Selangor Journal
Photo taken from the edge markets

Pakatan Harapan’s Budget 2019

Photo taken from the edge markets

By Selangor Journal Staff

Finance Minister Lim Guan Eng  tabled the 2019 Budget in Parliament today.

Budget 2019 has 3 focus areas to return Malaysia’s economic position as the Asian Tiger.

The first focus is to ‘Implement institutional reforms’, second focus of the budget is to ‘Ensure people’s well-being’ while the last focus is to ‘Nurture a culture of entrepreneurship’.

The following are the highlights of the Economic Outlook 2019 report, the first presented under the Pakatan Harapan government:

 

Main points of the Economic Outlook 2019 Report:

• Federal govt budget at RM314.55bil for 2019
• Federal government revenue to increase by 10.7% to RM261.81bil from RM235.46bil this year.
• Operating expenditure to increase by 10.4% to RM259.85bil from RM235.45b this year
• Development expenditure to dip 0.5% to RM54.33bil from RM54.04bil this year
• Tax revenue to increase by 0.8% to RM176.15bil in 2019 from RM174.70bil this year
• Fiscal deficit to be reduced to 3.4% in 2019 from 3.9% this year
• Individual income tax is expected to be at RM34.95bil compared with RM34.80bil this year

Taxes

Photo taken from Greenpro Synergy Network

• Individual income tax is expected to be at RM34.95bil compared with RM34.80bil this year.
• Corporate income tax (CITA) is expected to increase by 1.3% to RM70.18bil from RM70.53bil.
• Govt will introduce a credit system for sales tax deductions from Jan 1 to avoid double-taxing and lower business costs
• Services tax will be imposed on imported services
• Govt plans to implement scheduled land sales to the highest bidder subject to land conditions to maximise govt revenue
• Govt to propose departure levy be imposed on air travellers leaving the country from June 1, 2019
• Govt plans to impose departure levy of RM20 on travellers flying to Asean; RM40 on those going to other countries
• Rate of stamp duty on property transfer worth more than RM1m will be raised by 1% from 3% to 4%
• Only 545 items were zero-rated under GST, while under SST, almost 10 times more items are exempted from sales tax
• Govt will launch a Special Voluntary Disclosure Programme to allow taxpayers to voluntarily declare any unreported income
• For locals and PRs, a 5% real property gains tax will be imposed, from 0% now
• For companies and foreigners (non-PRs), real property gains tax to be doubled to 10%
• Annual gaming licence fee for casinos to be raised from RM120m to RM150m; gaming tax on casinos to be raised to 35% of GGR
• Gaming machine dealer’s licence to be raised from RM10,000 to RM50,000 per year; tax on gaming machines also up from 20% to 30% of gross collection
• Tax relief to be given to companies that help their employees settle their PTPTN study loans in 2019 tax year
• Govt to turn Pangkor island into a duty-free zone

Economy

Photo taken from Moneycontrol.com

• Fallout from US-China trade war
• GDP to expand up to 4.9% in 2019 compared with 4.8% in this year
• Domestic demand growth at 4.9% in 2019 versus 5% in 2018
• Services sector to grow slower at 5.9% in 2019 from 6.3% this year
• Manufacturing to expand up to 4.7% in 2019 from 4.9%
• Mining to rebound to 0.7% in 2019 from a contraction of 0.6%.
• Agriculture to jump to 3.1% in 2019 from a decline of 0.2%.
• Construction is expected to expand by 4.7% in 2019 from 4.5%.
• Public expenditure to fall to 0.9% in 2019 from a marginal growth of 0.1% this year
• Malaysia’s exports to fall by 0.08 percentage points and GDP by 0.02 percentage points over 2018-2020
• Worsening conflict could see Malaysia’s economy fall by 0.7% percentage points
• 2% of Malaysia total exports or RM108bil (US$25.1bil) will be affected

Loan growth in 2018

• Banks registered a 7.3% increase in disbursements to RM678.8bil
• Loan disbursements to households jumped 13.2% to RM191.7bil in January to July
• Total loans outstanding in banking system to grow 5.3% to RM1,63bil
• Total household loans outstanding rose up to 6%, that is to RM936.7bil or 57.4% of the total loans outstanding in the country’s banking system
Overall household debt moderated to RM1,165.7bil or 83.8% of GDP as at end-June 2018

Subsidies

 

•Single vehicle/motorbike owners with engine capacity 1500cc and below to get targeted fuel subsidy
•Govt to give RON95 petrol subsidy amounting to 30 sen/litre, limited to 100 litres/month for cars; and limited to 40 litres/month for motorcycles
•RM500m will be allocated to the Public Transport Fund in the form of subsidy rate of 2% for taxi and bus firms and public transport operators

Financial Assistance

•Households with monthly income of RM2,000 and below to receive RM1,000 financial assistance
•An estimated 4.1 million households to continue receiving financial assistance from govt via a RM5b allocation
•Govt proposes to raise minimum wage to RM1,100 in Malaysia from Jan 1, 2019
•Govt proposes reduction of employers’ EPF contribution for workers aged 60 and above to 4%
•Govt, in cooperation with private insurance company, to introduce National Health Protection Fund B40
•B40 fund will provide free coverage on 4 critical illnesses up to RM8,000, and wage replacement during hospital treatment at RM50/day or RM700/year
•Labour laws to be reviewed to strengthen the labour market and workers’ welfare, and totally prohibit discriminatory practices by employers
•One-off assistance of RM500 to be paid to eligible pensioners
•Govt to allocate nearly RM29b for health services, up 7.8% y-o-y

