Budget shows clear shift from broad-based subsidies to direct assistance

BUDGET 2015 shows a clear shift from broad-based subsidies to direct assistance that has been the cornerstone of Prime Minister Datuk Seri Najib Razak’s Economic Transforma­tion Programme (ETP).

There were no big surprises in the budget, which is the last for the 10th Malaysia Plan (10MP).

In May next year, Najib will unveil the 11th Malaysia Plan, which is the last five-year plan before Malaysia hits high-income nation status by 2020. But in Budget 2015, what is evident is the number of direct subsidies given to various groups of lower and lower-middle income households, a move to ease the burden of this group of people.

Topping the list is the 1Malaysia People’s Aid (BR1M), which has been increased almost 50% to RM950 from RM650 for those households with a monthly income of RM3,000 and below. For those with monthly incomes of between RM3,000 and RM4,000, BR1M would be increased to RM750 from RM450.

On a smaller scale, assistance is channelled to rubber smallholders, who get a one-off special payment of RM500 to help overcome the low price of the commodity, fishermen to get monthly living allowances of RM250 or RM300 depending on location and a monthly allowance of RM200 for coastal fishermen.

To enable more people to buy their first home and reduce the cost of buying a house, the 50% stamp duty exemption will be extended to Dec 31, 2016 while the purchase limit will be increased to RM500,000 from RM400,000.

Furthermore, for those purchasing their first home via the Skim Rumah Pertamaku, the ceiling price has been raised to RM500,000 and the age of borrowers raised to 40 from 35. Conspicuously missing was the announcement of large-scale projects that used to be a feature in previous budgets under the ETP.

Among the few announced were the RM9bil LRT 3 and the RM23bil Second MRT Line. But both these projects were already on the drawing board.

The only element missing was the amount that the Government will set aside for implementation.

The much talked about Pan Borneo Highway, straddling Sabah and Sarawak, that has been mentioned since two years ago will finally take off next year at a cost of RM27bil.

There were also no major surprises where personal income and corporate taxes were concerned, as the reductions announced yesterday were already made known during Budget 2014.

But it is easy to fathom why Najib has taken a cautious stance in unveiling this budget.

It comes at a time when the country is going through a transformation in its tax system with Goods and Services Tax (GST) of 6% slated to replace the Sales and Service Tax from April 1.

The next one year will be a transition for the Government to gauge its potential income from GST.

For now, it is slated to net about RM5.6bil for the period between April and December next year.

Given that Budget 2015 is the final budget of the 10MP, Najib mentioned in his speech that a new approach known as the Malaysian National Development Strategy (MyNDS) is being formulated. This would underpin the 11th Malaysia Plan, to be launched next May.

Until then, the nation will have to go through this period of transformation.