Prudence in sustaining growth

Prudence in sustaining growth "The government is aware of complaints of inadequate basic infrastructure facilities, particularly in rural areas." THE THEME OF Budget 2006, "Strengthening Resilience, Meeting Challenges", reflects the current economic environment ­ that prudence and belt-tightening are needed to weather the current storm. Presenting his second budget yesterday, Prime Minister Datuk Seri Abdullah Ahmad Badawi said with more money in the coffers ­ RM136.8 billion, an increase of 5% from last year ­ the government hopes to lower the budget deficit from 3.8% this year to 3.5% next year ­ something it has been struggling with the last nine years. Attributing the deficit to oil prices, Abdullah hinted at a raise in electricity tarrifs. "Higher crude oil prices will result in higher subsidies for fuel and other sources of energy, such as electricity. "We cannot rely on subsidies to maintain our competitiveness and thus should be more energy efficient in our production processes. "In due course, electricity tariffs will need to be adjusted to promote greater energy efficiency. "However, the government is committed to ensuring there will be no additional burden," he said. Abdullah, who is finance minister, painted an overall optimistic picture, saying growth is estimated at 5%. "We are fortunate that within a short period of seven years after the 1997 financial crisis, the economy has fully recovered to achieve sustainable g rowth. GDP (Gross Domestic Product) grew at an annual average rate of 5.4% during the period." To affirm this point, Abdullah said per capita income is expected to increase to RM17,741 in 2005 compared with RM16,616 last year. "Our ability to succeed in an environment marked by greater external vulnerabilities and challenges depends on our agility to make changes to our lifestyle," he said. "(Thus the) willingness to make short-term sacrifices for long term benefits." Outlining the blueprint for 2006 ­ the start of the 9th Malaysia Plan (2006-2010), Abdullah said Budget 2006 would have four main strategies: · implementing pro-active mea sures to accelerate economic activities; · providing a business-friendly environment; · developing the country's human capital; · enhancing the well-being and quality of life of Malaysians. Emphasising the development of human capital, RM5 billion has been allocated for education and training, including ICT and curriculum development and building more hostels and teachers' quarters, as well as upgrading teachers' colleges. "The target of providing secondary schools with 100% graduate teachers and 50% in primary schools will be met by 2010," Abdullah said. The prime minister proved once again that his administration has the low-income earners at heart. "The government will continue to ease the financial burden of Malaysians, especially the lowincome group," he said, announcing an increase in allocations of between RM20 and RM75 for the old, needy as well as orphans and poor children. Abdullah said rural folk will be able to enjoy adequate roads, water and electricity and improved educational facilities through an allocation of RM5.7 billion ­ the implementation of which will see the involvement of small-time bumiputra contractors. "The government is aware of complaints of inadequate basic infrastructure facilities, particularly in rural areas. I am saddened by reports of fatal accidents involving school children while crossing dilapidated bridges. As a nation with world-class infrastructure, such incidents should not occur," said Abdullah. The 1.2 million civil servants will again be receiving their bonus, this time between one and oneand-a-half months' worth, and pensioners will get RM200 this month. Cost of living allowance for public servants has been raised between RM50 and RM150, depending on where they live. But, there is little for those in the middle and higher income brackets to cheer, apart from Abdullah keeping to a promise he made early last month that there will be no fuel hikes this year, as well as no toll increases. However, if you have a child studying abroad, you are entitled to a RM4,000 tax relief. The expected raise in sin taxes will cost smokers 13% more and drinkers 9%. Most of the extra income will probably go towards boosting the health sector, which has been injected with a RM1.3 billion allocation. "We should sustain our physical, spiritual and emotional wellbeing. "If this becomes our way of life, we will become a nation that is successful, resilient and capable of overcoming challenges," Abdullah said before wrapping up.