{"id":19898,"date":"2015-10-23T22:38:16","date_gmt":"2015-10-23T14:38:16","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=19898"},"modified":"2015-12-28T10:23:48","modified_gmt":"2015-12-28T02:23:48","slug":"budget-2016-giving-the-b40-a-boost","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/budget-2016-giving-the-b40-a-boost","title":{"rendered":"Budget 2016: Giving the B40 A Boost"},"content":{"rendered":"<p>News of perks for the Bottom 40 (B40) group has been buzzing for months even before the Budget 2016 announcement. This group has also been the highlight of the 11<sup>th<\/sup> Malaysia Plan (11MP), and today\u2019s Budget being the first of the plan, was highly anticipated.<\/p>\n<p>Five years away from Vision 2020, the nation\u2019s goal of becoming a developed and high-income nation, the 11MP is the final leg of the race.<\/p>\n<p>To drive growth, private consumption and investment will be boosted, where real private consumption is expected to increase at 6.4% per annum, while public investment will grow at 2.7% per annum, and private investment at 9.4% per annum.<\/p>\n<p>About 11.7 million (40%) Malaysians are in the B40 group and will need to be elevated in order to achieve the targets above. The monthly household income of this group is targeted to be raised from RM2,500 per month to RM5,000 per month by 2020. This will automatically raise the group from being B40 to middle-income.<\/p>\n<p>What is the plan to achieve that? Outlined in the 11MP, there will be more effort in enhancing accessibility to higher education and skills training, reducing school dropouts, enhancing integrated entrepreneurship support, developing community and social-based enterprises as well as increasing ownership through investment programmes.<\/p>\n<p>In a <a href=\"https:\/\/www.imoney.my\/articles\/budget-2016-survey-malaysians-buckle-under-the-rising-cost-of-living\" target=\"_blank\">Budget 2016 Sentiment Survey<\/a> conducted by iMoney, we\u2019ve seen 87% of the respondents raising their concern on the rising cost of living. This undoubtedly has the most impact on the B40 households. As the first Budget of the five-year plan, what is the plan for next year to address this pressing issue?<\/p>\n<p><center><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/T2q88pswqaI\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/center><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What-are-the-perks\"><\/span><strong>What are the perks?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Under the first priority in the Budget, Easing Cost of Living of the Rakyat, one of the first measures promised to be undertaken by the Government is to increase the quality of life of the B40 households in the country.<\/p>\n<p><a href=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2015\/10\/b40_budget-2016_mini.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-19891\" src=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2015\/10\/b40_budget-2016_mini.png\" alt=\"b40_budget-2016_mini\" width=\"800\" height=\"1965\" srcset=\"\/articles\/wp-content\/uploads\/2015\/10\/b40_budget-2016_mini.png 800w, \/articles\/wp-content\/uploads\/2015\/10\/b40_budget-2016_mini-300x737.png 300w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\n<p>To the government\u2019s credit, they\u2019re taking a long term view and rightly so. To help this group of the society to cope in the long-run many allocations are made to help them start up their own businesses, through TEKUN, the Indian Community Development Scheme, KOJADI and Amanah Ikhtiar Malaysia (AIM).<\/p>\n<p>Allocations are also made to upskill those in the rural areas through the Career and Skills Training Programme, and also through private skills training institutions and NGOs to help them get jobs or delve into entrepreneurship.<\/p>\n<p>Other areas that are addressed including doubling the number of medicines brand in the Goods and Services Tax (GST) zero-rated list, and also including more food items in the same list. More Klinik 1Malaysia will also be built, especially in the rural areas in the country. There were also many announcements to increase infrastructure coverage for rural communities.<\/p>\n<p>Not surprisingly, the Government decided to continue with BR1M handouts, with allocation of RM5.9 billion next year. The handouts will range from as low as RM400 to RM1,050. Though on this note, we\u2019re not confident that the BR1M will be of much help especially since an increase of RM50-100 doesn\u2019t go very far now. This allocation could\u2019ve been better spent by increasing their other long-term up-skilling efforts.<\/p>\n<p><a href=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2015\/10\/budget-2016_mini-br1m.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-19893\" src=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2015\/10\/budget-2016_mini-br1m.png\" alt=\"Budget 2016 BR1M\" width=\"800\" height=\"1110\" srcset=\"\/articles\/wp-content\/uploads\/2015\/10\/budget-2016_mini-br1m.png 800w, \/articles\/wp-content\/uploads\/2015\/10\/budget-2016_mini-br1m-300x416.png 300w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Will-they-work\"><\/span><strong>Will they\u00a0work?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Will these really alleviate the burden of the skyrocketing cost of living for the bottom 40%?