MINISTER’S FOREWORD

Message by the Honourable Tan Sri Dato’ Haji Muhyiddin bin Yassin Deputy Prime Minister

The Addressing the Rising managing the rising cost of Cost of Living National Key living, even before this NKRA Result Area (COL NKRA) was was introduced. For 2011, the introduced in July 2011, two government spent a total of RM years after the Government 20.3 billion in providing subsidy Transformation Programme for fuel alone. (GTP) was first launched, making it the seventh NKRA. The GTP 2.0 will continue with This was done in response to the existing initiatives as it was the rakyat’s concerns over the introduced one year ago. Apart rising prices of essential items, from that, in cases where the which is due to escalating cost of living rises substantially global fuel and food prices. The and if the situation warrants, the government recognised the government will further develop need for an immediate response and introduce assistance to ease the financial burden and programmes, not limited to implemented various initiatives financial assistance. We are to provide relief. committed to ensuring that all Malaysians enjoy a sustainable The government has always standard of living. played a pro-active role in

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Looking back at the GTP 1.0 (2010 - 2012)

Introduced in July 2011, the COL NKRA households and over 6 million primary, has already delivered fast results to the secondary and tertiary school students country’s working and middle class. As defray living costs in a variety of ways. global food and energy prices continue In addition, through initiatives such as to increase and impact the living costs Klinik , Kedai Rakyat 1Malaysia of average Malaysians, this NKRA seeks (KR1M) and Menu Rakyat 1 , to offer immediate relief for the rakyat the rakyat now have access to virtually via immediate-term measures, while cost-free medical treatment, 30-40% assessing strategies that will address cheaper groceries and affordable meals. the rising cost of living over the long term. As a result of the measures taken, the COL NKRA recorded a number formulate further measures under the The various government assistance of Big Wins. Additionally, the efforts GTP 2.0 that will help ease the rakyat’s programmes have helped over 5 million taken have driven the government to burden in a sustainable manner.

The Government has also expanded the Government has also started to its assistance programmes to help look into long-term structural changes students with the cost of education by that will help address the cost of living providing them with book vouchers and issue in the long run. These include a RM100 cash assistance payment. studying and addressing leakages in the food supply chain, factors contributing While these short-term impact to skyrocketing prices of homes, as initiatives have helped the NKRA score well as studying the country’s subsidy a number of Big Wins in the GTP 1.0, programme.

33 For example, a drastic increase in homes, which have made them demand for properties, and a lack of the cost of building materials such forbiddingly expensive for low- to affordable housing is exacerbating as cement, steel and sand have medium-income earners (See Figure 2 the issue. contributed to the higher cost of below). Other factors such as increased

The Perumahan Rakyat 1Malaysia directly translates into a lost subsidy as several years away – the short-term (PR1MA) programme, targets this issue well, which is why the supply chain has measures need to be continued in the by boosting the supply of affordable to be tightened. GTP 2.0 to ensure that all Malaysians housing for middle-income earners have access to the basic necessities of thereby allowing greater home The same argument holds for fuel home, food and medical services. ownership and to fill the gap in supply. products in the country, such as petrol, The programme is to be expanded in diesel and natural gas where cross- the GTP 2.0. border smuggling remains a pressing challenge. The subsidy bill for fuel In the case of food items, such as alone in 2011 cost more than RM20 cooking oil, leakages from illegal billion, which is not sustainable in the activities such as smuggling exacerbate long term. already high prices caused by external factors. As goods are subsidised at the Since household incomes are not producer’s level, goods that end up in rising as fast as prices – and with the the hands of non-Malaysian residents aspiration of a high-income nation still

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BIG WIN 1 Provided financial assistance to working class households

Under the Bantuan Rakyat 1Malaysia (BR1M) initiative, the Government offered a RM500, one-off financial aid to households earning RM3,000 and below. Announced in December 2011, the Government set aside a budget of RM2.6 billion for BR1M, reaching 5.2 million Malaysian households.

