KUALA LUMPUR: The 2017 Budget is likely to be a populist one with improved handouts such as the 1Malaysia People’s Aid (BR1M) for the needy and certain tax relief for targeted groups, particularly the bottom 40 and middle 40.
MIDF Amanah Investment Bank Bhd chief economist Dr Kamaruddin Mohd Nor said the assistance offered to these groups would help boost domestic consumption.
He said the effect of the handout is high as these groups spend almost 70 to 80 per cent of their income on necessities, such as food and accommodation, compared with other groups with higher household income.
“It would highly likely be an election budget instead of a cost-cutting budget. It’s going to be more focused on the rakyat. It’s going to address the people’s concerns mostly on the high cost of living, affordable housing and education among others,” Kamaruddin told Business Times in an interview, here, recently.
The B40 group are those with household earnings of RM3,000 and below, while the M40 are those with a household income of RM3,860 to RM8,319.
Other than boosting the domestic economy, Kamaruddin is hopeful there would be some allocation for education as well as vocational and technical training to upgrade the skills of workforce as the country move towards service-oriented economy.
He also hoped there would be some allocations for the agricultural sector to spur the growth of “Made in Malaysia” food products.
The budget will be tabled by Prime Minister Datuk Seri Najib Razak, who is also Finance Minister, on Friday.
The government has been giving out BR1M since 2012 with an initial single payment of RM500 to low household income group in Malaysia. Those who are single and aged 21 and above were also given RM250 in a single handout.
The BR1M allocations since 2012 until last year have seen an increase. RM2.6 billion was allocated in 2012, while in 2013, 2014 and 2015 the allocations were RM3 billion, RM4.6 billion and RM4.9 billion, respectively.
Last year, a total of RM5.9 billion was set aside for BR1M. The handout to the needy B40 and M40 groups has boosted private consumption and economic activities in Malaysia since it was introduced four years ago.