Govt urged to review pension reform and rightsize civil service

KUALA LUMPUR: The government needs to look at pension reform and rightsizing the bloated civil service to rationalise expenditure, according to Socio-Economic Research Centre executive director Lee Heng Guie.
This is in view of the size of the civil service, which stands at about 1.6 million, that takes up more than a third of the RM214.8 billion operation budget through emoluments.
“I emphasise the need to look into public sector pension reform and rightsize the civil service,” Lee said.
“We need to get the size right, there is little space for developmental expenditure, as most is spent on operational expenditure,” he said on emoluments taking up a large portion of the budget allotted under Budget 2017.
According to Lee, Malaysia’s civil service ratio to population stands at 1:44, while Singapore’s ratio is at 1:77 and Indonesia at 1:110.
The government can look at improving efficiency through “rightsizing” the civil service by leveraging on means such as e-government and technology. This is essential for the government “to stay on a path of fiscal consolidation and control debt”.
He said the government’s fiscal deficit target of 3% to the gross domestic product (GDP) is achievable on the back of oil prices, and expects the government to lower its target next year.
The real challenge, however, lies on its ability to stay on a near-balanced fiscal budget by 2020.
Lee also commended the government’s efforts to reduce its fiscal deficit.
“Fortunately in the first quarter the federal debt to GDP was at a very good ratio, it was only about 50.2% of GDP with a net repayment of RM29.9 billion.
“(On an) absolute level, it is still high (at) RM664.5 billion, but in terms of GDP it is only at 50.2%, due to the expanded size of the GDP, which is still below the 55% set by the government,” he added. – by V. Ragananthini