Budget 2012 – Embracing the middle class

The most vocal class are often heard to be neglected

We are still talking about the Budget presented by the Prime Minister last Friday in Parliament.

Many reviews, analysis and feedback can be read in blogosphere since that day. As usual, like so many years before, good points were raised and bad things were pointed out.

Obviously no man made things or ideas are perfect. And this Budget is no exception. I believe the government is doing it’s best to present a fair budget that will not be too strenuous to the budget deficit.

To correct a few perception, this budget is not a long term plan or policy for the nation. Neither will it cause the country to be mired with huge debts. It is certainly not a long term development plan like the 10th Malaysia Plan or the New Economic Model.

It is simply a proposal by the government presented to the parliament to get approval by parliamentarians on how government will spend in 2012. It is simple as that. But the thought process into developing the budget was not simple.

Months were spent to figure out the best way to do it without jeopardising the financial health of this country.

With international reserves standing at Rm414.5 billion which could finance 9.5 months of imports and a huge increase of FDI in 2011 (RM21.2 billion for the first 6 months of 2011 as compared to RM29 billion for the whole of 2010), coupled with 2011 income per capita of RM28,725 as compared to RM26,175 in 2010, the economy is forecasted to be growing positively at a maximum 5.5%.

The budget signifies PM’s method underlined in his New Economic Model where it will focus more on needs based approach i.e., developing and improving the 40% of Malaysia’s households that earn less than RM1500 a month.

Although I have a few misgivings on the New Economic Model which can be read here and here, I can’t fault the budget for focussing the needy and the lower income group.

Subsequently, the middle income group feel neglected especially when the lower income earners seemed to get the bulk of the incentives. A quick glean over the social media revealed that feedback from a more vocal middle income were from professionals.

There is nothing wrong for asking the government goodies to alleviate their lifestyle. But when the complaints for not getting any money or incentives came from a section of middle income earners who in the past had chastised the NEP and the government for its ‘crutches’ mentality, then the real characteristic of these people is exposed. In the past, they were ashamed of the NEP. Today, they cry because the government is not putting some money in their pockets.

Shameless.

Of course it can be argued that NEP and budget one-off payments are not the same. But surely to ask something from the government while knowingly is disparaging a policy that had helped the poor in the past is smack of hypocrisy of the highest order. Especially when this budget, with an already limited resources, must prioritise the people who needed a quick relief the most.

Importantly, the budget is not devoid of any relief or assistance towards the middle class. And most definitely, not all middle income earners and professionals are shameless people like the ones mentioned above.

The budget has something for everyone. Directly or indirectly.

For the middle income earners, among the many incentives are:

1) Increase from 12% to 13% of employer’s contribution for employees earning less than Rm5,000 per month

2) New and improved salary scheme for civil servants:

    a) Annual increment of 7% to 13%

    b) Half month bonus this December

    c) 5,000 master’s and 500 PHDs scholarships respectively are provided

3) 100% exemption on housing loan stamp duty

4) Increased on-call allowance for medical officers and specialists

5) RM100 million soft loans with low interest rate for professionals setting up professional firms in smaller cities.

6) Abolition of all school fees.

7) My First Home Scheme price limit to be increased from RM220,000 to Rm400,000.

8 ) RM100 for all school children and RM200 book vouchers for college students.

9) Free immunisation against Human Papilloma Virus for all women.

10) RM2.1 billion micro credit financing under Amanah Ikhtiar Malaysia is provided for entrepreneurs, especially women.

11) RM10 million allocation to implement training programmes to help and encourage professional women to return to work.

All the above will directly and indirectly benefit the middle income group in 2012. Please note that the government has been giving a lot of incentives for this income group for many years.

And these incentives are continuing measures till this day. Among others, income tax rate cuts, higher individual tax reliefs, moratorium on PLUS toll rates (no increase for a certain number of years), and subsidies on electricity tariffs. Before 2002, widows who lost their husbands cannot receive any more of her husband’s pension if she remarries. After 2002 budget, she can continue enjoy her late husband’s pension even after she remarried.

Look back on the past budgets and there are hundreds of goodies being given out for middle income group which may have been taken for granted today.

This article is written merely to help us remember that there are other needy people out there than to think about our own pockets. At least, we are in the middle income group. It is really but a small twist of fate that we didn’t end up jobless, homeless or destitute.

Speaking of homeless, it is good to hear that the government is setting up “Anjung Singgah” for those who are seeking help. Last year, I was involved in feeding the homeless in Kuala Lumpur streets organised by Reach Out and it was truly a humbling experience. Therefore, I think Anjung Singgah is a terrific initiative by the government.

Further reading : Middle income group included