Budget 2014

Budget 2104: 6% GST, sugar subsidy cut, more BR1M the highlights

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.

24. 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.

25. For Sabah and Sarawak, to enhance the internet speed coverage, underwater cables will be laid over three years – RM850mil.

26. 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.

27. 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.

28. 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.

29. 1Malaysia Entrepreneurs (1MeT) will be implemented to give entrepreneurs exposure in business.

30. To encourage graduates to do business, RM50mil is allocated under Tabung Usahawan Siswazah.

31. The Government is committed to reducing the fiscal deficit gradually, will ensure Federal debt level remain low and not exceed 55% of GDP.

32. 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.

33.  To encourage Minimum Wage Policy compliance, further tax deduction proposed with regard to the difference in the wages paid by employers in 2014.

34.  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.

35. Establishment of Integrity Management Unit in each ministry to enhance integrity; officers from Malaysia Anti-Corruption Commission to be represented in the unit.

36. The Government to conduct audit on projects valued at more than RM100mil during their implementation phase.

37.  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.

38.  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.

39. 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.

40. RM530mil allocated for pre-school programmes as well as set up 93 pre-schools in national-type primary school.

41. 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.

42. 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).

43. 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.

44. 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.

45.  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.

46.  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.

47.  The Government proposes to abolish the sugar subsidy of 34 sen effective 26 Oct  2013.

48. 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.

49. RM100mil allocated for enhancing education performance and skills training, including RM28mil for early education programmes, involving 176 Tamil pre-schools and i-Sinar programmes.

49.  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%.

50. 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.

51. 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.

52. 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.

53.  BR1M increased from RM250 to RM300 for single individuals aged 21 and above and with a monthly income not exceeding RM2,000.

54. Pensioners will receive a special financial assistance of RM250 to assist them meet the rising cost of living.

55. For civil servants, half-month bonus for 2013 with a minimum payment of RM500 to be paid in early January 2014.

56. RM100 schooling assistance to all primary and secondary students as well as RM250 book vouchers to continue, with allocations of RM540mil and RM325mil respectively.

57. RM1.2bil allocated to build and upgrade dams and water treatment plants to increase coverage of water supply to 100%, especially in urban areas.

58.  Health sector allocated RM22.1bil; RM150mil to appoint 6,800 more nurses; RM3.3bil to purchase medicine and medical equipment.

59.  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.

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Budget 2014: Full text of Prime Minister’s speech:

KUALA LUMPUR: The following is the 2014 Budget Speech tabled by Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak at the Dewan Rakyat Friday.

The text of the speech will be updated as it progresses.

“STRENGTHENING ECONOMIC RESILIENCE, ACCELERATING TRANSFORMATION AND FULFILLING PROMISES”

Mr. Speaker Sir,

I beg to move the Bill intituled “An Act to apply a sum from the Consolidated Fund for the service of the year 2014 and to appropriate that sum for the service of that year” be read a second time.

Mr. Speaker Sir,

I begin the 2014 Budget Speech by reciting the holy kalimah Bismillahirrahmanirrahim. Surah al-Qasas from the holy Quran, verse 77 says, “But seek, through that which Allah has given you, the home of the Hereafter; and [yet], do not forget your share of the world. And do good as Allah has done good to you;”

Philosophers often say:

“Unity is the beginning, staying united reflects progress while working together is the recipe for success.”

1.Let us begin by expressing our gratitude to Allah Subhanahu Wa Taala for with His Blessings, my colleagues and I are able to gather in this august House, a symbol of our vibrant democracy in our sovereign and independent nation.

2.On behalf of the Government, I would like to record our highest appreciation and thank the rakyat for supporting and giving the mandate to Barisan Nasional in the 13th General Election to continue to lead the country.

Mr. Speaker Sir,

3.This proves that though faced with various obstacles and challenges as well as allegations hurled at us, with God’s grace and the transformative leadership of Barisan Nasional, we prevailed and continue to be resilient and strong as the party chosen by the rakyat for the next five years.

