Malaysia’s 10th Prime Minister Datuk Seri Anwar Ibrahim and his entourage seen at the Ministry of Finance, Putrajaya and later in the Parliament ahead of the tabling of the revised Budget 2023. Find out more about the “Madani Budget” below:
NEW GOVT, NEW BUDGET 2023 BASED ON ‘REAL FACTS’
Prime Minister Datuk Seri Anwar Ibrahim, who tabled the revised Budget 2023 in the Dewan Rakyat at 4pm on Friday (Feb 24), said he intended to share “the real facts” rather than opting for “captivating” figures in order to accurately present the state of the nation.
The government faces five core challenges in its economy – a debt level that is too high, decline in quality of administration, global economic uncertainties, a slow recovery in investments to pre-pandemic levels, and the impact of economic challenges on the rakyat, said Anwar, who is also the Finance Minister.
For example, the government expects total debt to reach RM1.2 trillion or over 60% of gross domestic product (GDP) in 2023. If it reaches RM1.5 trillion or 80% of GDP, debt service charges will reach RM64 billion or 16% of revenue, exceeding the 15% commonly practised, said Anwar.
“The question is whether there is political will to effect change”, he said as he tabled the revised Budget 2023 themed “Madani Budget”.
Below are the key highlights of the revised Budget 2023:
Highlights of Budget 2023:
The revised Budget 2023 will see an allocation of RM388.1 billion, comprising RM289.1 billion operating expenditure and RM99 billion development expenditure, including RM2 billion in contingency savings.
With 12 main efforts based on three determinations — inclusive and sustainable economic drive, institutional and governance reforms to restore confidence, and social justice to moderate disparities — here are the key measures under the new supply bill.
- Education Ministry receives highest allocation of RM55.2 billion, up from RM52.6 billion in 2022.
- Health Ministry receives second-largest allocation of RM36.3 billion, up from RM32.4 billion last year. Mostly to buy medicine, reagents, vaccines and consumables, while RM3 billion will be set aside for new permanent positions and appointment of over 1,500 contract medical officers, contract dentists and contract pharmacists.
- Higher Education Ministry gets RM15.3 billion, up from RM14.5 billion in 2022.
- Home Ministry gets RM18.5 billion; RM4.1 billion to maintain and procure military assets, including littoral combat ships.
- Defence Ministry gets RM17.7 billion, including RM1 billion to enhance domestic security such as acquiring 2,100 body cameras for police, and RM450 million for new police headquarters and police quarters in Perak.
New and restructured taxes
- No Goods and Services Tax (GST) but the government will tax those with the means to pay via:
* Luxury Tax on items such as watches and fashion goods;
* excise duties on liquid nicotine used in e-cigarettes and vapes.
- The government may introduce a capital gains tax on the sale of shares in private companies in 2024.
- Income tax on those earning more than RM100,000 to RM1 million will be raised by 0.5 to two percentage points, affecting fewer than 150,000 taxpayers.
- Income tax on those earning between RM35,000 to RM100,000 will be lowered by two percentage points, resulting in additional disposable income of RM1,300 for about 2.4 million taxpayers.
- Individuals or companies donating to non-profits undertaking grassroot sports development programmes will qualify for a tax cut of up to 10% on aggregate income.
- Tax relief of up to RM3,000 for voluntary contributions to the Employees Provident Fund (EPF) account.
- Under a special voluntary disclosure programme from June 1, 2023 until May 31, 2024, the govt will provide 100% waiver on additional taxes for taxpayers who declare unreported taxes.
- Tax relief on medical treatment raised to RM10,000 from RM8,000, including relief of up to RM4,000 on treatments for conditions such as autism, Down syndrome and specific learning disabilities.
Digitalisation and automation
- RM1 billion in funds under Bank Negara Malaysia (BNM) to help micro, small and medium enterprises (SMEs) automate their processes to digitalise their businesses.
- RM100 million under the SME digitalisation scheme will be used to fund matching grants of up to RM5,000 to SMEs subscribing to apps to digitalise their businesses, such as point-of-sales systems, accounts or inventory management.
- Govt to provide RM50 million in matching grants to encourage automation of plantation sector through use of robotics and artificial intelligence.
- Govt to accelerate implementation of Jendela project as a national effort to provide internet network facilities.
RM725 million to implement digital connectivity in 47 industrial areas and nearly 3,700 schools.
- Grants and incentives to spur SME growth, drive domestic investments
- Syarikat Jaminan Pembiayaan Perniagaan to guarantee up to RM20 billion in loans from SMEs, with a government guarantee of up for 90% for companies in frontier tech, agriculture and manufacturing.
- Investment incentives will be restructured towards tiered taxes based on outcomes, such as creating high-value jobs, including local firms in the supply chain and creating new industry clusters.
- Khazanah Nasional and EPF to invest in innovative and high-growth local start-up companies with an investment value of RM1.5 billion.
- Tax deduction of up to RM1.5 million for firms that list on Bursa Malaysia’s ACE and LEAP Markets until assessment year 2025; tax rebate also extended to tech companies that list on the Main Market.
- RM100 million under Digitisation Grant Scheme for SMEs and small vendors to support business automation and digitisation; separately, there is a RM1 billion facility under BNM aimed at incentivising SMEs to automate processes and digitalise operations.
For Malaysia’s electrical & electronics (E&E) and aerospace sectors, govt plans to:
* extend tax incentives to manufacturing companies that transfer their operations to Malaysia, as well as a 15% tax rate for C-suite executives until 2024 to attract investment from companies affected by Covid-19;
* extend income tax incentives, as well as investment tax allowances to the aerospace sector until Dec 31, 2025 to encourage capacity expansion of existing companies and attract investment from new companies;
* strengthen development of Iskandar Malaysia in Johor via creation of a special financial zone and competitive remuneration package to attract international investors and skilled workers to settle in Malaysia;
* RM6 billion strategic financing by Bank Pembangunan Malaysia to promote sustainable and automation agenda.