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Wednesday, October 8, 2014

Sarawak folk want long-term measures, not BR1M handouts

Sarawak remains one of the poorest states in the country despite its rich natural resources and now state leaders and citizens want Putrajaya to address the problems of rural folk, including their poverty, in the coming bedget. – AFP pic, October 8, 2014.Sarawak remains one of the poorest states in the country despite its rich natural resources and now state leaders and citizens want Putrajaya to address the problems of rural folk, including their poverty, in the coming bedget. – AFP pic, October 8, 2014.The Budget 2015 tabled on Friday will not improve the future of Sarawak's rural folk without long-term strategies to raise their incomes, state leaders and citizens say.
And with the government promising added assistance in the budget to offset the burden of subsidy cuts and the goods and services tax (GST) next year, Putrajaya might end up crossing out expected gains from rationalising fuel subsidies, a PKR politician said.
Sarawak PKR's Boniface Willy Tumek also said those living in the interior should expect more pain and hardship as they would bear the brunt of subsidy cuts and the GST that comes into force next April.
Higher BR1M payout negates subsidy savings and GST
Boniface, who is aspiring to be PKR's candidate for the Tasik Biru seat in the next state election, agreed that the subsidy cut and GST were in line with the government's plans to reduce the fiscal deficit from 3.9% at the beginning of 2014 to 3% next year, so as to avoid another downgrade in Malaysia's credit ratings.
But the government's extra spending on the 1Malaysia People's Aid (BR1M) scheme for next year would negate the savings from cutting subsidies and the additional revenue earned from GST, he said.
“RM4.6 billion was allocated for BR1M payment in the Budget 2014. But the impact of future subsidy cuts and of the GST on household income will put more households in need of financial assistance in 2015, thus necessitating a bigger allocation for BR1M.
“As a result, the desired effects from any subsidy cuts in 2015 and from the GST would probably not be there.”
Prime Minister Datuk Seri Najib Razak said the government would increase the amount of BR1M given to low-earning households and individuals next year.
AmResearch recently said that a raise in the BR1M quantum would likely cost the government RM7.5 billion in 2015, an increase from RM4.6 billion this year.
The increase is based on a projected raise of RM300 in the amount paid to households earning less than RM3,000 a month.Sarawak PKR's Boniface Willy Tumek says those living in the interior should expect more pain and hardship as they will bear the brunt of subsidy cuts and the GST that comes into force next April. – The Malaysian Insider pic, October 8, 2014.Sarawak PKR's Boniface Willy Tumek says those living in the interior should expect more pain and hardship as they will bear the brunt of subsidy cuts and the GST that comes into force next April. – The Malaysian Insider pic, October 8, 2014.
Revenue from GST, to be introduced at 6%, might also be lower than initially expected if the budget expands the list of zero-rated items.
Maybank Investment Bank Research recently said revenue from GST could be RM2.4 billion next year from April to December, and RM7 billion for 2016.
BR1M a one-off handout and not a long-term solution
Boniface doesn't believe that BR1M would be able to offset increased costs as a result of higher fuel prices and the GST.
He expects the purchasing power of Sarawak's rural folks to be reduced by nearly 10% from the combined effect of subsidy cuts and the GST in the second half of next year.
The latest cut in fuel subsidies on October 2, he said, had pushed up transport costs of goods in Sarawak's vast and under-developed rural areas.
“Transport cost has always been a significant factor in the prices of goods sold in rural areas and the cuts in fuel subsidy will push transport costs up.”
Wheelchair-bound Josh John said BR1M was not a solution to the rising cost of living.
“Obviously, cuts in subsidies will cause a domino effect on prices of almost everything. People will have lower purchasing power, resulting in a lower quality of life,” said John, who lost his ability to walk after a viral infection in the spinal column.
He said while the BR1M handout helped to some extent, it was only a one-off immediate relief.
“It doesn't resolve the overall financial strain caused by subsidies cuts and GST.”
And amid talk of further subsidy cuts to improve national credit ratings, the government should maintain or in fact double the subsidy for rural air travel, said editorial consultant William Chan.
Chan, who works with the state's pro-Barisan Nasional newspaper, The New Sarawak Tribune, said subsidies should be targeted to benefit rural Sarawakians by lowering the price of essential goods and keeping rural air transport affordable.
“In the Budget 2013, RM130 million was allocated to subsidise rural air transport, while RM386 million was allocated to lower prices of essential goods. Those should all be doubled,” Chan said.
Better to spend on long-term measures and overall development
Instead of BR1M handouts, Boniface said, savings from the subsidy cut and revenue from GST would be better spent on strengthening the rural economy and increasing the income level of rural dwellers.
Chan agreed. He said temporary cash handouts like BR1M should be “done away with and replaced by this long-term entrepreneurship programmes”.
“Like the proverbial saying, you give them fish, you are feeding them for a meal but teach them how to fish and you develop them to prosper during their life time,” Chan said.
He said the architects of past national budgets, "in the comfy of their offices in Putrajaya", seemed to have drafted the budgets “without the sincere interest in touching the souls of Sarawak and Sabah”.
“The rural populace in Sarawak expect Budget 2015 to have allocations for their overall development. Past budgets have not given this as much consideration as they expected.”
Like Boniface, Chan said the government needed to regulate prices of essential goods to help rural folks overcome the rising cost of living.
For John, it is better that the government spend on more on basic infrastructure projects like roads, water, electricity with the money saved from subsidy cuts.
“Sarawak remains one of the poorest states in the country despite its rich natural resources. Putrajaya may claim that the budget is for the benefit of the people and nation as a whole. However, what we see at the end, paints a different picture altogether.
“I believe what most people would like to see is that government tackle issues of corruption, leakages and wastage first before subsidies are cut or taxes increased or introduced.”
- TMI

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