KUALA LUMPUR: A 6% Goods and Services Tax (GST) rate and a
new income tax structure, abolition of the 34 sen sugar subsidy and increased
BR1M payments were the highlights of the 2014 Budget presented by Datuk Seri
Najib Tun Razak in Parliament on Friday.
He said a one-off cash assistance of RM300 to households who
are BR1M recipients would be given when GST is implemented on April 1 2015.
He said to lessen the burden of the people, individual
income tax rates would be reduced by 1 to 3 percentage points for all tax
payers to increase disposable income.
Sale, purchase and rental of residential properties as well
as selected financial services were exempted from GST. Similarly, GST would be
excluded in transportation services such as bus, train, LRT, taxi, ferry, boat,
highway toll and education & health services.
Najib said the 6% GST rate would be among the lowest in
Asean countries, with Indonesia, Vietnam, Cambodia, the Philipines and Laos
capping theirs at 10% and Singapore 7%.
On the abolition of sugar subsidy, Najib said it was due to
the high diabetic rate among Malaysians under the age of 30.
“Statistics indicate that 2.6 million Malaysians under the
age of 30 are diabetic. If left untreated, patients will face various
complications such as heart disease, kidney failure, blindness and amputation,”
he said.
Highlights of Budget 2014:
1. The theme for
Budget: Strengthening Economic Resilience, Accelerating Transformation &
Fulfilling Promises with 5 main thrusts.
- Thrust 1: Invigorating Economic Activity
- Thrust 2: Strengthening Fiscal Management
- Thrust 3: Inculcating Excellence in Human Capital
- Thrust 4: Intensifying Urban and Rural Development
- Thrust 5: Ensuring Well-Being of the Rakyat
2. For 2013, domestic
economy is expected to expand between 4.5% and
5%. Growth supported by private investment, increasing 16.2% to
estimated RM165bil.
3. Nett FDI was higher at RM18.2bil in 1st half of 2013,
compared with RM15.9bil during the same period in 2012.
4. Private and public consumption expected to grow 7.4% and
7.3% respectively mainly supported by strong domestic economic activity.
5. Export of goods
are expected to grow at 2.5%.
6. In 2014, construction sector is expected to grow at 9.6%
and followed by services sector at 5.7%.
7. Unemployment rate for Budget 2014 is estimated at only
3.1% whereas inflation rate remains lowest at 2% to 3%.
8. The per capita income for 2014 is expected to reach
RM34,126. That is 37% higher than RM24,879 in 2009.
9. We are confident of achieving the target per capita
income of RM46,500 (US$15,000) in 2020.
10. It is even possible that we will achieve developed
nation status much earlier than 2020.
11. Budget 2014 will
allocate a total of RM264.2bil to implement programmes and projects for the
rakyat’s well-being & development.
12. In 2014, the Federal Government revenue collection is
estimated at RM224.1bil, an increase of RM4bil from 2013.
13. The Federal
Government fiscal deficit will further decline from 4% of GDP in 2013 to 3.5%
in 2014. This indicates the commitment towards fiscal consolidation to further
strengthen the financial position of the nation.
14. Private
investment is expected to reach RM189bil (17.9% GDP) in oil and gas, textile,
as well as transportation and property.
15. Public investment is expected to reach RM106bil.
Projects to be implemented: West Coast Expressway from
Banting-Taiping (316KM); double-tracking projects Ipoh-Padang Besar and
Gemas-JB.
In the oil and gas sector, among projects to be undertaken
by Petronas include the Sabah Ammonia Urea Project (SAMUR) in Sipitang. The
integrated oil and gas production development project in Kebabangan, the
regasification plant project in Lahad Datu, Sabah; and RAPID in Pengerang,
Johor, which is the largest investment in Malaysia.
16. The government will continue to encourage investments in
five regional economic corridors. As at 2012, RM124bil investments realised.
For the first 9 months of 2013, all regional corridors attracted committed
investments of RM53.4bil with 50% realised.
17. For 2014, the government will provide RM1.6bil for
development in the five regional corridors.
18. The services sector is the key contributor to economic
growth and has huge potential for further development.
19. The Government will launch the Services Sector Blueprint
in 2014 to outline strategies, measures and identifies potential subsectors.
20. The Government will formulate a Logistics Sector Master
Plan to provide strategic direction for development of logistics infrastructure
and supply chain.
21 RM1.2bil allocated
for operating and development expenditure in 2013 and 2014 to implement Visit
Malaysia Year 2014 programmes, targeting 28 million tourists. To make Malaysia
as the destination of choice, we will encourage investment to build new 4 and 5
star hotels.
22. The government has implemented the High-Speed Broadband
(HSBB) project under the National Broadband Initiative. To expand coverage in
major towns, it will implement the 2nd phase of HSBB in collaboration with the
private sector involving RM1.8bil investment. This is expected to provide more
coverage in urban areas, benefiting 2.8 million households. Internet speed will
be increased to 10 Mbps.
23. For Sabah and Sarawak, to enhance the internet speed
coverage, underwater cables will be laid over three years - RM850mil.
24. GST to be enforced 1 April 2015 at rate 6%. This is
lowest in Asean. One-off payment of RM300 to BR1M when GST is implemented.
25. Tax deduction for companies that invest to acquire
technology platform in bio-based industry. Exemption on import duty on R&D
equipment for companies that invest in pilot plants for the purpose of
pre-commercialisation in Malaysia.
26. The Government plans to increase its contribution in
1Malaysia Pension Scheme from 5% to 10%, or from a maximum of RM60 to RM120 per
year; effective Jan 1, 2014 to end-2017.