4. Indeed, we went through a challenging General Election. We take pride that we observed all the rules and regulations in the true spirit of democracy as provided for under the Federal Constitution. This election has been acknowledged by friend and foe alike as the mother of all elections.

Mr. Speaker Sir,

5.The Government is certainly aware that in an environment of global political and economic uncertainties, and if we are not vigilant, we will be adversely affected. Hence, we are most grateful that our nation has not been dragged into civil unrest which can destroy the country.

6.We are also grateful that our nation remains blessed, as we are free from natural calamities unlike in other countries. We pray that we are always protected by Him.

Mr. Speaker Sir,

7. We have implemented 10 Malaysia Plans and 3 Outline Perspective Plans, since 1965 to 2010.

8. The National Development Policy was implemented from 1991 to 2000. Next came the National Vision Policy which spanned the period from 2001 to 2010. When tabling the 2010 Budget, I launched the National Transformation Policy, the bedrock and catalyst towards achieving Vision 2020.

Read more @ http://www.thestar.com.my/News/Nation/2013/10/25/Budget-2014-PM-speech.aspx

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Budget 2014: GST at 6% on April 1, 2015:

KUALA LUMPUR25th October 2013: The sales and service tax will abolished, to be replaced by a single tax known as the Goods and Services Tax (GST), said Datuk Seri Najib Tun Razak in his Budget speech at Parliament Friday.

The GST will be enforced on April 1, 2015 at a rate of 6%. This is the lowest in Asean, he said.

He said the Government would also provide a one-off payment of RM300 to BR1M households when GST is implemented.

When GST is implemented, the government will reduce personal income tax by one to three percentage points, individual income tax structure will also be reviewed.

There will be no GST levied on essential food items, transport services, including toll payments, purchase and rental of residential properties and selected financial services.

GST will not be imposed on basic food items, piped water supply, the first 200 units of electricity per month for domestic consumers, services provided by the government such as issuance of passports and licences, health services, school education.

Read more @ http://www.thestar.com.my/News/Nation/2013/10/25/budget-2014-gst.aspx

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Budget 2014: Students to continue receiving RM 100 aid, RM250 book vouchers.

KUALA LUMPUR: 25th October 2013:  The Government will continue giving RM100 in schooling assistance to all primary and secondary students, totalling about 5.4 million people.

This is the third year the government is giving such aid to help ease the financial burden of parents with their children’s schooling expenses, especially when school reopens for the new session.

Prime Minister Datuk Seri Najib Tun Razak, when tabling the 2014 Budget in the Dewan Rakyat Friday, said the government was allocating RM540mil for the purpose.

“I understand some parents have donated the schooling assistance to the Parent-Teacher Association (PIBG).

“The Government appreciates the kind gesture,” he added.

Meanwhile, Najib said the government would also continue with the 1Malaysia Book Voucher Programme valued at RM250 to each student in pre-university and institutions of higher learning to help them with the purchase of books and reference materials.

“The initiative is expected to benefit 1.3 million students involving an allocation of RM325mil,” he added.

BERNAMA.

Read more @ http://www.thestar.com.my/News/Nation/2013/10/25/Budget-2014-student-handouts-continue.aspx

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Budget 2014: Sugar subsidy abolished tomorrow.

PETALING JAYA: 25th October 2013: The government will abolish the sugar subsidy of RM0.34 starting Saturday.

Prime Minister Datuk Seri Najib Tun Razak announced this while tabling Budget 2014.

He said the abolition of the subsidy was because of 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.

Sugar costs RM2.50 per kg and with the abolition of the subsidy, it will cost RM2.84.

by Rashvinjeet S. Bedi.

Read more @ http://www.thestar.com.my/News/Nation/2013/10/25/Budget-Sugar-Subsidy.aspx

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All eyes on Budget 2014:

24th October 2013.

