Friday, September 28, 2012

Live-blogging Budget 2013 [UPDATED]

As I’ve tried to do in the past, I’ll be hoping to live-blog the budget announcement this afternoon. However, I’m on standby for something else, which may mean this plan might go out the window – but in that case, I’ll be going “live” in a very real sense.

So watch this space.

[I’m adding corrections to some of the items below, based on the released text of the speech. You can get the English version here, Bahasa version here. If you want an online version, try The Mole]

4.17 Well we’re live.

4.18 The overall numbers are RM250b [RM251.6b] for expenditure and RM208.6b for revenue, with a 4% deficit target. This year’s estimate is 4.5%.

4.19 The revenue and expenditure numbers are too conservative.

4.20 Five focus. First is to improve investment (both domestic and FDI)

4.22 RM3 billion for EPPs [about half for agriculture, and RM500 million for the River of Life project in KL]

4.23 Strategic Investment fund of RM1 billion for acquiring technology [This one’s under MIDA]. Tax incentive for mergers [and foreign acquisitions]

4.24 RM1 billion for SMEs under SME Bank [additional RM200 million for developing halal products for export]

4.26 Group insurance for RM5000 (for hawkers and small scale entrepreneurs?)

4.27 Pernas to help finance franchising [business transformation for hawkers and small businesses, including providing help with financing]

4.29 Incentives for private sector involvement in oil & gas, including assistance for land acquisition, 100% tax holiday for ten years

4.30 RAPID in Johor mentioned (USD20 billion investment)

4.31 Tourism: RM300 [358] million for 2013-2014 Visit Malaysia year

4.32 Agriculture: RM5.8 billion for food security [Ministry of Agriculture]

4.34 For plantations: RM420 [432] million for palm oil replanting (Felda needs this!!)

4.34 Additional land for rice planting. Question: where are they going to find the farmers??

4.36 RM200 per month for fishermen, plus insurance scheme.

4.37 RM2.4 billion for famers income assistance and subsidies, for prices, seeds and fertilisers; Takaful insurance coverage as well

4.39 Capital markets! Malaysia has over 70% market share in sukuk issuance this year.

4.41 SC to prepare framework for agro company IPOs [sukuk]

4.42 Retail bonds for MRT. I’m in two minds whether retail bond issues are a good idea. Double tax deduction though [for expenses incurred in issuance]

4.43 One stop centre to promote Malaysia’s capital markets

4.44 To train 1,000 graduates to fulfil requirements for capital and derivative markets

4.45 New organisation type: “business trust” with stamp duty exemption as incentive

4.46 Danajamin to have RM400 million capital injection, which will allow it to guarantee more bonds

4.47 Tun Razak Exchange: tax exemption for ten years, development works on schedule

4.50 Bumi share of corporate ownership stands at 23%; RM9 billion or 43% of MRT projects to be awarded to Bumi companies

4.51 RM1 billion (?) under SME Bank for the takeover of GLC subsidiaries by Bumis

4.54 Second focus: Education and training

4.55 RM38.7 billion for Education Ministry

4.56 Raising teacher quality: an additional RM500 million [on top of Ministry allocation]

4.57 RM1 billion for school infrastructure

4.58 Pre-school education: [RM1.2 billion for pre-school, of which] RM380 million [are for pre-school teachers]

4.58 Child care centres and kindergartens: RM10k grant for new private sector [child care centres and] kindergartens; Double tax deduction for employer [provided] child care centres; tax exemption for 5 years

5.00 Market closed: interesting stuff should be just ahead

5.01 Assistance for unemployed graduates; SL1M program has added incentives; Support for technical and vocational education [RM3.7 billion]

