Today on the 7th October 2011, our Malaysian PM Datuk Seri Najib Tun Razak tabled the Budget 2012 in the parliament at 3:00pm. Overall Budget 2012 allocates RM232.8bil for Government plans, including RM181.6bil for management and RM51.2bil for development. RM29.8bil has been allocated for investment in infrastructure, industrial and rural development. RM13.6bil has been allocated for the social sector, including education and training, welfare, housing and community development. Another move seen as a pump priming move is the move to implement a RM98.4 billion rolling plan (RP2) until 2013 for high impact development projects. RP2 main projects will include the East Coast Highway from Jabor to T’ganu and road upgrades from Kota Marudu to Ranau. Total revenue for 2012 is forecast to increase 1.9% to RM186.9bil and the deficit to decrease to 4.7% of GDP from 5.4% in 2011.
Many questions raised from the floor whether the government has the sufficient fund to accommodate such massive expenditure. In my personal view, there are some other important issues that need attentions such as Petrol Fuels. We’re promised earlier that these prices will follow market value. The question is why the price tag still unchanged for almost nearly a year? And whether this budget will reduce country’s deficit while maintaining 5.0%-5.5% GDP then time will reveal it all eventually.
Nevertheless, lets look at the some of the highlights that brought to my attentions:
“I started my administration with the guiding philosophy of 1 Malaysia “People’s First, Performance Now.” It was followed by the implementation of Government Transformation Programme (GTP) with seven National Key Result Areas (NKRAs), Economic Transformation Programme (ETP) with 12 National Key Economic Areas (NKEAs) and New Economic Model with eight Strategic Reform Initiatives (SRIs). The Political Transformation Programme introduced recently will witness major changes in legislation to enable Malaysia to become a modern, progressive and at the same time, a functional democracy. To complement this, the Government will introduce several other transformation programmes. All these will culminate into the National Transformation Policy or DTN, effective from 2011-2020.”
“Inflows of foreign direct investment have regained momentum. Foreign direct investment increased six-fold to RM29 billion in 2010, the highest growth in Asia. In the first half of 2011, it surged further by 75 per cent to RM21.2 billion compared with RM12.1 billion for the same period in 2010. Private investment is expected to expand 15.9 per cent in 2012, supported by the increase in foreign and domestic direct investments.”
“International reserves remains strong, registering RM414.5 billion in 15 September 2011, sufficient to finance 9.5 months of retained imports as well as 4.5 times of short-term external debt. Income per capita is estimated to increase to RM28,725 in 2011 compared with RM26,175 in 2010.”
“The total revenue of the Federal Government is expected to increase 1.9 per cent to RM186.9 billion in 2012 compared with RM183.4 billion in 2011. Taking into account the estimated revenue and expenditure, the Federal Government deficit in 2012 is expected to improve to 4.7 per cent of GDP compared with 5.4 per cent in 2011.”
“The Government will further liberalise 17 services subsectors in phases in 2012 which include private hospital services; medical and dental specialist services; architectural, engineering, accounting and taxation, legal services; courier services; education and training services; as well as telecommunication services. This initiative will allow up to 100 per cent foreign equity participation in selected subsectors.”
“In 2012, the Government will allocate RM978 million to accelerate the development in five regional corridors. Among the projects to be implemented are the construction of Johor Bahru-Nusa Jaya coastal highway in Iskandar, Johor; heritage tourism development in Taiping in the Northern Corridor; agropolitan scheme in Besut in the East Coast Economic Region; palm oil industrial cluster project in Lahad Datu in Sabah Development Corridor; and Samalaju water supply in the Sarawak Corridor of Renewable Energy.”
“Small and medium enterprises (SMEs) contribute about 31 per cent to GDP, 56 per cent to the workforce and account for 19 per cent of total export. To further strengthen SMEs’ contribution to economic growth, a syariah-compliant SME Financing Fund totalling RM2 billion to be managed by selected Islamic banks will be established in 2012. The Government will finance 2 per cent of the profit rate.”
“To promote green technology and ensure sustainable development of the nation, full exemption of import duty and excise duty on hybrid cars and electric cars will continue to be given to franchise holders. This tax exemption will be extended until 31 December 2013.”
“The current rate of 5 per cent on real property gains tax (RPGT) is not effective in curbing real estate speculative activities. If not controlled, it will put pressure on the price of real estate. In the long run, it will jeopardise the ability of the low- and middle-income groups to buy houses. To overcome this concern, the Government proposes the RPGT rate be reviewed. For properties held and disposed within 2 years, the RPGT rate is 10 per cent. For properties held and disposed within a period exceeding 2 years and up to 5 years, the rate is 5 per cent. Properties held and disposed after 5 years are not subject to RPGT.”
