As 2013 draws to a close, it is time to reflect on the year that has passed – and the promise of the year to come.

Twelve months ago, we were gearing up for a general election, the thirteenth in our nation’s history. We are humbled that Barisan Nasional received a new mandate. We have the better plan for Malaysia’s future, and we worked hard to convince the rakyat of our vision.

The victory renewed the sense of responsibility I feel to all Malaysians – not just those who voted for us.

In a hard-fought election, it is normal for tensions to rise; we feel that our nation’s very future is at stake. Our election was peaceful: with the eyes of the world upon us, we Malaysians showed we are wedded to democracy. But we also found ourselves divided, sometimes bitterly so, over the path our country should take.

This too is natural. Elections are about competing visions for a nation. People are free to choose which path to take, and to defend their choice. That is the very essence of democracy. Yet this time, emotions ran higher than usual. Where once there was disagreement, there was now division. On occasion, politicians, media – and sometimes even the public – went too far.

When I spoke of a ‘Chinese tsunami’ on election night, I simply meant that a wave of Chinese support had washed away from Barisan Nasional. It shows how polarised we can be that some people read so much more into my comment.

I believe Malaysia is strong enough to survive heated debate. With time, the divisions will heal, as we see our nation continue to grow and develop, and as we realise that those we disagree with are still our neighbours, our colleagues – and our friends. But I also believe that we should reaffirm our commitment to the peaceful coexistence that defines our nation.

We must be active in the pursuit of unity. Our stability, and our progress, depend on it. That is why I have established the National Unity Consultative Council, which will report to the Cabinet with recommendations on what we can do to bring Malaysians closer together.

Our responsibility – and my priority – is to secure the continued peace, stability and progress on which Malaysia’s future rests. Rebuilding our national unity, and encouraging public debate based on respect, is a great part of that. As the new year unfolds, you will hear more from my government about how we will do so.

Speaking of the new year, I believe 2014 will be a year of great opportunity.

As the second Visit Malaysia year gets underway, we will see a concerted push to bring new visitors to our beautiful country. New businesses will open, and new investments will be realised. Our economy, which has weathered the storm of the financial crisis, is predicted to grow by 5.5%.

Yet behind these headline figures, I know that some people are concerned about 2014: worried that as we seek to balance the national budget, household budgets will come under pressure.

I understand and sympathise with these concerns. Hard-working people will feel the impact of rising costs. And when the media is full of red numbers and price rises, it can seem as though 2014 will bring pain without gain.

For those of you who are worried about the cost of living, I want say a few words about the economy and how it will affect you.

Firstly, we would not sign off any subsidy cuts or rate rises that were not absolutely necessary. Subsidy programmes have benefited people for many years, but as our population grows and our nation develops, they are no longer sustainable and it is time to move on. We need to rationalise subsidies and target them to those in most need.

The government commitment to development expenditure has grown, and we have to manage our fiscal position to ensure the stability of our economy.

The recent financial crisis showed just how serious the consequences are to nations whose finances are not built on solid ground: if investors and agencies decide countries cannot pay their debts, the cost of borrowing money spirals out of control. Without access to credit, there will be huge implications for a country and its people. For example, more than half of young people in some European countries are unemployed.

Under BN’s stewardship, Malaysia has grown significantly – per capita income has increased by 49% during the last four years. We will take the difficult decisions needed to keep our borrowing costs low, and maintain investor confidence – which is crucial to keep Malaysia’s economy strong and growing.

We must accept that we have to make changes to keep our finances under control. And we must balance the programme as much as possible, so that the burden is spread.

So my second point is this: we will do everything we can to ensure the impact on the rakyat is minimised. Based on public feedback, where necessary we will fine-tune government programmes so that the effect on household incomes is not too great. We will put in place mechanisms to cushion people from rises in the electricity tariff and toll fares. And PEMANDU is coming up with new ideas to ease the cost of living pressures.

We will also try to ensure that rises are proportionate. For example, the rise in fuel and electricity prices will have an effect on people’s spending power. But, despite the increase, the government still subsidises petrol and electricity bills. As for the recent rises in property assessment rates in Kuala Lumpur, after listening to peoples’ concerns, the rates were reduced by 2%, and extra rebates were added for disabled property owners, retirees and owner-occupiers.

We will not impose rising costs without supporting those who need it most. From last week, 7.9 million recipients in households earning under RM4,000 per month were eligible apply for new BR1M payments. We are opening new 1Malaysia shops, to help with the cost of daily goods, and new 1Malaysia Kliniks to provide affordable healthcare. Altogether, next year the government will spend some 42 billion ringgit on subsidies – almost as much as we spend on development.

While we rationalise subsidies, we are also cutting our own costs. We have announced eleven new measures to reduce public expenditure, including reducing electricity costs in all departments by 5%, tightening the rules on hiring consultants, and cutting toll and entertainment allowances for Ministers and civil servants. We are also reaffirming our commitment to tackling corruption, cutting government waste, and improving procurement; putting government tenders online to make them more transparent, and working to better realise the value of government assets.

As we prepare for the new year, it is also a good time to remember why we are making these changes. They may not be popular in the short term, so it would have been easier to keep the status quo. People will say that too many costs are rising, and populist policies will seem attractive. But the government has to take action now. I am determined to do the right thing for this country and the people. Because by acting responsibly now, we will strengthen Malaysia’s economy in the long term – and the benefits will be felt much more widely.

By rationalising subsidies, we will strengthen our fiscal position, allowing us to focus our spending on development projects – including health and education – and move towards a balanced budget by 2020. By taking the steps needed to make Malaysia’s economy stronger, we are not only protecting our nation against financial crises, we are also opening up new jobs – and new opportunities. People will be more likely to invest in Malaysian companies, build Malaysian factories, and set up new businesses. This in turn will drive economic development, helping to improve people’s quality of life – and putting Malaysia in a much stronger position in the long run.

If we are to be responsible in government, it sometimes means taking difficult decisions which are unpopular. Leadership is about looking to the long-term: about doing what is right, not what is popular. In 2009, we began a journey of economic and government transformation. As 2014 begins, we must continue to build the foundations for Malaysia’s continued success: a stronger economy, and a more unified nation.