27. 1Malaysia Entrepreneurs (1MeT) will be implemented to
give entrepreneurs exposure in business.
28. To encourage graduates to do business, RM50mil is
allocated under Tabung Usahawan Siswazah.
29. The Government is committed to reducing the fiscal
deficit gradually, will ensure Federal debt level remain low and not exceed 55%
of GDP.
30. RM50mil allocated under Graduate Entrepreneurship Fund
to provide soft loans of up to RM500,000 at 4% interest rate with a view to
reducing graduate unemployment.
31. To encourage
Minimum Wage Policy compliance, further tax deduction proposed with regard to
the difference in the wages paid by employers in 2014.
32. RM100mil
allocated for creation of Night Market Traders Entrepreneur Scheme; soft loans
to carry 4% interest rate, with maximum loans of up to RM30,000.
33. Establishment of Integrity Management Unit in each
ministry to enhance integrity; officers from Malaysia Anti-Corruption
Commission to be represented in the unit.
34. The Government to conduct audit on projects valued at
more than RM100mil during their implementation phase.
35. To facilitate tax
payers with employment income whose monthly tax deductions (MTD) have been
made, it is proposed that they are not required to submit tax returns if
satisfied their MTD is a final tax; proposal effective from assessment year
2014.
36. Subsidy programme
to be gradually restructured; a portion of savings from restructuring to be
distributed in the form of direct cash assistance with the other half to
finance development projects.
37. The Government is committed to accelerating academic
achievement, competencies and skills. Towards this, the Government will
allocate a sum of RM54.6bil or 21% of the total allocation in 2014.
38. RM530mil allocated for pre-school programmes as well as
set up 93 pre-schools in national-type primary school.
39. Allocation of RM600mil in research grants for public
institutions of higher learning for improving the status of research
universities by increasing research and
the number of articles for publications in international journals.
40. Implement a single tier for the Malaysian Skills
Certificate course Levels 1 to Level 3
for 6 months in all Industrial Training Institutes under the purview of the
Manpower Department (JTM).
41. Government to continue to provide the 1Malaysia Book
Voucher Programme valued at RM250 to each
student. The initiative is expected to benefit 1.3 million
students involving an allocation of RM325mil.
42. In the fight against serious crime, the Government has
allocated RM200mil to equip PDRM with the latest tools and equipment such as
firearms, ammunition, bulletproof vests, narcotic detectors, biometric systems
and forensic vehicles. The Government will also provide 496 closed-circuit
cameras (CCTV) in 25
local authorities involving an allocation of RM20mil.
43. To strengthen the
development of green technology, the Government will provide investment tax allowance for the
purchase of green technology equipment and income tax exemption on the use of
green technology services and system.
44. To encourage a green
lifestyle, the Malaysian Green Foundation will be established to promote and enhance use of
green technology by the corporate sector and the general public. For this, a
launching grant of RM15mil will be provided to the Foundation.
45. The Government
proposes to abolish the sugar subsidy of 34 sen effective 26 Oct 2013.
46. The Government to purchase four special buses for the
implementation of the Mobile Family Centre which will provide advisory services
related to family matters; dietary requirements; screening for chronic disease;
as well as testing for glucose and cholesterol.
47. RM100mil allocated for enhancing education performance
and skills training, including RM28mil for early education programmes,
involving 176 Tamil pre-schools and i-Sinar programmes.
48. Real Property
Gains Tax (RPGT) - For gains on properties disposed within the holding period
of up to three years, the RPGT rate is increased to 30%, whereas for disposals
within the holding period of up to four and five years, the rates are increased
to 20% and 15%, respectively. For disposals made in the sixth and subsequent
years, no RPGT is imposed on citizens, whereas companies are taxed at 5%.
49. RM100mil will be provided to the 1Malaysia Maintenance
Fund under the Ministry of Urban Well-being, Housing and Local Government. The
Government will also allocate RM82mil to rehabilitate 20 abandoned housing
projects involving 8,197 houses.
50. Tax Relief for Middle-Income Group - Government proposes
a special tax relief of RM2,000 be given
to tax payers with a monthly income up to RM8,000 received in 2013. This
measure will result in tax savings up to RM480. This group is already enjoying
tax savings up to RM475 on income received in 2013 with the reduction of tax
rates announced by the Government in the last Budget.
51. BR1M to households with a monthly income of below
RM3,000 increased from RM500 to RM650; and for the first time, BR1M assistance
of RM450 to be extended to households with monthly income of between RM3,000
and RM4,000.
52. BR1M increased
from RM250 to RM300 for single individuals aged 21 and above and with a monthly
income not exceeding RM2,000.
53. Pensioners will receive a special financial assistance
of RM250 to assist them meet the rising cost of living.
54. For civil servants, half-month bonus for 2013 with a
minimum payment of RM500 to be paid in early January 2014.
55. RM100 schooling assistance to all primary and secondary
students as well as RM250 book vouchers to continue, with allocations of
RM540mil and RM325mil respectively.
56. RM1.2bil allocated to build and upgrade dams and water
treatment plants to increase coverage of water supply to 100%, especially in
urban areas.
57. Health sector
allocated RM22.1bil; RM150mil to appoint 6,800 more nurses; RM3.3bil to
purchase medicine and medical equipment.
58. Police and Armed
Forces allocated RM8.8bil and RM13.2bil respectively to reduce crime and
enhance military preparedness. RM75mil proposed to further strengthen the East
Coast Special Security Area (ESSCOM) operations. RM48mil allocation to cater
for the welfare of 20,000 armed forces veterans, including health payments,
ex-gratia and education; RM202mil to build and refurbish ATM quarters
