• Budget 2019 Key Features

    The new Pakatan Harapan government released Budget 2019 with the aim of re-establishing Malaysia as the ‘Asian Tiger’. The theme of the Budget speech was ‘A Resurgent Malaysia, A Dynamic Economy, A Prosperous Society’.

    It constituted of 12 strategies that were listed under three areas:

    • To implement institutional reforms
      • Strategy 1: Strengthen Fiscal Administration
      • Strategy 2: Restructuring and Rationalising Government Debt
      • Strategy 3: Raising Government Revenue
    • To ensure the socio-economic well-being of Malaysians
      • Strategy 4: Ensuring Welfare and Quality of Life
      • Strategy 5: Improving Employment and Employability
      • Strategy 6: Enhancing Health & Social Welfare Protection
      • Strategy 7: Raising Real Disposable Income
      • Strategy 8: Education for a Better Future
    • To foster an entrepreneurial economy
      • Strategy 9: Unleashing the Power of the New Economy
      • Strategy 10: Seizing Opportunities in the Face of Global Challenges
      • Strategy 11: Redefining the Role of Government in Business
      • Strategy 12: Ensuring Equitable and Sustainable Economic Growth

    The total 2019 Federal Government Budget stands at RM314,550 billion with income tax contributing 40.3%, 27.2% from non-tax revenue, 16.8% from borrowings and use of the Government’s assets, 13.1% from indirect tax, and 2.6% from direct tax.

    The budget that is allocated is further divided into two sections—operating expenditure and development expenditure.

    Out of the total budget, 26.1% is allocated to emoluments. The breakdown for the rest of the budget is below:

    • 18.9% for other expenditures
    • 10.5% for debt service charges
    • 9.3% for economic development
    • 9.2% for supplies and services
    • 8.4% for retirement charges
    • 7.1% for subsidies and social assistance
    • 4.8% for social
    • 2.4% for grants and transfers to State Governments
    • 2.3% for security
    • 1.0% for general administration

    Key Features of the Malaysia Federal Budget 2019

    Income Tax

    • The Government will offer a Special Voluntary Disclosure Program to encourage taxpayers to voluntarily declare any unreported income.
    • The tax relief for your Takaful premium or life insurance and EPF contribution will be separated.
    • Your Takaful or life insurance premium payments will get an income tax relief of up to RM3,000.
    • Your EPF contributions or any approved pension funds will get an income tax relief of up to RM4,000.
    • Civil servants who are registered under the pension scheme will get a tax relief of up to RM7,000.
    • The tax relief for the the Skim Simpanan Pendidikan Nasional (SSPN) or National Education Savings Scheme has increased from RM6,000 to RM8,000.
    • Corporate income tax rate for SMEs has been reduced from 18% to 17% on the first RM500,000 of chargeable income. The balance income will continue to be taxed at 24%.

    Tax

    • The Real Property Gains Tax rates will be revisited for disposal of properties or shares in a real property company.
    • The rate will be increased from 5% to 10% for companies, non-citizens, and non-permanent residents.
    • The rate will be increased from 0% to 5% for Malaysian citizens and permanent residents.
    • The tax will be exempted for low-cost, low-medium cost, and affordable houses that are priced below RM200,000.
    • Transfer of property valued more than RM1 million will see an increase in the stamp duty from 3% to 4%.
    • Casino license will be increased from RM120 million to RM150 million per annum.
    • Casino duties on nett collection will be increased up to 35%.
    • Machine dealer’s license will be increased from RM10,000 to RM50,000 per annum.
    • Gaming machine duties on gross collection will be increased from 20% to 30%.