BIG WIN 2 Reduced education costs A major success under the COL NKRA has been the abolishment of government school fees beginning in 2012. Public education in Malaysia is, for the first time, free. Other measures taken to reduce the burden of education costs are: • RM530 million in funds channelled to 5.3 million primary and secondary students, providing RM100 in cash aid to fund back-to-school costs and other expenses • RM260 million of RM200 Bantuan Buku 1Malaysia book vouchers distributed to 1.3 million students in public and private local institutions of Another example is the Baucar Buku and private local institutions of higher higher learning, matriculation streams 1Malaysia (BB1M), the book voucher learning. and Form 6 assistance for students of both public

BIG WIN 3 Established affordable options for medical treatment and necessities

In order to provide the rakyat with • Kedai Rakyat 1Malaysia, offering breakfast and RM5 for lunch in East affordable alternatives for necessities, groceries at a 30-40% lower price Malaysia. the Government has established: than at conventional stores • Klinik 1Malaysia, providing affordable • Menu Rakyat 1 Malaysia, a pre- and virtually costless treatment at a packaged menu at a standard rate of charge of RM1, while senior citizens RM2 for breakfast and RM4 for lunch receive treatment for free in West Malaysia and RM2.50 for

In addition to the Big Wins above, other initiatives such as the Menu Rakyat 1Malaysia, Perumahan Rakyat 1Malaysia, Kedai Rakyat 1Malaysia and Kebajikan Rakyat 1Malaysia were also implemented. 35 Introduction to the GTP 2.0 (2013 - 2015)

Case for Change The COL NKRA was introduced in for 55.3% of Malaysian household Going forward, the government will response to growing concern among expenditure. continue to monitor the situation and Malaysians over the rising cost of implement appropriate interventions living, which is due mainly to the rapid This new addition to the GTP as and when necessary. Despite the increase in commodities prices that Programme takes a very different successes of the GTP 1.0, food and oil reached new highs in 2011. The rising approach from the other six NKRAs. prices are only expected to further cost of living was also seen in similar Where the other NKRAs were increase as the world remains highly developing nations, as cost of living deterministic, laying out concrete dependent on these commodities. The increases in tandem with the growth in pathways and outcomes, the COL NKRA COL NKRA must therefore make similar income level. Measures under this NKRA is reactive in that its measures are borne adjustments to ensure that impact of focus on food, transport and housing out of a close study of the economic future price hikes will be minimised. - the three categories that account environment.

Housing, food and transport accounted for 55.3% of total average Malaysian household expenditure in 2009/10.

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While government subsidies have and not the households. In order to As such, the GTP 2.0 will see the COL traditionally been used to mitigate streamline the subsidy process, aid must NKRA reallocate subsidies as well cost pressures on the rakyat, these be channelled directly to households, as identify alternative initiatives that efforts have proved to be inefficient which is what the second phase of this will provide households with greater as subsidies mainly benefit producers NKRA proposes to do. purchasing power in the long term.

37 Overview

Due to the reactive nature of the COL initiative if the situation calls for further ensure initiatives are implemented in an NKRA programme, the government intervention with regard to the price of effective and efficient manner. will continue to further develop and essential goods and services. introduce assistance programmes, Initiatives such as the Menu Rakyat which are not limited to financial This means the COL NKRA programme 1Malaysia, PR1MA, Kebajikan Rakyat assistance, should the cost of living rise is dependent on how the situation 1Malaysia, Kedai Buku 1Malaysia and substantially and only in appropriate develops and as such, efforts Kedai Kain 1Malaysia will continue to be situations. The Government is also undertaken throughout the GTP will implemented in the GTP 2.0. prepared to reintroduce the flagship also be dependent upon them. We are Bantuan Rakyat 1Malaysia (BR1M) committed to resolving roadblocks to

Continuation of Government Assistance Programmes in the GTP 2.0

In just over a year since this NKRA’s over six million students. Government access to basic necessities such as inception, initiatives tailored to bring assistance programmes such as Klinik medical treatment, essential goods and immediate relief to the rakyat have 1Malaysia, KR1M and MR1M have affordable meals. helped over four million households and ensured that the rakyat now have better

Klinik 1Malaysia Since 2010, 111 Klinik 1Malaysia have ensure that all rakyat have access to medical advice. Since its inception, been established at a cost of RM4.5 affordable basic healthcare. The clinics Klinik 1Malaysia have treated over 4.6 million to start the clinics and RM18.5 provide basic outpatient treatment, million patients. million to operationalise the clinics. and functions as information centres This programme will be continued providing health notices such as dengue The target in 2013 is to establish 80 and expanded in the GTP 2.0 to fever outbreaks, as well as general Klinik 1Malaysia.

