KUALA LUMPUR, Oct 13 — Based on the framework of the Madani Economy, the unity government has provided RM393.8 billion for Budget 2024 in an effort to strengthen the national economy, accelerate the business sector and at the same time achieve a balance of fiscal support and prudent spending despite the current global challenges.
With the expectation of higher government revenue than last year following more tax collection, the government once again presented an expansionary budget to pave the way for nation-building as it seeks to catapult Malaysia to be among the world’s top 30 economies.
When presenting Budget 2024 today, Prime Minister Datuk Seri Anwar Ibrahim said the government allocated RM393.8 billion, or 19.9 percent of the gross domestic product (GDP), with three ministries — Finance, Education and Health being the main recipients.
“So, Budget 2024 which I expressed as the Second Madani Budget conveys the determination and seriousness of the Unity Government to raise the economic level of the country and the people,” he said.
With the theme of “Economic Reformation, People Empowerment”, this is the second budget presented by Anwar, who is also the finance minister since the formation of the unity government in November 2022. Last February, Anwar presented a revised budget amounting to RM388.1 billion.
Meanwhile, of the RM393.8 billion allocated in the budget this time, he said as much as RM303.8 billion, or 77.1 percent will be channelled to operating expenditure (OE) while the remaining RM90 billion will be allocated to development expenditure (DE) with RM2 billion in contingency savings.
Anwar said Budget 2024 is divided into three main focuses, namely Best Governance for Service Agility, Restructuring the Economy to Accelerate Growth and Improve People’s Living Standards.
He said the subsidy increase in 2023 was enabled through savings and increasing revenue. For 2023, the revised revenue estimate is RM303.2 billion instead of RM291.5 billion.
The total deficit is projected to be 5 percent to GDP as forecast.
“For next year the government expects GDP growth of between 4 and 5 per cent and with the Madani Economy reforms to be implemented, the government is confident of achieving growth close to 5 percent.”
According to Anwar, government revenue collection in 2024 is expected to see an increase from RM303.2 billion this year to RM307.6 billion while the fiscal deficit in 2024 is projected to decrease to 4.3 percent compared with the target of 5 percent this year and 5.6 percent in 2022.
He added that in the medium term, Malaysia will achieve a fiscal deficit of 3 percent or lower to GDP as the benchmark set in the Madani Economy framework.
Regarding taxes, Anwar said the tax revenue collected by the government is one of the lowest in Asean, that is only 11.8 percent to GDP compared with Singapore at 12.6 per cent) and Thailand at 16.4 per cent.
Accordingly, he said, starting next year, several taxation reform measures will be implemented to expand the national revenue base, while at the same time not burden the majority of the people.
“The government plans to increase the service tax rate to 8 per cent instead of 6 per cent. The government will also enforce the implementation of capital gains tax (CGT) for the disposal of unlisted shares by local companies based on net profit at a rate of 10 percent from March 1, 2024.
“The government is also considering the exemption of CGT on the disposal of shares related to certain activities such as approved initial public offerings, internal structuring and venture capital companies subject to set conditions,” he said.
Next, he said, the government will also enact new legislation to implement the High Value Goods Tax at a rate of 5-10 percent on certain high value items such as jewelery and watches based on the threshold value of the goods.
In addition, the government is expected to implement a global minimum tax in 2025 which will only apply to companies with a global income of at least 750 million euros.
“The government has agreed to enforce mandatory e-invoicing for taxpayers with annual income or sales exceeding RM100 million from Aug 1, 2024,” he said.
Meanwhile, he said as an effort to reorganise the economic framework, the New Industrial Master Plan 2030 (NIMP 2030) introduced by the government this year targets a total investment of up to RM95 billion with an allocation of up to 10 percent of the total NIMP investment provided by the government as a catalyst to drive the plan’s mission.
In order to empower the high growth and high value sector (HGHV) the government will introduce an incentive approach using a ‘tiering’ system in giving incentives.
“The government plans to provide reinvestment tax incentives in tiered form in the form of investment tax allowances of 70 percent or 100 percent,” he explained.
Meanwhile, Anwar said government-linked companies (GLCs) and government investment-lionked companies (GLICs) will provide funds of up to RM1.5 billion to encourage startup companies including Bumiputera SMEs to venture into HGHV fields such as digital economy, space technology and electronics and electrical (E&E) in an effort to internationalise local startup companies and increase their competitiveness and penetrate regional markets.
He said business loan facilities were also given to micro, small and medium entrepreneurs (SMEs) through loans and financing guarantees amounting to up to RM44 billion.
In an effort to invigorate the plantation and commodity sectors, the government also provided RM2.4 billion to FELDA, FELCRA and RISDA to continue boosting agricommodity activities and improve the socioeconomics of smallholders.
The government also agreed to raise the activation price of the rubber production incentive to RM3 per kilogramme with an allocation of RM400 million.
In order to realise the aims of the Energy Transition Roadmap (NETR), the government will provide RM2 billion to the National Energy Transition fund.
Anwar said the government welcomes an investment of over RM170 million by leading companies such as TNB, Gentari and Tesla Malaysia to install 180 electric vehicle (EV) charging stations.
“The government plans to extend individual income tax relief of up to RM2,500 on EV charging facility expenses for four years and tax deductions for EV rental costs for another two years,” he added.
Meanwhile, the tender process for 19 work packages for the Pan Borneo Sabah Phase 1B project with a distance of 366 kilometres, involving a cost of RM15.7 billion, will be completed this November, while the Sarawak-Sabah Link Road Phase 2 project with a distance of over 320 kilometres, which involves a cost of almost RM7 .4 billion, will be implemented at the end of this year.
“And taking into account the increase in vehicles, the North South Highway (PLUS) widening project from four to six lanes will be extended from Sedenak to Simpang Renggam at a cost of RM931 million,” Anwar said.
The government also agreed to resume the proposed construction of five LRT3 stations that were cancelled before, namely at Tropicana, Raja Muda, Temasya, Bukit Raja and Bandar Botanik at a cost of RM4.7 billion.
Before ending his presentation, he said the country should be put back on track to ensure the peace and well-being of the people.
“This budget is a statement of the government’s commitment to restore the economy in today’s challenging world,” he said.
— Bernama
