Rm393bil Budget For Growth And Higher Living Standards

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Prime Minister Anwar Ibrahim delivering the 2024 budget in the Dewan Rakyat today. (Bernama pic)KUALA LUMPUR: The government has tabled a RM393.8 billion budget for 2024 in an an effort to strengthen the 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 an expectation of higher government revenue following greater tax collection, the government has presented an expansionary budget as it seeks to place Malaysia among the world’s top 30 economies.
In presenting the federal budget today, Prime Minister Anwar Ibrahim said the RM393.8 billion represents 19.9% of gross domestic product. The ministries of finance, education and health are the main recipients of budget allocations.
The budget conveys the determination and seriousness of the unity government to raise the economic level of the country and the people,” he said.
Economic reforms
The budget is the second presented by Anwar, who is also finance minister, since the formation of the unity government in November 2022. In February, Anwar had presented a revised budget amounting to RM388.1 billion.
Operating expenditure takes up 77% or RM303 billion of the overall budget, with the remaining RM90 billion for development expenditure and RM2 billion in contingency savings.
Anwar said the budget is divided into three main focuses, best governance, restructuring the economy and improving 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% of GDP as forecast.
“For next year the government expects GDP growth of between 4% and 5 % and with the reforms to be implemented, the government is confident of achieving growth close to 5%,” he said.
Anwar said government revenue collection in 2024 is expected to see an increase from RM303 billion this year to RM307 billion while the fiscal deficit in 2024 is projected to decrease to 4.3% compared to the target of 5% this year and 5.6% in 2022.
In the medium term, Malaysia will achieve a fiscal deficit of 3% or lower as the benchmark set in the Madani economy framework.
Tax reforms to raise revenues
Regarding taxes, Anwar said the tax revenue collected by the government is one of the lowest in Asean, amounting to 11.8% to GDP compared to 12.6% in Singapore and 16.4% in Thailand.
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.
SST – “The government plans to increase the (sales and) service tax rate to 8% from 6%. The government will also enforce the implementation of capital gains tax for the disposal of unlisted shares by local companies based on net profit at a rate of 10% percent from March 1.
Capital gains – “The government is also considering capital gains tax exemption 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.
Luxury goods – Next, the government will also enact new legislation to implement the high value goods tax at a rate of 5-10% on certain high value items such as jewellery and watches based on the threshold value of the goods.
Global tax – 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.
Incentives for growth
In an effort to reorganise the economic framework, the new industrial master plan 2030 introduced by the government this year targets a total investment of up to RM95 billion with an allocation of up to 10% of the total investment provided by the government as a catalyst.
The government will introduce an incentive approach using a ‘tiering’ system in giving incentives, he said. “The government plans to provide reinvestment tax incentives in tiered form in the form of investment tax allowances of 70% or 100%,” he explained.
Startup companies
Anwar said government companies will provide funds of up to RM1.5 billion to encourage startup companies including Bumiputera SMEs to venture into fields such as the digital economy, space technology and electronics and electrical 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 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.
Energy reform
In order to realise the aims of the Energy Transition Roadmap, 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 charging stations.
“The government plans to extend individual income tax relief of up to RM2,500 on EV charging facility expenses for a period of four years and tax deductions for EV rental costs for another two years,” he added.
Highways, LRT
Borneo – Meanwhile, Anwar announced that the tender process for 19 work packages for the Pan Borneo Sabah Phase 1B project with a distance of 366km, involving a cost of RM15.7 billion, will be completed in November while the Sarawak-Sabah Link Road Phase 2 project with a distance of over 320km, which involves a cost of almost RM7 .4 billion, will be implemented at the end of this year.
North-South Highway – “Taking into account the increase in vehicles, the North South Highway widening project from four to six lanes will be extended from Sedenak to Simpang Renggam at a cost of RM931 million,” he said.
LRT – 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.
Anwar said the country should be put back on track to ensure the peace and wellbeing of the people. “This budget is a statement of the government’s commitment to restore the economy in today’s challenging world,” he added. - FMT

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