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Kedai Rakyat 1Malaysia (KR1M) The rationale for the establishment implementation of two enhancements, reach 85 by the end of this year. of these mini-markets is to provide which will be completed in the GTP More information on KR1M products essential goods to low-income 2.0. The second phase of the KR1M and prices can be found at rakyat located in urban areas. These programme will see ‘Mom and Pop’ http://www.1pengguna.com, which is mini-markets are operated by local stores from rural areas distributing KR1M the Government’s consumer information superstore operator Mydin, and goods in their own district in order to website. emphasises the delivery of basic expand the reach of KR1M products to essential needs such as rice, cooking those who need them the most. The The target for KR1M is to establish 50 oil, milk powder and diapers. Products third phase will see the KR1M franchise stores every year until 2015. sold in KR1M shops are produced by open to the general public thereby local small and medium enterprises and creating more business opportunities packaged under the KR1M brand. for the country.

The GTP 1.0 saw the introduction There are presently more than 45 KR1M of KR1M as well as the preliminary stores nationwide, and the goal is to

39 Perumahan Rakyat 1Malaysia (PR1MA) Perumahan Rakyat 1Malaysia (PR1MA) with affordable homes ranging from PR1MA homes will be allocated through Bhd was established under the PR1MA RM100,000 to RM400,000. an audited balloting process. A 10-year Act 2012 to plan, develop, construct and moratorium will be imposed and homes maintain affordable lifestyle housing for The PR1MA programme is also aimed have to be owner occupied. middle-income households in key urban at community integration and will centres. be a catalyst for wealth creation for PR1MA’s target is to build 850,000 PR1MA home buyers at the end of the homes over a period of 10 to 15 years. The Prime Minister is fully aware of moratorium period. The first phase of homes will be the financial pressures faced by the launched in key urban areas such as the urban, middle-income population due Key eligibility criteria: Klang Valley, Bahru, Seremban, to Malaysia’s rapid urbanisation. His • Individuals or Families (husband and , and Miri. The second vision is to rebalance assistance to the wife) with a household income of phase will focus on suburban areas. For rakyat in both rural as well as urban between RM2,500 and RM7,500. the next three years, PR1MA targets to areas. PR1MA is one of various initiatives • Those working or currently living near launch a total of 60,000 units (home implemented to help the rakyat manage the development locations or those and commercial); six new 10,000-unit the cost of living in urban areas. While planning to live or work there. projects in 2013, seven 20,000-unit other public housing providers are • Individuals currently owning no more projects in 2014 and seven 30,000-unit mainly catering for lower income than one property projects in 2015. groups, PR1MA will be the first that exclusively targets this middle segment

Kebajikan Rakyat 1Malaysia (KAR1SMA) KAR1SMA is the Government’s welfare to provide financial assistance ranging Women, Family and Community programme launched in September 2011, from between RM100 and RM450 a Development, Yayasan Kebajikan and is targeted at the underprivileged, month to the recipients. Negara (National Welfare Foundation), including senior citizens, the disabled, and the National Population and children and single mothers. Widows In 2012 itself, a total of RM1.4 billion Family Board (Lembaga Penduduk dan of policemen and military personnel has been budgeted for KAR1SMA and Pembangunan Keluarga Negara). are also eligible to receive the financial will be distributed through existing aid under this programme. The goal is programmes run by the Ministry for

Kad Siswa 1Malaysia The Ministry of Domestic Trade,Co- KADS1M is given free to all students in Discounts offered by companies operatives and Consumerism created institutions of higher learning that fulfills participating are for selected goods the Kad Siswa 1Malaysia (KADS1M), these criteria: and services that are subjected to the or the Graduate’s 1Malaysia Discount • Enrolled in long term courses for rate and terms set by the individual Card, to further help alleviate the cost a duration of 1 year and above companies. For full information on of living for students in institutions (certificates, diploma, and degree); the company, discount rate and of higher learning in both public and • Full time students; and terms of discount, please visit private sector throughout the country. • Citizens of Malaysia http://www.1pengguna.com/kads1m.

