I’m back at work, and just in time to catch the budget. In case anybody’s wondering where I disappeared to over the past month, I’ve been on a spiritual pilgrimage and only just got back a few days ago. It’s been a bit depressing having to come back to the real world (and the haze), but it was a simultaneously fun and scary break from work, responsibility, and everything else.
As has become traditional, I’ll be live–blogging (and tweeting) on Budget 2016 as the speech is delivered this afternoon, subject to my internet connection holding up. So stay tuned on this page.
- We’re almost live – PM has arrived at Parliament
- Some of the media outlets have jumped the gun already on the numbers
- Oh well, me too:
- 2016 Growth forecast at 4%-5% - no surprise
- Budget deficit at 3.1%, a little lower than this year’s 3.2%
- Revenue and Opex almost unchanged
- Development budget up by RM3b
- Inflation expected to remain between 2%-3%
- GST registration and compliance much better than expected (about twice as much as initially expected)
- Petronas dividend affected by oil prices – oil-related government revenue dropped 1/3 this year to RM44b
- RM21b drop in revenue, if GST had not been implemented
- 7 improvements to GST
- Controlled medicines and some others will be zero-rated (doubling the list)
- Zero-rated list for food also increased
- Decrease in registration threshold
- Approved traders scheme
- Temporary imported goods
- Vocational education
- Rebates given for prepaid telephony
- Income tax raised for the rich? 28% nice
- Investments – Malaysian Vision Valley, Cyber City Centre, Aeropolis, RAPID – doesn’t sound like much of it is actually borne directly by the govt
- Lots of other small projects, mainly rural
- MRT1/LRT extension to be completed next 2016
- Status updates on MRT2/MRT3/HSR/BRT
- RM1.2b for rural broadband
- Extension of income tax relief for tourism
- RM5.3b for agriculture
- Tax relief and exemptions for some agricultural projects – some aren’t new but extensions however
- Also for export-oriented SMEs
- 2016 – Malaysia Commercialisation Year (?)
- Focus on raising labour productivity
- A few small grants for innovation and entrepreneurship
- Taking on KRIS’ idea of industrial building system
- RM41.3b for education
- Cash and book vouchers students from for low income households
- Big money for vocational education
- Women’s corporate participation reiterated, but that’s it
- Bumi agenda – grants to existing agencies
- Sabah & Sarawak – Pan Borneo Highway (RM16.1b and zero toll), domestic air travel GST exempt, RM70m in zero-interest loans for longhouses (RM50k per unit), rice planting fertiliser subsidies, RM115 for special projects, mobile clinics
- B40 assistance
- RM600m for Bumis and Indians via Tekun
- RM60m for SME Bank
- RM200m for AIM
- RM100m for Indian NGOs
- RM90 for Chinese hawkers
- Waiting for BR1M (….)
- RM300m for Orang Asli
- RM852m for Risda and Felcra (for rice and rubber smallholders)
- Affordable Housing – Pr1ma, SPPK etc etc
- RM2b for social safety net
- RM17.3b for defence and security – quite a bit of procurement, including drones
- Civil service pay rise, minimum civil service wage set at RM1200, minimum pension at RM950
- No bonus?
- BR1M
- Under eKasih RM1050
- Under RM3000, up from RM950 to RM1000
- RM3001-4000, up from RM750 to RM800
- Single individuals below RM2000, raised from RM350 to RM400
- Total cost RM5.9b
- For the M40:
- Child Tax relief increased from RM1000 to RM2000
- Tax relief for single earner households raised from RM3000 to RM4000
- Tax relief for university going children, raised by RM2k
- Socso eligibility raised from RM3k to RM4k
- Minimum Wage Raised!!!!
- RM500 gratuity to civil service and RM250 for pensioners
And that’s a wrap.
I’ll post my first impressions here later tonight, so check back tomorrow morning.
Posts
Welcome Back !!!
ReplyDeleteWelcome back too and also to The Slug.
ReplyDeleteZuo De
I won't lie...I was waiting for this annual meet up at this blog :)
ReplyDeleteOpinion so far: I was hoping for a more boring budget. Sigh.
