KUALA LUMPUR: Budget allocations for construction projects cannot be cut as there will be an adverse ripple effect on the economy and the people, the minister for the economy, Mustapa Mohamed, said today.
He said more than 40% of the development projects receiving budget funds were continuation of half-completed projects such as schools, hospitals and highways.
“If the projects are immediately halted, the people will suffer,” he said. “The government does not have the option of cutting the allocation as that would be unreasonable.”
Mustapa was asked in a television interview why the government did not postpone construction projects and channel the allocation to other matters that needed more focus such as the Covid-19 crisis.
He said a cut in development expenditure would affect about 200 other sectors, such as architects, lawyers, banking institutions, hardware stores, and consultants, who depended on the construction sector.
Many professionals have lost their source of income when the government cut allocations for the construction sector in the 2019 budget, he said.
“The construction sector has a large multiplier factor, it will adversely affect many quarters and thousands of contractors will lose their jobs,” he added.
He said a total of RM322.5 billion or 20.6% of gross domestic product was allocated for the 2021 budget, with RM236.5 billion (73.3%) for operating expenditure, RM69 billion (21.4%) for development expenditure and RM17 billion (5.3%) for the Covid-19 fund.