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Menu Rakyat 1Malaysia Menu Rakyat 1Malaysia aims to help and food operators who participate on official website low-income earners and students by a voluntary basis. There are presently http://www.1pengguna.com providing affordable breakfasts and 2,400 participants of this programme, lunches not exceeding RM2 and RM4 and the goal is to raise the number to The target for MR1M is the introduction respectively for West Malaysia and 3,000 by the end of 2012. Information of 1,000 new locations every year until RM2.50 and RM5 for East Malaysia. about the location of participating 2015. This programme is implemented in premises nationwide, food menu and collaboration with private restaurants price monitoring can be found at the

Kedai Buku 1Malaysia This programme will be established original programme, namely to alleviate secondary students as well. Further in 2013 to further complement the the cost associated with education. details of the programme will be Bantuan Buku 1Malaysia programme. The objective’s coverage will be further announced soon. It shares a similar objective with the expanded to include primary and

Kedai Kain 1Malaysia (KK1M) Similar to KR1M, KK1M will see textile . The target is to establish six shops set up under the KK1M brand more outlets this year and to set up to offer more affordable products to another 30 outlets in 2013 in Peninsular the rakyat. On July 14, 2012, the first Malaysia. outlet was opened in Hulu Langat,

41 Subsidies for Essential Items The Government subsidy bill has been For 2012, the subsidy for fossil fuel on an increasing trend since 2009 due (petrol, diesel and LPG) is expected to the global fluctuation of fuel and to cost RM19.5 billion. An estimated food prices. Presently, the Government RM2.4 billion will go towards subsidising subsidises two essential groups of items: food products. Despite the high cost • Food of subsidies, the Government is still Sugar, flour, cooking oil, rice committed to assist the rakyat by • Fuel deferring the implementation of RON95 petrol, diesel, cooking gas subsidy rationalisation.

Food Security

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Reliance on imported food items conducted for other categories of including raw ingredients has resulted food. in the increase of the food bill in overall • Land allocated under the National household expenditure. Malaysia Physical Plan needs to be reallocated imported RM3.4 billion of processed to set appropriate allocation levels at food in 2011, and has only attained a both the federal and state levels. self-sustainable level (SSL) for a handful • The food value chain, i.e. farming, of raw ingredients for cooking. wholesaling, retail distribution and sales of produce, need to be better The Food and Security Lab has coordinated to alleviate concerns that analysed Malaysia’s supply and demand farmers further up the value chain do for each category of food, taking into not benefit equitably. account criteria such as the country’s competitiveness in producing food The recommendations from the Food against neighbouring farming countries, Security Lab were greatly considered, and made the following findings: and the possibility of greater integration The initiatives are divided into two • Malaysia is able to produce high- with the NKEA Agriculture Entry major components: quality poultry products at a Point Projects has also been taken • Increasing local productivity competitive cost, and, in the long into account. This would subsequently • Integrating the value chain term the country should be able to allow the private sector to take the produce a surplus over and above lead in implementing these projects via local demand. Similar studies were prudent public investments.

Increasing local productivity Under NKEA Agriculture, only well-run The scope of NKEA Agriculture will also to increase consumer confidence in and top-performing private companies be expanded to encourage local farmers their produce. By adhering to strict were selected to become anchor to work as contract farmers for the food preparation procedures (i.e. companies to market and distribute anchor company’s flagship. This will not Good Manufacturing Practice, HACCP) produce to hypermarkets. These anchor only increase the revenue to the farmers which will be set up through the companies play the role of vertically but at the same time ensure cheaper anchor company, small-scale food integrating the production process, i.e. farm produce due to increased farm producers can utilise their facilities from seed to production until marketing production. for a reasonable fee. This initiative is and export. It is the hope that existing an ongoing Entry Point Project under farmers will be able to benefit from the At the same time, existing small- NKEA Agriculture. transfer of skills and technology from and medium-scale processed food the existing anchor companies when the producers will be provided a common initiative has been integrated with facility that allows them to gain access the NKEA. to equipment and improve standards

43 Integrating the value chain The goal is to reduce the price of raw paired with government agencies such with the integration of small-and ingredients by increasing their supply. as FAMA and the Ministry of Domestic medium-scale food processors with Another factor that affects retail pricing Trade, Co-operatives and Consumerism an anchor company, will make a wider is the number of middlemen within the to market directly to the consumer. It and cheaper selection of processed supply chain who takes the products is expected that retail prices will be food available. from the farm to the consumer. The reduced by 5% to 8%. Government has thus established multiple retail points such as Pasar Tani, On processed food, initiatives such Agro Bazaar and KR1M in an effort to as Produk 1Malaysia will be further mitigate handling charges. expanded. By establishing guidelines for 1Malaysia products, a greater number With increased production from the of rakyat will be able to enjoy access to farm, the anchor company will be cheaper food items. This effort, coupled

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