Prime Minister Najib Abdul Razak said Budget 2012, to be tabled in Parliament on Oct 7, would be inclusive, people-centric and accelerate the transformation efforts.

It would be another milestone towards a developed and high income economy by 2020, he said.

"Let us work together in making this a reality," he added, in his opening remarks at the Budget 2012 consultation in Putrajay today.

He said the formulation of Budget 2012 would be challenging.

"We have to rise to the occasion and come up with bold and innovative approaches and solutions," said Najib, who is also the finance minister.

He said the focus would be on accelerating the transformation efforts towards enhancing the growth momentum and sustaining the well-being of the people.

azlan Last year, the government allocated RM212 billion for the 2011 Budget, which was 2.8 per cent higher than the allocation for 2010. Of the amount, RM162.8 billion was for operating expenditure and RM49.2 billion for development.

Najib said the government had put in place a strong policy framework through the New Economic Model (NEM) to transform the nation into a developed and high-income economy that is inclusive and sustainable by 2020.

He also said the 10th Malaysian Plan articulates medium-term strategies while the Economic Transformation Programme (ETP) and Government Transformation Programme (GTP) lay a strong foundation for economic and government transformation.

The prime minister said these policy initiatives were anchored by the guiding principles of 1Malaysia, where every Malaysian had a place and role in "this great journey of transformation".

"We now have to deliver on the expectations created by this policy framework. The key word is implementation. I assure you that the government is committed towards accelerating the transformation process," he added.

Najib was also pleased with the remarkable progress of the GTP and ETP.

He said the GTP had brought about significant tangible results in reducing crime, poverty and corruption as well as improving access to basic infrastructure, education outcomes and urban public transport.

"While we can be proud of these achievements, more needs to be done. In this regard, the government will do its utmost towards delivering the six national key results areas (NKRAs) for the people," he added.

On the ETP, Najib said since its launch on Oct 25 last year, 54 entry point projects (EPPs), representing 41.2 per cent of the total 131 have commenced operations.

"The investments totalling RM106.4 billion are expected to increase the Gross National Income (GNI) by RM153.8 billion and create 298,865 employment opportunities.

"This is a significant achievement in such a short time frame and the momentum must be sustained," he added.

Cost-push inflation a major challenge

He said in addition, the implementation of the mass rapid transit (MRT) project as well as increasing investment activities in regional corridors, especially in Iskandar Malaysia, will help sustain the growth momentum.

"We have successfully weathered the global economic recession. The economy rebounded strongly with a Gross Domestic Product (GDP) growth of 7.2 per cent in 2010, surpassing the initial forecast of 7.0 per cent," he added.

He said that this favorable growth performance was supported by robust domestic economic activities.

"For 2011, we are striving to achieve the 6.0 per cent growth," Najib added, noting "there remained challenges".

On the external front, the turmoil in the Middle East and North Africa continued to roil the global crude oil market while supply disruptions have elevated other commodity and food prices.

"Cost-push inflation is on the rise and is a major challenge to many countries, including Malaysia.

"The sovereign debt crisis in some euro nations poses downside risks to global financial stability and the economic recovery in developed nations remains subdued while Japan needs to embark on massive reconstruction in the aftermath of the tsunami and nuclear disasters," he said.

Meanwhile, domestically, Najib said private investment as a share of GDP was still low at 10.7 per cent in 2010 compared to 30.3 per cent prior to the Asian financial crisis in 1997/1998.

"We need to increase trade and investment links with fast-growing Asian countries, particularly China and India.

"We need to strengthen the skills and knowledge base of our human capital to support the new economy," he added.

He said the government would also ensure Malaysia's underlying competitiveness remains intact, by focusing on high value-added activities and productivity, while fostering and ensuring an environment that encourages innovation and creativity.

In this regard, he added, the government would focus on assisting innovative Small and Medium Enterprises (SMEs) while expanding access to risk capital, especially to early stage funding.

On the fiscal front, Najib said, there was a need to remain committed to prudent financial management to ensure fiscal sustainability.

He also said that the government is fully committed to ensuring the people enjoy a higher quality of life.

"While we have virtually eliminated hardcore poverty, we need to address remaining pockets of poverty in Sabah and Sarawak and urban poverty.

"Emerging challenges include the rising cost of living and affordable housing, particularly in urban areas while the increasing cost of health services requires our immediate and appropriate action," he added.

In this respect, Najib said the government would continue to implement initiatives to mitigate the impact of rising food prices, as well as facilitate the supply of affordable housing.

- Bernama