5.02 The money is big, but the numbers are disappointingly small

5.03 RM200 million from Perkeso for members, to pay for free medical screening

5.04 Fourth Third focus: Innovation

5.05 RM200 million for Intellectual Property [Financing] Fund

5.07 Local entrepreneurs: angel investors are allowed tax deduction up to the sum of their investment

5.10 RM2 billion for Green Technology Fund

5.10 Focus Five [Four]: The public sector fiscal position

5.10 This is what everyone’s waiting for

5.11 Subsidies to be targeted not general [GST is implied but not mentioned explicitly]

5.14 Increase in civil service pension

5.15 Cut in passport processing fees

5.15 Armed Forces: SPM minimum requirement for rank and file, honours degree for officers

5.16 Special incentive of RM200 per month for all ranks

5.17 Allowances increased for reserves and volunteer orgs like Rela

5.18 RM1000 one off for ex-armed forces who have not met the minimum service period

5.19 Group life insurance for police and armed forces

5.20 Civil service housing scheme to be managed by banks instead of by MoF

5.20 Focus Five? For the People

5.21 RM6 billion for PFIs; improve clinics and schools among others

5.22 Crime: RM591 million for anti-crime measures, particularly for patrolling and CCTVs at hot spots

5.24 Comprehensive study to revise career path for police

5.25 RM20 million for free public advocacy [legal representation]

5.26 RM10k grant for each resident association for safety measures

5.26 Corruption: MACC to aim for 5,000 staff strength

5.27 Plugging the transformation centres [rural and urban transformation centres]

5.30 Rural development: RM4.5 billion for development, RM1.2 billion for rural roads [plus RM1.6 billion for utilities]

5.31 Public health: Additional 70 1Malaysia clinics

5.32 For terminal patients, full withdrawal of EPF funds

5.33 For women: 500 women to be trained for company directorships

5.34 RM20 million [RM25k] for free mammograms

5.35 Low income households: Kar1sma to get RM1.2 billion for welfare payments

5.36 Sports: RM80 million for badminton academy and enclosed velodrome

5.37 RM50 million for New [Youth] Entrepreneur Fund under SME Bank, for those under 30

5.38 One-off RM200 rebate for smartphones for 21-30 year olds, with income less than RM3000 a month

5.40 50% discount for low-income households for using Commuter lines

5.42 Housing: ongoing priority. RM1.9 billion for affordable housing in strategic areas under PR1MA [123,000 houses]

5.42 RM500 million for JVs with private developers, and prices will be 20% below comparable properties

5.43 For first time buyers: Income barrier raised from RM3000 to RM5000; other restrictions are dropped

5.46 [Property market] Speculation: RPGT for under two years raised to 15%, from 2-5 years raised to 10% – not enough

5.47 RM100 million for Housing Ministry for reviving abandoned housing projects

5.49 Subsidy rationalisation: subsidies to be targeted not general

5.50 BR1M 2.0 (LOL!), RM500 for households earning less than RM3000, and will include singles above 21 earning less than RM2000 (RM200). 4.3 million households [and 2.7 million individuals], for RM3 billion, to be paid early 2013.

5.52 Subsidy on sugar to be cut!! Finally – 2.3 [2.6] million Malaysians suffer from Diabetes

5.54 RM380 million for Sabah, Sarawak and Labuan to ensure consumer prices are at par with the Peninsular

5.57 Only 1.7 million tax-payers out of 12 million labour force

5.57 Personal income tax reduced 1% across all tax bands [for annual incomes below RM50k]

5.58 Tax for cooperatives also cut

6.00 RM2.6 billion for student assistance

6.01 School vouchers [assistance] to be continued, RM540 million allocated

6.02 Vouchers for books also to be continued, but increased from RM200 to RM250; RM275 million

6.03 Tax relief for children in higher education raised [from RM4k to RM6k]

6.04 Tax relief for PTPTN [National Education Savings Scheme] doubled

6.04 Those who settle PTPTN loans in the next year will be given a 20% discount, while those who pay on time will be given a 10% discount

6.07 Civil service bonus: 1.5 months this year, of which one half month has already been paid, another half in December, and another half month in January

6.09 Pensioners will get RM500 bonus

6.15 Looks like that’s a wrap, bar the shouting

My first reaction is, looking at the revenue and expenditure numbers, the government is being true to form and being overly conservative in their forecasts.  The income tax cut is a big surprise, and not something I’m not sure I agree with – it benefits tax-payers certainly, but that’s a small portion of the work force.

But I’ll be doing a read through tonight and have a more thorough feel for the budget tomorrow.

22 comments:

  1. Green shirt is a tad distracting, so is the political rhetoric foreword

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  2. Deficit and growth have nice round numbers

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  3. Ooohh KLCI reference as a sign of investor confidence. Makes you wonder how many MP's have their incomes linked there

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  4. SKIP THE BULLSHIT INTRODUCTION AND GET TO THE BUDGET!

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  5. Loving the translation for committed

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  6. River of life has no translation :(

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  7. Feel like starting a SME now...

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  8. Oil & gas hub mentioned...incentives for the most cash rich industry...makes you think

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  9. Just read the latest Economic Report. Looks like there is a government spending cut for the first time in ages.

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  10. Going offline now, enjoy the rest of the show guys.

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  11. I thought MACC was discredited recently and i wondered; now i know why...

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    Replies
    1. I'm curious...what exactly do you mean?

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  12. "Group insurance for RM5000 (for hawkers and small scale entrepreneurs?)"---


    Does gomen have valid legal standing on the contractual interest of the lives insured? Or is this another scam?

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    1. I've no idea of the legal ramifications - you'll have to ask a lawyer. I'll keep this point in mind though.

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  13. Hishamh,

    First thank you for this blog it really help in my understanding of budget, government debt, etc.

    One question, does the government allowed to use the Foreign reserve to pay off Government foreign debt?

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  14. No. That's Bank Negara's money.

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  15. In terms of subsidy rationalization, how do we address price increase of consumer products? The standard anecdote is cut sugar subsidy and teh tarik price goes up 20 sen. The rest of the menu increase by 10 sen eventhough some items dont event use sugar.

    In my mind, the answer is NOT govt price regulation. The answer is consumers taking a stand on outlets unfairly increasing price. Easier said than done.

    Anyways.. are you gonna compare BN and PR and gives your opinion on which is better and doable. Election is coming.. PR may actually have the chance to implement parts of its budget.

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  16. @Zhang

    What Anon12.13 said is absolutely right.

    @mdabel

    There is no "better' in my view. The Alternative Budget has too many holes in it - it's really a policy document, not a budget per se. As far as implementation is concerned, the AB is certainly "doable", but effectiveness and price tag are another question entirely.

    It's a matter of whether you think any of the policies are worth doing, and how effectively they can be done. I don't think the household income target is achievable for instance, though they can certainly spend the money trying. The excise duty cut can certainly be done, but whether its a good idea to promote car ownership and all that entails in terms of congestion and pollution, is questionable to me.

    For the overall numbers, there's actually little difference on the expenditure side between the two budgets except in two critical areas - civil service pay and subsidies, from which I think the AB is based on last year's budget figures, and not the latest revised estimates.

    From these two areas alone, I think the AB is underestimating expenditure by at least RM20 billion, if not more. Revenue too is also seriously underestimated, so there's no danger of missing the deficit target.

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