`Money saved will also go to public transport projects'

Publication: NST
Date of publication: Sep 4, 2013
Section heading: Main Section
Page number: 004

PETALING JAYA: The government will announce measures to ease the burden of the middle-income group in the 2014 Budget.

"We are studying all aspects and it can be in any form of assistance," Finance Ministry secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said yesterday, adding that Prime Minister Datuk Seri Najib Razak would announce the measures on Oct 25.

Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar said the government could save RM3.3 billion a year by reducing the fuel subsidy.

He said some of the money saved would be pumped into the 1Malaysia People Aid (BR1M).

The balance, he said, would be invested in infrastructure projects, such as the Mass Rapid Transit system, to upgrade the public transport.

"Instead of subsidising the entire population, it is better if we make the subsidies more targeted and given to the people who are more deserving," Wahid said after the launch of an Ekuinas Nasional Bhd event yesterday.

Wahid said the 20 sen per litre increase of RON95 and diesel prices were "reasonable and within the context of the subsidy we are providing, and the savings required to manage our fiscal deficit".

Last year, the country's fiscal deficit was 4.7 per cent of the gross domestic product and the target was to reduce it to three per cent by 2015, he said.

"The global economic environment has changed from what it was last year where there was a lot of optimism with the continued quantitative easing.

"But this year, with the announcement of the reversal of the quantitative measures, we are seeing a reversal of the flow from the emerging markets back to the developed markets."

Wahid said the country's inflation rate was expected to be around 2.3 per cent this year after the fuel price hike.

He said until July, the inflation rate was two per cent and was the lowest in the region.

Wahid added that the consumer price index last year averaged by 1.6 per cent, compared with 3.2 per cent in 2011.

"The government had been expecting it to be between two and 2.5 per cent this year."

He pointed out that the country's current account surplus dropped to RM2.6 billion in the second quarter from RM8.7 billion early this year, while export of crude palm oil last year had gone down by 17.5 per cent last year.

"All this has led to a contraction in our trade surplus and it is very important for the government to address these issues."

On the implementation of the goods and services tax (GST), which would replace the current sales and service tax, Wahid said when implemented, there would be items that would be exempted.

"Typically, whenever countries implement the GST, there would always be exempted items as well as zero-rated items.

"We will make sure the impact to the people is manageable."