In less than three months, Budget 2017 themed ‘Accelerating Growth, Ensuring Fiscal Prudence, Enhancing Well-being of the People’ will be tabled in Parliament. The theme in itself holds much expectation among the rakyat, all eagerly awaiting for implementation of measures which would ease cost of living issues, not just in the short, but longer term.

The quest being for sustainable solutions to address the economic and social constraints they are facing, especially the lower as well as middle income groups.

The Malaysia Consumers Movement (MCM) commends the government for actively holding pre-budget consultation session with stakeholder groups. The MCM is confident that all recommendations, viewpoints and grouses would be weighted seriously in the formulation of solutions, with the central aim being to develop a progressive nation.

As we all aware, since the introduction of the Goods and Services Tax (GST) in 2015 coupled with numerous other price increase announcement by the government, and cost of living issues have severely impacted household finances. Buying power was indeed better pre-GST, where X amount of money could purchase more versus post-GST. What we could purchase during the pre-GST period is not possible with the same amount of money now.

The Consumer Price Index (CPI) for June 2016 increased by 1.6 percent to 114.8 compared with 113.0 in the same month last year. Certainly, the rakyat are scrambling to cope with current economic reality, the consequence of which impacts daily livelihood. In order to keep going, many are already on second jobs to earn an additional income but how successfully people have adjusted to these conditions, it would probably remain unknown.

It is also worth noting that the Retail Group Malaysia (RGM) expects a negative 0.4 percent year-on-year growth for the retail industry. This subtly supports the fact that there is growing pressure on consumer purchasing power. The industry expects the situation to worsen if there is any further increase in the cost of living.

Good thing that there is intense but healthy competition amongst hypermarkets, the impact of food price inflation has to a certain extent been mitigated. The situation could have been unfavourable otherwise.

It is widely believed that introduction of GST was important to provide sustainable alternative revenue to the government and expected to distribute wealth of the country more equitably. It is probably time for the government to demonstrate through Budget 2017 that revenue generated through GST will indeed be distributed more equitably to help elevate living conditions of the lower and middle income groups.

We must also not forget that Malaysia’s household debt-to-gross domestic product (GDP) ratio has increased to 89.1 percent as of 2015. As a matter of fact, Malaysia has one of the highest household debts in the region. These statistics do not augur well.

Fortunately, on the broader economy, despite external economic shocks and lower oil prices, the prime minister has recently declared that Malaysia registered growth of 4.2 percent in the first quarter of this year supported by strong economic activities, particularly private investment and consumption.

Aims to achieve fiscal deficit of 3.1pct

The government remains committed to ensuring that its fiscal position remains strong and aims to achieve a fiscal deficit of 3.1 percent this year, lower than the 3.2 percent in 2015.

It is also notable that Malaysia has been able to register strong net inflow of foreign direct investments of RM15 billion in the first quarter of this year from RM9.9 billion in the same period last year which is a testament to investor confidence in Malaysia

While the broader economic indicators remain favourable, it’s the cost of living issues that the government must address. While measures such as BR1M are in place to support the lower income group, in order to sustain domestic consumption the government must put more money into the pockets of the middle income group.

A strong and healthy middle-income group with wider spending power will contribute towards robust domestic economic growth. The middle income group is, after all, the key driver in achieving our aspiration of a developed nation by 2020.

In conclusion, instead of normal presentation of a specific wish list, the MCM urges the government, through Budget 2017, implement strategic and measurable solutions to ease pressures revolving around high cost of living, concurrently, stimulating domestic consumption.

We need to avoid one-off incentives but instead introduce equitable initiatives to gradually and consistently strengthen the rakyat’s fiscal standing. More importantly, for solidifying Malaysia’s position from both the economic and social fronts.

DARSHAN SINGH DHILLON is president, Malaysia Consumers Movement (MCM).