    Property

    • The Government is allocating RM1.5 billion for Program Perumahan Rakyat, Perumahan Penjawat Awam Malaysia, Perumahan Rakyat 1 Malaysia (PR1MA) and Syarikat Perumahan Negara Bhd to continue the construction and completion of affordable homes.
    • Bank Negara Malaysia will be setting up a fund amounting to RM1 billion so those earning under RM2,300 each month can buy houses priced at RM150,000 and below.
    • This fund will be made available from 1 January 2019 at participating financial institutions like CIMB Bank, BSN, AmBank, Maybank, and RHB Bank with interest rates as low as 3.5% per annum.
    • This fund will be available for 2 years or until the allocated amount is exhausted.
    • The Government will allocate RM25 million to Cagamas Berhad to create a mortgage guarantee for first-time home buyers with an income below RM5,000.
    • The Government will exempt stamp duty up to RM300,00 for first-time home buyers who will purchase residential properties priced up to RM500,000.
    • The Public Sector Housing Financing Board will extend the loan repayment period from 30 to 35 years for civil servants on their first loan. The second loan’s repayment period will be increased from 25 to 30 years.
    • The Government will allocate RM400 million to upgrade, repair, and maintain Government housing quarters for the police, armed forces, and teachers.
    • The Government has secured commitment from the Real Estate Housing Developers Association (REHDA) to reduce the prices of houses to 10%.
    • The Government will exempt stamp duty on the instrument of transfer and the purchase of new homes from developers that are valued between RM300,001 and RM1 million.
    • This is part of the National Home Ownership Campaign and developers will offer a minimum price discount of 10% on residential properties.

    Transportation

    • The Government will allocate RM240 million to increase public transport utilisation with the introduction of a RM100 unlimited public transport pass.
    • This will be implemented initially on the rail and RapidKL bus network, starting 1 January 2019.
    • Malaysians will also have access to a RM50 unlimited monthly pass for just RapidKL bus services. This campaign will be extended to other bus companies in stages.
    • The Government plans to fully utilise Prasarana Malaysia Berhad (Prasarana), its wholly-owned public transport subsidiary.
    • The current fleet of 1,131 RapidKL, 408 Rapid Penang, 69 RapidKuantan and 300 MRT feeder buses will be fully utilised and optimised.
    • The Kuala Lumpur City Council will allocate RM20 million to further improve public transport coverage in Kuala Lumpur. This will lead to additional free GoKL free bus services in addition to the 4 existing routes.
    • The Government will make RM500 million available through Bank Pembangunan Malaysia

    Berhad (BPMB) for a Public Transport Loan Fund. There will be a 2% interest subsidy to bus and taxi companies, including other public transport operators as well.

    • The Government will freeze toll hikes on all intra-city tolls around the country for 2019.
    • The toll for motorcycles for the First and Second Penang Bridge, as well as the Second Link in Johor will be abolished by the Government.
    • An amount of RM10 million will be allocated by the Government to upgrade the Autogate Malaysia Automated Clearance System and M-Bike.
    • The Pakatan Harapan Manifesto has promised to provide fuel subsidies to individual car owners with an engine capacity of 1,300cc and below. Motorcycle owners with an engine capacity of 125cc and below will also be privy to this subsidy.
    • The Government has decided that car owners will enjoy up to 100 litres of RON95 petrol per month with a subsidy of at least RM0.30 per litre.
    • Motorcycle owners will enjoy up to 40 litres of RON95 petrol per month with the same subsidy.

    Education

    • The Government will allocate RM60.2 billion to the Education Ministry with the aim of getting better quality education at all levels, thus leading to higher income growth.
    • Students from lower income groups will get a total of RM2.9 billion for food, text books, and cash assistance.
    • A total of RM652 million will be allocated for the maintenance of schools.
    • The Government will allocate RM100 million for the rebuilding of dilapidated schools across the country.
    • For development and provision of training programs in Polytechnics and Community Colleges, the Government has allocated RM206 million.
    • There will be an introduction of a RM30 million Technical and Vocational Education and Training (TVET) Contestable Fund.
    • A total of RM400 million will be allocated to public institutions of higher learning (IPTA) for research activities.
    • Depending on the borrower’s monthly income level, the payment deductions for PTPTN will be between 2% and 15%. This is only applicable for those earning more than RM1,000 per month.
    • Students from B40 households who have successfully obtained first class results will get loan deductions.
    • Those who are 60 years and above with a monthly income of less than RM4,000 will have their debts written off.
    • A total of RM70 will be allocated to a new programme, Malaysia Future Leaders School (MFLS).
    • The Government will allocate RM100 million to prepare Malaysian athletes for the Tokyo Olympics 2020.
    • A total of RM10 million will be allocated for eSports to the Malaysia Digital Economy Corporation (MDEC).