Thanks for the wrap up of the budget. Looking forward for your further comment tomorrow :)
ReplyDeleteany comment about PR Alternative budget
ReplyDeleteWhy are you praising the 28% tax rate for individuals earning MYR1 million or more in taxable income?
ReplyDeleteWhy haven't corporate tax rates been cut to, say, 20%? Can't the country afford it?
This is a Budget that has shown up quite glaringly the government's lack of financial muscle, thus leading to all sorts of compromises.
I had hoped that the government would have announced a one-time "tax amnesty" to encourage Malaysian individuals & corporates to repatriate foreign currency holdings kept overseas. Nada.
This is not a Budget that sets up the country to up it's competitiveness and productivity.
MYR5 billion for the bumiputra agenda? I hope that there are some concrete and strictly enforceable KPIs to determine if these funds have been well spent to achieve clearly defined objectives!
ReplyDeleteIn many ways Budget 2016 was opportunity lost. A chance to reduce opex and unnecessary defense spending has gone begging. And the puny tax cuts and illogical tax increase ( no I am not pro-rich advocate now…hahaha) is a sure-fire way to exacerbate economic malaise
ReplyDelete.
1.Tax increases for the rich: this one is baffling at a time when one needs to stimulate consumption, one slaps a higher tax rate and effectively takes out about 400 million from the economy. A hike of RM 30,000.00 for earning RM 1 million may just encourage under-declaration, evasion, the whole works or alternatively, take 30K from consumption spending. And it sends the wrong signals to those desirous of earning more and keeping it, all because an extra 400 million to waste elsewhere.
2.Giving an extra 50 to someone receiving BRIM is merely adding a huge 13 sen…yes….13 sen to supplement his per day free income of 2.60 previously (950/365). Some humongous sum to battle rising living costs.
3.Asking employers to increase the minimum wage by 300.00 is merely adding another RM 300 million of outflows assuming that we have 1 million legally registered immigrant workers
Just these three simple examples illustrate what a wet blanket the budget is. And I wont be touching on the irrelevant and paltry tax reliefs offered to M40s, the missed opportunity of trimming roughly 7 billion from both opex (via reduced emoluments) and devex
(culling needless defense spending).
The fact that while the percentage to GDP may look pretty at 3.1, it cannot mask the fact that
a.The deficit increased by 4 billion (42B vs 38 billion last year)
b.devex dropped a whopping 3.5 billion while opex increased 3 billion
http://www.themalaymailonline.com/malaysia/article/2016-budget-to-sustain-growth-boost-investor-sentiment-say-banking-giants
says a lot.
In defence, it can be said falling revenues didn’t help matters and left little room for manoeuvre but that doesn’t mean scarce resources shouldn’t have been better optimized. But like the mistimed GST, fuel subsidy removal, toll hike etc etc….this is not surprising.
Ah to dream for an eventual top tax rate of (17-18%), a corporate tax rate of mid to late teengagehood, a balanced budget or even a surplus plus more actual developmental spending than is currently allocated.
Maybe this one accurately describes the budget for what it is and echoes my thoughts exactly:
http://www.theedgemarkets.com/en/node/237229?google_editors_picks=true
So will we get the real budget after the elections? I wonder
Warrior 231
im waiting for your comment on the budget
ReplyDeleteThe Singapore Straits Times in it's editorial ("Long and short of Malaysian Budget" - ST, Oct 26) wrote in the concluding paragraphs:
ReplyDelete"Wise heads at Putrajaya are only too aware that there are limits to public largesse when addressing short-term needs as the nation has to deal with a long-running budget deficit that is on the radar of global investors. Pressing ahead with its economic transformation is certainly the more viable path, a process that has already made it a middle-income economy that can rely on multiple engines of growth rather than just on raw materials, as was the case five decades ago. Its Asean neighbours would hope that Malaysia will be able to make the leap to high-income status by 2020, as targeted by Mr Najib, by tapping technology and Islamic finance, for example.
"The risk, however, is that transformative initiatives might be shunted aside when the administration is in a tight fiscal spot or when politics derails efforts to liberalise some sectors and make economic participation more inclusive. A long view will be hard to sustain if political ructions leave the nation short of options."