LAST weekend, Prime Minister and Finance Minister Datuk Seri Najib Razak wrote two blog postings relating to Budget 2014, giving an indication as to what he is going to announce at Parliament tomorrow.

The Oct 20 posting was on the need for the government to embark on long-term measures to reduce public dependency on government subsidies now, rather than pass the burden to future generations.

“Of course, it will be hard for some people to deal with the removal of a subsidy — we understand that. So I would like to assure all Malaysians, especially those of you in lower-income groups, that measures will be put in place for you to cope with the price hike.”

In the posting, he wrote on affordable housing, saying that it was one of the most popular topics received by the government.

He said following the housing laboratory organised by the Urban Wellbeing, Housing and Local Government Ministry, the government had identified several strategies on how the public and private sector could collaborate to build affordable housing for the rakyat, some of which will be revealed tomorrow.

“It is the dream of every Malaysian to own their own house, and it is our dream to make that a reality for the people,” he wrote.

He said the government was aware of speculative buying among high-income earners who had denied those in the lower- and middle-income brackets their right to own homes and was looking at methods to curb such practices to protect first-time home owners.

Of course, uppermost on the people’s minds when watching the Budget announcement on television or listening to it on the radio — be they from the civil service, corporate sector or man on the streets — will be what Najib has in store for them.

Najib will table the budget for 2014 at Parliament in the afternoon. Together with the Budget 2014 proposals, the Finance Ministry will also release the Economic Report 2013/2014.

The normal practice for many would be to ignore the first half of the Budget speech, which will be on health of the economy, although it would indicate whether the budget would be a balanced one (where the government revenue as expenditure are equal), surplus (when anticipated revenues exceed expenditure) or a deficit (when anticipated expenditure is greater than revenues.)

It is the second half of the speech that would either excite (or otherwise) people as it would contain the government’s proposals on reliefs and taxes for the consideration of the members of the august House.

In past years, the government sought proposals from the private sector via their associations while the public would be represented by consumer groups.

Ahead of the Budget 2014, as the practice under his administration, Najib had asked for the public to give suggestions through his 1Malaysia blog. For Budget 2013, the government sorted through more than 2,500 comments and suggestions taken from social media platforms.

“… I believe everyone deserves a say on how we as a nation will progress next year,” Najib said in a recent blog posting.

“With the current state of the world economy, it has become even more important for us to come up with an ambitious yet sensible budget that sets the right pace and direction of our country’s growth,” he wrote.

There were many suggestions in all the 15 topics given: cost of living; housing and urban living; healthcare; transport and infrastructure; rural development; economic development; education; public safety and corruption; youth and sports; social welfare; public services; environmental and agriculture; employment; taxation, business and finance; and culture and tourism.

The suggestions include an income tax exemption to those earning less than RM5,000; increasing the individual income tax relief from RM9,000 to RM12,000, wife from RM3,000 to RM7,000 and children from RM1,000 to RM4,000; expanding BR1M to those whose income bracket is less than RM4,500 (there were suggestions to scrap the 1Malaysia People’s Aid); create Bantuan Niaga 1Malaysia for small businesses; lower the cost of internet/data (as it is now seen as a basic household need like electricity and water); giving first-time parents RM1,000 for their first born (for savings or paying medical bills) and making powdered milk and diapers price-controlled items.

There were also suggestions for the setting up of a mental hospital for the East Coast states, for an international airport in Kelantan and animal clinics or hospital under the 1Malaysia banner.

There were a few funny ones, if not the suggestions, but the justification for making them.

Among them were for the government to provide incentives to the obese to reduce weight (there were suggestions for the setting up for GIM 1Malaysia gymnasium for the same purpose); offering honeymoon packages to newlyweds to promote tourism, and promoting home and water births to reduce the number of C-sections (as some pregnant women opt for surgery to deliver their babies because they want to avoid the pain of normal delivery).

Let’s wait for tomorrow to see whether these suggestions are worthy to be included in the 2014 Budget.