RM6,000 today is NOT ENOUGH for family of four – report

Earning RM6,000 a month is barely enough for a family of four (with two children) today, reports financial portal The Edge Financial Daily.

Based on an estimation done by the portal, a family with RM6,000 income, with two children, a conservative house loan and car loan would only see a saving of RM357 at the end of the month.

"The middle income squeeze is highlighted worldwide. But in Malaysia, a large proportion of the population comes under the middle-income category.

There is no doubt this group will experience price pressure [from the subsidy cut and increase in cost of living] and as a result they have to spend less than before,” RAM Holdings Bhd group chief economist Yeah Kim Leng was quoted as saying.

CIMB Research director of economic research Lee Heng Guie meanwhile expressed concern on the implementation of goods and services tax on middle-income group.

If there is no adjustment to income tax rates when GST is imposed, Lee warned that a decline in quality of living would be inevitable.

Middle-income group earning between RM2,300 and RM7,000 that forms 40 percent of the country’s workforce would bear the full brunt arising from government’s fiscal consolidation plan.

Yeah called on the government to broaden the tax band to alleviate pressure on the middle income group while Lee told the government to focus on providing education, healthcare and affordable housing so that people do not need to save for contingency plan.

Bank Negara Malaysia (BNM) had warned of rising inflation due to government’s subsidies rationalisation plan. Minister in the Prime Minister’s department Abdul Wahid Omar said inflation would spike to 2.3 percent following the recent fuel hikes.

“Income growth needs to be above the rate of inflation in order for consumers to cope with rising prices. Right now, the nominal income growth is still exceeding the inflation rate,” Yeah pointed out.