Friday, April 26, 2013

GE 13 : The BR1M Way Forward

In his Budget 2012 presentation, Prime Minister Datuk Seri Najib Razak unveiled to the nation a new targeted approach towards helping low-income earners benefit from the continuing growth of the economy. His announcement of a one-off cash payment of RM500 to households earning less than RM3,000 a month electrified the nation. Najib's initiative immediately benefited 5.2 million families regardless of political affiliation.
The Bantuan Rakyat 1Malaysia (BR1M) or 1Malaysia People's Aid was repeated in Budget 2013 and its scope expanded to include single people. Apart from RM500 for households earning less than RM3,000, Najib announced BR1M cash assistance worth RM250 for single, unmarried people aged 21 and above, earning less than RM2,000 a month.
This financial assistance is one of the various initiatives undertaken by the Barisan Nasional government to alleviate the burden of low-income earners in facing the rising cost of living.
In its election manifesto, BN has pledged to make BR1M an annual feature and increase the amount to RM1,200 for households and RM600 for singles.
This is a remarkable approach to providing financial assistance directly to those who need it most. Costing RM2.6 billion, the programme benefits approximately 80 per cent of households in Malaysia.
In contrast, Pakatan Rakyat's promises – to abolish tolls and lower the price of petrol and car duties – are wasteful as these benefit only those who drive cars, including the middle class and the rich. In the name of helping the poor, the Opposition seeks to help the well-off pay less.
BR1M, meanwhile, gives cash hand-outs directly to the lowest income section of the population. With the economy growing at 5.6 per cent, Malaysia is financially well-placed to support such measures.
This also indirectly helps to boost the economy.
"Usually, if the government gives money to low-income earners they will use the money instead of saving it compared to high-income earners," said Prof Amir Hussin Baharuddin, lecturer of economics at Universiti Utara Malaysia (UUM).
"They will use the BR1M they get to buy household needs and it will create demand in the market," he told New Straits Times.
This will in turn generate job opportunities and help new businesses.
Other countries have provided fiscal stimuli in the recent past, including the United States and China. This can be done in several ways, such as increasing government spending on infrastructure or by lowering taxes to spur growth.
In Malaysia, programmes like BR1M can provide a shot in the arm to the local economy by boosting consumer spending.
"Private consumption is expected to grow by 6.5%, underpinning our gross domestic product (GDP) growth forecast of 5% in 2013," said a recent analyst report by Affin Investment Bank, referring to BR1M as a growth driver of household disposable income.
So BR1M can help millions of hard-working Malaysians as well as the economy itself. What is in this for the Opposition not to like?

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