Property

Photo taken from The Star

•For companies, non-citizens and non-PR holders, Real Property Gains Tax (RPGT) will be increased from 5% to 10%. For citizens and those with PR, real property gains tax will be increased from 0% to 5%
•Stamp duties for property transfers worth more than RM1mil will be raised by 1 percentage point from 3% to 4%
•Government to spend RM1.5bil on affordable housing. To help those earning no more than RM2,300, a fund will be set up by Bank Negara for homes up to RM150,000 at interest rate of 3.5% through selected banks
•Real Estate and Housing Developers’ Association Malaysia (Rehda) agrees to reduce house prices as much as 10% for houses which are not subject to price control for new projects
•RM1.5bil to build and complete affordable homes under the People’s Housing Programme, Civil Servants Housing Project, PR1MA, and Syarikat Perumahan Nasional Bhd.
•RM1bil fund to be set up by the Central Bank of Malaysia (BNM) for those earning under RM2,300 per month to buy affordable houses priced at RM150,000 and below. The fund will be made available for two years or until the fund is depleted through AmBank, CIMB Bank, Maybank, RHB Bank and BSN at an interest as low as 3.5%
•RM25mil will be allocated to Cagamas Berhad to prepare a mortgage guarantee (jaminan pajak gadai) to ensure that first time house buyers with a household income of up to RM5,000 will receive a higher financing, including for their deposit
•Stamp duty exemption for the first RM300,000 on the property transfer letter (surat cara pindah milik) and loan agreement for first time house buyers purchasing a house priced at a maximum of RM500,000 for two years until December 2020
•Financing under the Public Sector Home Financing Board (LPPSA) will be extended from 30 years to 35 years for first-time financing and 25 years to 30 years for second financing (pembiayaan kedua)
•RM400 mil will be allocated to improve the living quarters of civil servants such as police and military personnel and teachers
•Government is suggesting on an exemption of stamp duty on property transfer letter for first house purchase for houses priced between RM300,001 and RM1mil for the period of six months starting from Jan 1, 2019.
•Property crowdfunding platform will be allowed, which will be headed by the private sector. Overseen by the Securities Commission, it will allow house buyers to use peer-to-peer lending to finance their purchase.

Allocations

•RM500m will be allocated to the Public Transport Fund in the form of subsidy rate of 2% for taxi and bus firms and public transport operators
•No toll hike in 2019, which will cost the govt about RM700m in potential revenue loss
•RM400m allocated to maintain, improve govt quarters
•Govt allocates RM210m for years 2019-2021 to encourage Industry 4.0 transition
•Khazanah to develop 80-acre plot in Subang as a world-standard aerospace hub
•Film in Malaysia Incentive (FIMI) to get RM30m allocation; Khazanah to also provide additional RM100m to FIMI for production at Pinewood Iskandar Malaysia Studios
•Govt to continue providing scholarships, study loans via RM3.8b allocation, of which RM2b is reserved for MARA-sponsored Bumiputera students
•RM20m will be spent on Buy Malaysian Product Campaign to support local products and services
•Govt to designate 380 acres of land in Pulau Indah, Selangor as free trade zone to support and catalyse shipping and logistics activities in Port Klang
•RM30m allocated to help small palm oil plantation estate holders to obtain MSPO certification
•RM2.46b will be allocated to upgrade railway tracks
•RM100m allocated to TEKUN to finance small entrepreneurs in 2019
•RM314.5b allocated for Budget 2019 versus estimated RM290.4b for 2018
•RM259.8b allocation for operating expenditure, RM54.7b for development expenditure
•Under development spending, economic sector (transport, commerce, industry, energy, public utilities and agriculture) gets RM29.2b allocation; social sector gets RM15.2b, while security gets RM7.1b; public administration gets RM3.2b
•RM20m allocated to Malaysia Healthcare Tourism Council (MHTC) to team up with leading private hospitals, to boost Malaysia’s image as a health tourism destination
•RM2b proposed to encourage investment in green technology industries
•Japanese govt offers to guarantee up to 200b yen or RM7.4b of Samurai bond issuance with 10-year tenure. The issuance will be guaranteed by the Japan Bank of International Cooperation at a coupon rate of 0.65% and is expected to be issued before March 2019.
•New framework to approve and monitor buy-and-sell of digital tokens and currencies will be gazetted in early 2019
•Govt to raise MACC allocation by 18.5% to RM286.8m from RM242.1m

Sports

Photo taken from The Malaysian Insight

•RM100m earmarked to prepare Malaysian athletes for 2020 Tokyo Olympics
•RM10m allocated for E-Sport sector in Malaysia

Women welfare

Photo taken from humanresourcesonline

•Government to increase the 30% target of having women in decision-making roles in the country as only 32.2 per cent of women are board members out of the 100 main listed companies in Malaysia.
•RM10 million allocation to add 50 children daycare centres in government buildings

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