RINGGIT BEFORE THE BUDGET 2017

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SEPT 8 TH 2016

OCT  7 THE 2017

ere's What Malaysians Want To See Addressed In The Upcoming Budget

Yesterday S wishlist for the upcoming budget.

Ng Hooi Koon, 26, accountant, Kuala Lumpur

“The education system in Malaysia should focus on being an economic instrument for growth. The government should allocate more funds to improve Internet access in schools, since many teaching materials were now online. The quality of reading materials in schools and libraries must improve so students would have better access to information.

Seran Shanmugam, 30, technician, Sitiawan

“It is not an overstatement that most Malaysians are still unable to own a home even though Malaysian property prices are rising at a slower pace. My wish is for the government to make it easier for the younger generation to own their first house by increasing the supply of affordable houses. Providing affordable houses for Malaysians is no longer a financial question but a moral one, so to speak.

Jeff Henry.L, 32, wedding planner, Pasir Mas, Kelantan

“GST has severely affected my finances. This could be due to the lack of proper execution for the escalating cost of living. I want the government to reduce the GST rate and to improve price regulation to deter errant businesses from rampantly increasing their prices.

“Besides, public transport should be improved and the government must ensure the bus and taxi network in the Klang Valley is efficient, and well coordinated and the fares must also be attractive.”

Shilla Robert, 23, public relations officer, Kuching

“There is no denying that our country has low minimum salary that it’s quite difficult to stretch income to last till the end of the month. I hope the government introduces more affordable housing schemes especially in the city. Housing loans should also be more flexible for those who do not earn much to enable the lower or middle income group to own their own houses.”

Focusing On The Bottom 40 Percent And Middle 40 Percent Income Groups

According to Economic Report 2015/2016, the B40 (bottom 40% household income) group comprises households with a monthly income of up to RM3,855, while those in the M40 group (middle 40% household income group) earn between RM3,860 and RM8,319, Second Finance Minister Datuk Johari Abdul Ghani had highlighted the government’s continuing concern for these groups at the 2017 Budget focus group meeting on cost earlier in August.

Datuk Johari had said besides BR1M, Budget 2017 would also address issues pertaining to affordable housing under the 1Malaysia People's Housing Programme (PR1MA), the welfare of the Bottom 40 per cent (B40) and Middle 40 per cent (M40) income groups.

Johari said The 1Malaysia People's Aid programme or BR1M will continue as the government is committed to it. He also emphasized that there is a gap in terms of obtaining financing for the total purchase price of properties as banks are not providing the full financing that people want and there is a need to look into this.

When contacted, Hong Leong Investment Bank Bhd financial analyst, Sia Ket Ee (pic) told Malaysian Digestthat with the increase in the general price level, it is argued that the B40s and M40s are finding it hard to sustain their standard of living.

"It is commendable that the government is committed in addressing the issue in a holistic way to enhance the well-being of Malaysians. However, Malaysians generally spend about 30% of their disposable income on food and food away from home, nearly 24% on petrol, housing and utilities and others.

"With the change in lifestyle, the basket of necessary goods today includes cars, hand phones, computers and Internet access,” he said, which is consistent with the Finance Ministry’s statement earlier.

Asked how to address the rising cost of living, Sia opined: “Prices of essential goods and services and income need to be examined closely. This can be done by opening up more land for food and fish cultivation to all enterprising farmers and fishermen on a more equitable basis.”

“At this point of time, it is more important that the government continues on its budget consolidation path with the aim of reducing the deficit to further enhance private sector participation in economic development instead of focusing on goodies.

“The government should also review and revise our current economic model and make it more competitive, efficient and productive,” he reiterated.

Sia’s call for prices of essential goods and incomes to be constantly monitored echoes the government’s concerns as the Budget 2017 focus group convened in August summarised six items to be further examined. These areas all relate to keeping tabs on cost escalation of food, education and transportation, as well as other necessity items like handphones and internet, and the ability to get finance from the institutions to buy houses.

“With the increase in the general price level, it is argued that the B40s and M40s are finding it difficult to sustain their standard of living,” Datuk Johari added.

“We will look into all these in detail and see how we can think about coming up with the formula (that we need) to have,” he noted.

Minister in the Prime Minister's Department Datuk Abdul Rahman Dahlan had also spoken that among the aims of Budget 2017 is to create an efficient social security network for the target groups during a challenging economic environment.

"Besides, we also need many training programmes to teach fresh graduates new skills to make them more relevant to industry needs," he told reporters after officiating Softec Asia 2016 earlier.

Abdul Rahman, who is in charge of the Economic Planning Unit, said for the middle 40 percent income bracket (M40), apart from tax reliefs, the government was also expected to study ways of reducing their monthly fixed expenses.

"If we can't increase salaries, as requested, maybe we can look at reducing the monthly payment component with the collaboration of the private sector," he said, adding that this would increase the purchasing power of the M40 and boost the country's economic growth.

Fiscal Discipline Is Important To Achieve Macro Stability, Says Economic Expert

However, it all comes down to the government's revenue forecast for the coming year as Datuk Johari also emphasized that allocations under the 2017 Budget would be decided ultimately by what the government can afford without jeopardizing the country's financial position.

"We will look at what the government's anticipated revenue is," he said, reports New Straits Times.

Earlier in September, the World Bank had also signalled its approval of Malaysia’s steering of its economy in the face of uncertain economic conditions.

“If you look at Malaysia’s story over the past years, it has been a positive growth story. Malaysia continues to grow in the period when there is a lot of global headwinds,” World Bank Malaysia Country Manager, Faris H. Hadad-Zervos had stated about Malaysia’s pro-growth budget policies in a one-day workshop in collaboration with the Performance Management and Delivery Unit on 6 Sept 2016

Faris highlighted that the Malaysian economy grew by 4% in the second quarter of this year, leading to a 4.1% growth in the first half of 2016, in line with the moderate pace of the global economy.

Speaking to Malaysian Digest, Prof Dr Shazali Abu Mansor (pic), economic expert and lecturer of Universiti Malaysia Sarawak (UNIMAS) said our country needs a major restructuring in our economic plans and annual Budgets.

“To alleviate the burden of Malaysians, the government should allocate more funding for basic needs like housing, transport, health and even higher wages that can be related to productivity and performance.

“This is because all these necessary economic structural changes will also mean a better tax structure that will eventually raise taxes from the higher income groups through higher estate duties and wealth taxes.

Shazali, however, believes that the upcoming budget is going to be people-centric, which will be focused on measures to ease concerns of voters like easing the rising cost of living and raising income level.

“The bottom 40% of households (B40) and the middle 40% (M40) will be the targeted group in Budget 2017,” he predicted.

Even though market expectations for a “people-friendly” Budget 2017 has been mounting amid speculation about an early general election, some economists say there won’t be “big election giveaways”, as the government also needs to ensure fiscal prudence.

Elaborating, Shazali remarked: “The budget’s aim should be macro stability which infers any expansionary plans should be done with fiscal discipline, considering the prolonged slowdown in global trade.

Pointing out that striking a balance between necessary spending to alleviate Malaysians concerns while practicing financial prudence to ensure favourable international economic rating will continue to be a priority.

“Striking a balance between spending priorities and resource constraints is important as rating agencies had warned that a lack of fiscal discipline could lead to negative rating action on Malaysia's credit profile.

“This is important as rating agencies have sounded that wavering on fiscal discipline and broader public finances that lend to higher debt ratios,” he concluded.

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