    Quality of Life and Rakyat Welfare

    • With the Bantuan Sara Hidup” (BSH) cash grants, the Government will continue with B40 households.
    • From January 2019, households with a monthly income of RM2,000 and below will receive RM1,000.
    • Households with a monthly income between RM2,001 and RM3,000 will receive RM750.
    • A total of RM500 will be provided to households with a monthly income between RM3,001 and RM4,000.
    • A total of 4.1 million households, under BSH, will continue to receive financial assistance from the Government.
    • The Government will be allocating RM45 million to the Employees Provident Fund (EPF) i-SURI contribution scheme under the e-Kasih programme.
    • Housewives under this programme will have their caring husbands’ incentivised. If the husband contributes at least RM5 each month, the Government will match it with RM40 monthly.
    • The Government will allocate RM150 million to standardise prices of essential goods and also stabilise the supply. Products that fall under the essential good category are wheat flour, refined sugar, and cooking oil in 1kg packs, RON95 petrol, diesel, and Liquid Petroleum Gas (LPG), and local rice with 15% broken grains in 10kg packs.

    Healthcare

    • The Government will be allocating close to RM29 billion to the Ministry of Health.
    • An allocation of RM10.8 billion will be used to provide medicine and to improve the quality of health services provided at clinics and hospitals.
    • The Government will allocate RM20 million to ensure protection of women’s health by providing free mammogram screening, Human Papillomavirus (HPV) vaccinations, and Pap Smear tests as well.
    • The Government will also allocate RM50 million for treatments of rare diseases, Hepatitis C treatments, stunting among children, additional haemodialysis screening and treatments, and Enhanced Primary Healthcare (EnPHC).
    • The Government will introduce ‘soda tax’ at RM0.40 per litre for two categories of sweetened beverages to promote a healthy lifestyle among Malaysians.

    Infrastructure

    • The Government will allocate RM2.46 billion to upgrade and restore works for railway tracks.
    • A total of RM25 million will be allocated to develop a truck depot with efforts to build a as a strategic gateway for two-way trade between Malaysia and Thailand.
    • The Government will allocate RM926 million to build and upgrade roads, rural roads, and bridges.
    • An allocation of RM694 million and RM738 million will be made for electricity and water supply to rural areas.
    • A sum of RM85 million will be directed to New Villages to upgrade and maintain basic infrastructure.
    • To improve career advancement opportunities of the Indian youths, a total of RM100 million will be allocated.

    Women in Workforce

    • The Government will allocate RM10 million to set up 50 childcare facilities in Government buildings.

    Defense

    • The Government will allocate RM5.9 billion to the Ministry of Defence and the Ministry of Home Affairs to improve and strengthen national security.

    Agriculture

    • An allocation of RM30 million will be directed to assist smallholders and ensure they receive their Malaysian Sustainable Palm Oil (MSPO) certification.
    • A total of RM47 million will be directed towards R&D with efforts to improve productivity of fruits, grains, and seeds.
    • To promote automation of agrofood, the Government will allocate RM18 million.
    • To introduce entrepreneurship and training programmes, the Government will allocate RM52 million.

    SMEs

    • To strengthen SMEs in Malaysia, a total of RM4.5 billion SME fund will be created via commercial financial institutions.
    • SMEs with a taxable income of up to RM500,000 and paid-up capital of up to RM2.5 millions will see a reduced tax rate from 18% to 17%.
    • Credit and Takaful facilities worth RM2 billion will be made available to SME exporters to encourage exports.
    • The Government will be allocating RM100 million to improve and upgrade the capability of the SMEs in the halal industry with efforts to make Malaysia the halal hub by 2020.
    • A total of RM20 million will be allocated by the Government to initiate a ‘Buy Malaysian First’ campaign in order to support local products and services.

    Tourism

    • An allocation of RM100 million will be given to the private tourism sector for promotional and marketing campaigns to increase number of tourists in Malaysia.
    • There will be tax-free facilities in Penang’s Swettenham Pier in the form of duty-free shops.
    • A total of RM20 million will be allocated to the Malaysia Healthcare Tourism Council (MHTC) with efforts to generate 25% growth in medical tourism.
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