BUDGET 2013 is already well on the way as consultations gather pace, having kicked off several weeks early in anticipation of a weaker international economic environment.
That the input net is being cast as wide as possible suggests an eye towards ensuring the needs of the population, no matter how disparate or lowly, are satisfied. The objective is, of course, to cushion the poor and vulnerable especially, from the impact of an expected and feared global recession caused by the severity of the sovereign debt crisis in several European countries. So dire is the outlook that economists have gone so far as to factor in a possible eurozone collapse and the contagion effect that would have worldwide.
Despite the problems caused by the profligacy of many mature economies in the developed world, Malaysia has, thus far, fared rather well with a first quarter growth rate meeting forecasts. This indicates that the country is still on track to achieve First World status according to the appointed timeline. Indeed, the Industrial Production Index (IPI) has surprised pessimistic analysts by staying on an upward trend. Projections for a continuation of such robust performance, however, should err on the side of caution. In the powerful growth juggernauts of the BRIC group of developing nations (Brazil, Russia, India and China), growth has unmistakably slowed down. Of concern to Malaysia is the Chinese economic powerhouse, which has overtaken Japan as the world's second largest economy. Despite its still comparatively impressive rate of economic growth and the increasing importance of its currency as a global player, Malaysia's major trading partner is pulling back on its demand for imports.
China has implemented policy measures to soften the blow of reduced exports on its industries and workers. Its trading partners have been gratified by Beijing's determination to keep the Asian collective economy afloat. Even so, no country as reliant on trade as Malaysia can leave its fortunes to the policymaking talent of others. Therefore, Budget 2013 is again looking at meaningful measures of direct assistance, for instance, a second round of the much appreciated Bantuan Rakyat 1Malaysia (BR1M) for households with a monthly income of RM3,000 and less, more Kedai Rakyat 1Malaysia (KR1M) throughout the country, and the 1Malaysia menu. Indeed, critics of these programmes, including the RM100 to schoolchildren and book vouchers for university students, consider the payments too small to have the desired outcome. For those who have received the aid, however, this is more than temporary relief. They will appreciate not just the extra cash, but a responsible government that helps within its means.