<\/p>\n<p>According to Choong Hui Yan, tax consultant from SIMways Formulation, who was part of iMoney\u2019s panel of experts, increasing the number of medicines in the zero-rated list does not really address the real problem when it comes high medical expenses.<\/p>\n<p>\u201cDoctors who are acting as a third party with no employment relationship with the hospital, providing the same treatment to patients would attract GST of 6%,\u201d said Choong.<\/p>\n<p>\u201cThe bills issued to patients from the hospital would remain to be GST-exempted, but the fees are already inclusive of GST, charged by the third party doctors,\u201d she said, adding that price hike happens at this point.<\/p>\n<p>The trainings and upskilling will definitely help in the long-run, but another important area to help the B40 climb up the social ladder to be middle-class would be to arm them with the financial know-how on saving and growing their income.<\/p>\n<p>Failing to do so, this same group of the <em>rakyat<\/em> may be elevated to the next income level, but they will suffer equally due to the lack of financial literacy.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The-root-of-the-problem\"><\/span>The root of the problem<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Creating and sustaining wealth is more than just income, but also about savings and investment. To ensure that the B40 households join the middle-income group and be able to cope financially, financial management is a major part of the equation.<\/p>\n<p>There are a few things that will change drastically for a middle-class household:<\/p>\n<p><div class=\"block block--content\"><div class=\"block__title\">1. No more handouts<\/div><div>Middle-income households earning above RM4,000 will no longer be entitled for BR1M. This means, your take-home pay of RM5,000 will have to be divided for housing, transportation and everything else you need to spend on.<\/div><\/div><br \/>\n<div class=\"block block--content\"><div class=\"block__title\">2. Income tax<\/div><div>On top of GST, you will most probably have to pay for income tax if your taxable income is above RM5,000. This can take a sizeable chunk of your annual income.<\/div><\/div><br \/>\n<div class=\"block block--content\"><div class=\"block__title\">3. Unaffordable housing<\/div><div>Being middle-income will probably render you unqualified for affordable housing. Hence, more savings will be needed in order for you to afford buying your first home.<\/div><\/div><br \/>\n<div class=\"block block--content\"><div class=\"block__title\">4. Banking product confusion<\/div><div>As your income goes up, you will be presented with an array of banking products that may seem like a good idea initially. However, without proper management and planning, these banking products can lead you to deep trouble. Proper comparison of financial products such as <a href=\"https:\/\/www.imoney.my\/credit-card\/\" target=\"_blank\">credit card<\/a>, <a href=\"https:\/\/www.imoney.my\/home-loan\" target=\"_blank\">home loan<\/a>, <a href=\"https:\/\/www.imoney.my\/personal-loan\" target=\"_blank\">personal loan<\/a> and <a href=\"https:\/\/www.imoney.my\/fixed-deposit\" target=\"_blank\">fixed deposit<\/a> must be conducted to avoid making expensive financial mistakes that will put you right back in the B40 group (or worse).<br \/>\n<\/div><\/div><\/p>\n<p>With the above top four issues that every middle-income person face, there must be steps taken to address and also to avoid them. They\u2019ll need to not just learn skills that\u2019ll take them into workforce but they also need to arm themselves with the right financial knowledge to keep and grow their money.<\/p>\n<p>The Budget 2016, being the first budget under the 11MP, the government has taken a lot of the right steps in getting ball rolling in pulling the B40 up the ladder. However, there is a long way to go, to build a self-sustainable nation and ensuring that the B40 aren\u2019t dependent on handouts to get by.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Missed-the-Budget-announcement-Here-are-the-key-highlights-that-will-affect-your-life\"><\/span><strong>Missed the Budget announcement? Here are <\/strong><a href=\"https:\/\/www.imoney.my\/articles\/malaysia-budget-2016-the-key-highlights-infographic\" target=\"_blank\"><strong>the key highlights<\/strong><\/a><strong> that will affect your life!<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n","protected":false},"excerpt":{"rendered":"<p>Are the B40 households getting what the need from Budget 2016? What are the possible problems they may face even with the Budget perks? Read on to find out. <\/p>\n","protected":false},"author":9,"featured_media":19903,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[270,273,294,216],"tags":[219,208],"class_list":["post-19898","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-11th-malaysia-plan","category-br1m","category-budget-2016","category-news-updates","tag-bi","tag-featured"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Budget 2016: Giving the B40 A Boost | iMoney<\/title>\n<meta name=\"description\" content=\"Are the B40 households getting what the need from Budget 2016? What are the possible problems they may face even with the Budget perks? 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