Malaysia to tackle rising cost of living in budget?

Easing concerns over the rising cost of living among Malaysians is expected to top the agenda, with the government firm on further cutting subsidies to reduce fiscal deficit to 3 per cent next year.

KUALA LUMPUR: Malaysian Prime Minister Najib Razak has promised a pro-people budget when he tables the national budget for 2015 in parliament on Friday (Oct 10). Easing concerns over the rising cost of living is expected to top the agenda, with the government firm on further cutting subsidies to reduce fiscal deficit to 3 per cent next year.

Najib is expected to drive home the key message that the current level of subsidies is simply unsustainable. Fuel subsidies have increased from less than US$500 million (RM1.6 billion) a year in 2002 to US$600 million (RM2 billion) a month currently. Years of budget deficit with government debts hovering at 54 per cent of GDP is viewed unfavourably with international rating agencies and foreign investors.

Najib has reiterated his firm commitment towards further reducing subsidies to trim fiscal deficit, saying it is wrong to pass the debt burden to the next generation – but which is likely to cause short-term pain for the average Malaysian.

Pump prices were already raised by 6 US cents per litre last week, and further cuts in fuel subsidies can be expected next year along with a possible hike in electricity tariffs and toll charges. Many Malaysians are concerned about a surge in the cost of living especially with the expected roll out of a 6 per cent goods and services tax (GST) in April.

"GST will burden the poor people because 6 per cent tax will affect 29 million Malaysians including children and adults. So if you get RM10,000 salary, then it is no problem, but those who get less than RM3,000 household income will be burdened,” said one Malaysian protesting against the planned GST. Another remarked: "If the government could manage finances we wouldn't need GST."

Najib has promised to continue with the current cash hand-outs for those with a monthly income of less than US$1,000. Schoolchildren and college students can also expect to receive benefits such as text book vouchers.

While shrinking fiscal deficit towards a balanced budget in 2020 is the ultimate goal, Najib said this year's budget will still keep the focus on creating more job opportunities for school leavers and improving education as well as creating more affordable housing for first-time buyers.

- CNA/nd