy is telling; although state governments have no jurisdiction over macroeconomic policy, they are all too aware of the importance people place on economics, which ultimately determines their daily welfare.

Photograph: Kwong Wah Yit Poh

AUDITOR-GENERAL’S 2011 REPORT:
Another financial success that both states were proud to announce in their budget speeches was the commendation given by the Auditor-General’s 2011 Report. The report praised Selangor for its financial performance, increase in savings, revenues, investments and financial management. Specific mention was given to the fact that nine out of 12 of its local councils and five statutory bodies recorded surpluses; there was an increase in state revenues (as mentioned above); there was healthy public debt repayment; and state development was positive based on expenditure and the number of approved projects. Eight agencies were awarded a 4-star rating. Similarly, four of Penang’s agencies were also given the 4-star rating, and the state’s finances were also praised.

VALUE FOR MONEY:
Both state budgets made mention of the terms “value for money” and “open tender”, with Selangor’s Menteri Besar Tan Sri Khalid Ibrahim repeating the former phrase several times throughout his speech. For instance, under one of its strategies of pushing for innovative and modern development, Selangor’s act of having its local councils take over waste management service from its previous contractor Alam Flora saved the state RM80.95mil through the use of open tenders. These savings were then used to provide a 25% rebate for quit rent to low cost flats. In fact, contracts worth RM446.9mil were done via open tender from January to October 2012, which saved the state 18.6% or RM102.2mil (original tenders were estimated at RM549mil). Penang’s adoption of open tenders for the Material Recovery Facility (also for solid waste management) was also mentioned.

BALANCED BUDGETS:

Both Selangor and Penang saw higher budgets being tabled for 2013. Selangor’s budget grew to RM1.63bil from RM1.43bil, an 11.89% increase from 2012. This was a balanced budget, with an increase in development spending of three per cent and a slight fall in operational spending of 0.5% (the latter was due to the reduction in debts owed to the federal government). Penang, however, passed an RM1.13bil budget, an increase of 50.68% that almost doubled the RM752.53mil budget of 2012. This deficit budget (of RM262.04mil) was not the first for the Pakatan-led government, and the Chief Minister stated that this deficit would be funded by the state’s accumulated savings of RM710.81mil from 2011. In 2012, although it had originally tabled a deficit budget, Penang eventually recorded a surplus and, based on the budget speech, it hopes to do the same in 2013.

EXPENDITURE:
The bulk of Selangor’s budget was allocated for infrastructural projects, including public amenities, as well as its annual social programmes under the Merakyatkan Ekonomi Selangor (MES), or People’s Economy, and finance-based projects. Specific mention was made of the RM300mil Selangorku Grant, out of which RM37.4mil has been spent on infrastructure projects (whilst others are for human development, women and voter empowerment purposes). Apart from this, RM500mil of reserves will be used to build the third bridge in Klang (RM300mil), developing storm water as a source of water (RM100mil) and drainage systems (RM50mil). The Penang government allocated RM20mil for the year to top up any gap between household income and its state-decreed minimum wage of RM770 (increased from the previous amount of RM600, to be at least above the poverty line income of RM763).

INVESTMENT AND OTHER SECTORS:
Over the four years of the Pakatan governing Selangor from 2008 to 2011, the state attracted RM38bil worth of investments, whilst it topped the charts amongst all states for the first half of 2012, recording RM6.08bil and estimates the full year’s amount to total RM7.7bil. Penang led the investments record in both 2010 and 2011, and it hopes to target new sectors for growth in electronics (LED), avionic, photovoltaic, semiconductors and biotechnology, with a particular emphasis on SMEs. Selangor’s budget focused on ensuring the state’s assets were well recorded and taken care of (water services, particularly), developing new methodologies for water sources, ensuring affordable housing and urban living amongst others. Penang’s budget placed equal importance on housing (the Singapore Housing Development Board is to provide assistance), whilst emphasising tourism, cultural preservation and public transport as highlights. Allocations were given in both states to the following categories: environment, health, youth and sports, women, spiritual development, Islamic affairs, education, public utilities, entrepreneurial