Malaysia’s
Budget 2015 shows a responsive government with measures and incentives directed
at alleviating the pressures from the rising cost of living and ensuring that
the economic momentum is sustained in 2015. Yet, the government emphasises
fiscal sustainability as the country pushes forward with critical fiscal reform
measures such as GST implementation and subsidy rationalisation as outlined in
the previous budget. The budget’s expenditure and growth supportive measures
are expected to have a positive impact on the economy. Notable beneficiaries
include the deserving low-income groups and middle-class, SMEs and corporates,
construction, agriculture, education, health and service sectors.
Commentary
on specific measures : -
Strengthening
Economic Growth
•The budget continues to prioritise new areas growth to sustain
the investment momentum.
•RM48.3bn worth of infrastructure projects will be
implemented in 2015.
•Will continue to increase capacity of high-speed broadband
with RM2.7bn investment over the next three years.
•Provided capital allowance to increase automation in
labour-intensive industries and offered financial assistance for SMEs to
enhance use of new technology, automation and innovation.
•The 11th Malaysia Plan (11MP) will be launched in May 2015.
At the same time a new approach known as the Malaysian National Development
Strateg (MyNDS) is being formulated.
•The emphasis
is on using limited resources optimally, with special focus on high-impact
projects and programmes at low cost as well as efficient and rapid
implementation.
Enhancing
Fiscal Governance
•The government reiterated its efforts to strengthen fiscal
sustainability and yet ensure that the people’s well-being was not compromised
as part of achieving a balanced budget.
•The government announced a wider scope of items that will be
exempted from GST including foods, electrical appliances, household goods and
etc.
•To alleviate the burden of rising cost and GST, the
government will reduce personal income tax rates by 1-3% for year of assessment
2015 (YA 2015).
•The cooperative income tax rate will also be reduced by 1-2%
for YA 2015 and corporate income tax reduced by 1% from 25% to 24% for YA 2016.
SMEs‘ income tax rate will also be reduced by 1% from 20% to 19% for YA 2016.
•Incentives
and assistance have been provided to businesses in preparing to implement GST,
including training grants, purchase of accounting software, ICT equipment and
software and training in accounting and ICT related to GST be given additional
tax deductions.
Developing
Human Capital and Entrepreneurship
•In general, conditional direct cash transfers are not
sustainable, especially if they are not accompanied by higher productivity. As
such the government’s efforts to improving the quality of human capital are
critical to enhance worker productivity and allow them to earn higher wages.
•For this, measures were announced to build new schools and
expand the Trust Schools programme, upskilling in technical and vocational
qualifications, development and maintenance of education facilities, sponsoring
of education, and expanding the MyBrain15 programme, and enhance the graduate
employability scheme.
•The
government announced that the Employment Act 1955 and related labour acts will
be reviewed including better terms and conditions of employment, appointment
and dismissal, flexible working arrangements and termination benefits. The
government will also introduce an Employment Insurance System aimed at
assisting retrenched workers by giving temporary financial assistance and
provide opportunities for reskilling and upskilling.
Advancing the Bumiputera Agenda
•The government will allocate RM600m to EKUINAS to increase
Bumiputera ownership in private companies and GLCs.
•To date,
EKUINAS has cumulative investments of RM2.3bn in various sectors. Measures are
also announced to strengthen Bumiputera entrepreneurship and human capital as
well as financial assistance for Bumiputera SMEs.
Upholding role of women
•To increase
female workforce participation (which is currently only at 38%), the government
will embark on efforts to strengthen the Women Directors Programme to achieve
the targeted 30% participation of women in decision-making positions.
Developing National Youth Transformation Programme
•The government will establish 1Malaysia Youth City that
provides a comprehensive ecosystem for the youth to increase their capabilities
and progress in work, business and entrepreneurship as well as to gain access
to housing, recreational and sports facilities.
•The
government is also providing a 10% loan guarantee to enable borrowers to obtain
full financing that includes the cost of insurance.
Prioritising Well-being of Rakyat
• To improve the quality of life and well-being of the
people, the government will increase the BR1M cash assistance to those who are
lower income and civil servants.
• The government also allocating RM1bn in order to strengthen
the food supply chain.
• The government will continue to implement various price
uniformity schemes, transport subsidy and establishing more Kedai Rakyat
1Malaysia (KR1M). The GST Enforcement Unit will also be strengthened with
higher headcount.
• To improve the public transport system, the government will
introduce intercity bus services with a discounted monthly fare of 30%, provide
Electric Train Service (ETS) and upgrade stage bus services.
• To address the issue of affordable home ownership, the
government will build 80,000 units under the 1Malaysia People’s Housing
Programme (PR1MA) with an allocation of RM1.3bn.
• To enable
more people to own their first home and reduce the cost of buying a house, the
government has agreed to extend the 50% stamp-duty exemption on instruments of
transfer and loan agreements as well as increase the purchase price limit from
RM400,000 to RM500,000. The exemption will last until 31 Dec 2016.
Source:
CIMB Economic Research, Oct 2014
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