Game-changing moves for a better future

A KEY objective of the 11th Malaysia Plan is to ensure the country’s poorest families can seize the opportunities that national prosperity offers.

That is why households whose incomes are in the bottom 40% – the B40 – are a priority in the pursuit of development that is more inclusive.

As explained in the 11MP, failure to elevate the socio-economic status of the B40 households brings social costs that all Malaysians have to bear.

Neglect the B40 and we may end up with problems such as a shortage of skilled workers, persistent urban inequality and stunted growth.

The 11MP introduces six game changers, that is, innovative approaches to development that can alter the trajectory of the country’s growth.

One of these game changers is uplifting the B40 households towards a middle-class society.

This strategy fits the observations made by the World Bank in its Malaysia Economic Monitor report issued last December.

The report pointed out that Malaysia’s shared prosperity journey had entered a new phase as part of the transformation into a high-income nation: the move towards a middle-class society.

The report argued that while most Malaysian families were no longer worried about absolute poverty, they aspired to more than just meeting their basic needs.

Instead, they now want the comfortable living associated with the middle class.

There is far more involved here than the need to satisfy the desires of the B40.

The middle class has a decisive role, and it matters how fast the B40 progresses to the next level.

The World Bank believes that the importance of the middle class to a country’s economic growth has been well defined.

Its report in December last year supported this point by drawing from several studies.

A 2001 paper, for example, finds that there is a strong inter-relationship between the size of the middle class and a country’s level of income and growth.

Another study, said the World Bank, had concluded that the middle class was also seen as the driving force behind a country’s social and political stability, expressing preferences that reward moderate over extremist values.

It is therefore appropriate that the Budget 2016 addresses the M40, the households with incomes between RM3,860 and RM8,320, which puts them in the nation’s middle 40%.

Individual taxpayers in this group will be getting higher tax relief.

In his www.najibrazak.com blog on Monday, Prime Minister Datuk Seri Najib Tun Razak fleshed out the focus on the middle class:

“No country can reach progressive growth, economically and socially, without the full participation of the middle class,” he said.

“The size and strength of the middle class is the quintessential measurement of a country’s economic strength.

“The middle class social and cultural habits and value system can essentially determine the course of a country’s history.”

He said the M40 is central to the country’s consumption spending and private investments, and serves as a critical pool for talent, investments and entrepreneurship.

With this emphasis on the M40, helping Malaysia’s middle class to realise its hopes and aspirations is as pivotal to national development as pushing the B40 up the income pyramid.

It is no mystery what the middle class wants most.

A survey last year by insurance company AIA, for example, showed that the top goals in life for the country’s middle class were health, a happy marriage and a better life for their children.

These are the things that motivate people all over the world.

Much of health and matrimony depends on the individual, but certainly, governments have a major influence on the shape of the future that awaits our children.

All of us – the B40, the M40 or even the top 20% – will gladly embrace policies and actions that promise a better tomorrow.