“The education sector will be allocated RM50.2 billion in 2012. Currently, students in primary and secondary schools are still required to pay RM24.50 and RM33.50, respectively, for co-curriculum, internal test papers, Malaysian Schools Sports Council fees and insurance premium. To ease the burden on parents, it is proposed that these payments be abolished commencing the 2012 school year. With this announcement, for the first time in history, primary and secondary education is provided free. The abolition of these payments would involve an allocation of RM150 million.”
“To strengthen the development of rural basic infrastructure in a more comprehensive manner, an allocation of RM5 billion will be provided in 2012. Of this, RM1.8 billion will be allocated for the Rural Road Programme and Village-Link Road Project to build a road network of 2,749 kilometres which will benefit 1.76 million rural populations. In addition, RM2.1 billion will be allocated to expand clean water supply to 200,000 houses as well as RM1.1 billion for the provision of electricity supply to 39,000 houses in the rural areas, particularly in Sabah and Sarawak. The implementation of water supply reticulation projects in the interiors of Sabah and Sarawak takes time. As an immediate measure, the Government has provided an additional 20,000 water tanks costing RM52 million for rainwater harvesting, benefiting 100,000 people living in the interiors of Sarawak. For 2012, the Government will expand this programme to Sabah with an allocation of RM50 million.”
“The rural community frequently encounter difficulties arising from unreliable bus services. To provide a more comfortable, reliable and quality service, an additional RM150 million will be provided to the Public Transport Development Fund in the SME Bank. Stage, mini and school bus operators can apply for soft loans with an interest rate of 4 per cent, to purchase or refurbish busses. This financing facility will be available from 1 January 2012.”
COST OF LIVING: NO.70-74
“1) For every kilogramme of local super rice, the actual price is RM2.40. The rakyat pays RM1.80. The Government subsidises RM0.60 or 25 per cent of actual price; 2) For every kilogramme of sugar, the actual price is RM2.50. The rakyat pays RM2.30. The Government subsidises RM0.20 or 8 per cent of actual price; 3) For every kilogramme of cooking oil, the actual price is RM4.75. The rakyat pays RM2.50. The Government subsidises RM2.25 or 43 per cent of actual price; 4) For every kilogramme of flour, the actual price is RM1.90. The rakyat pays RM1.35. The Government subsidises RM0.55 or 29 per cent of actual price; these basic food subsidies require an allocation of RM2.3 billion are enjoyed by all Malaysians regardless of their socioeconomic status.”
“Government subsidies are not limited to just food items. It also includes subsidies for petroleum products and cash assistance involving RM17 billion. 1) For every litre of RON95, the actual price is RM2.75. The rakyat pays RM1.90. The Government subsidises RM0.85 or 31 per cent of actual price; 2) For every litre of diesel, the actual price is RM2.66. The rakyat pays RM1.80. The Government subsidises RM0.86 or 32 per cent of actual price; 3) For every 14-kilogramme tank of cooking gas, the actual price is RM48.02. The rakyat pays RM26.60. The Government subsidises RM21.43 or 45 per cent of actual price.”
“In addition, the Government will continue to provide subsidy for households with electricity bill of RM20 per month or less, implemented since 2009. This will involve an allocation of RM150 million and benefits 1 million households. All the subsidies, incentives and assistance totals RM33.2 billion. All these are carried out in the spirit of “People First.”
“The Government will undertake measures to ease rising costs and prices as well as reduce the burden of the rakyat, as follows:
1) Increase the number of Kedai Rakyat 1 Malaysia (KR1M) nationwide in 2012. KR1M offers 250 types of 1 Malaysia products, comprising consumer goods which are up to 40 per cent cheaper. In view of the overwhelming response, the Government plans to open an additional 85 units in 2012 with an allocation of RM40 million;
2) Open 30 units of Agro Bazaar Kedai Rakyat nationwide to market agriculture produce and 1 Malaysia brand products. In addition, the Government will expand the sales of 1 Malaysia products in all outlets under the Retail Shop Transformation (TUKAR) programme, Felda retail stores and convenient stores at petrol stations nationwide; and
3) Extend and promote the Menu Rakyat 1 Malaysia which offers popular menu sets at reasonable prices with a maximum of RM2 for breakfast and RM4 for lunch. Currently, more than 700 food operators are participating and this will be extended to 3,000 operators by end-2012. To further expand this initiative, the Government encourages all cafeteria operators in Government offices and the private sector to implement the Menu Rakyat 1 Malaysia.”
REAL PROPERTY & HOUSING: NO.75-81
“To meet the demand for houses from those earning below RM3,000, the Government launched the My First Home Scheme in March 2011. To expand the scheme, the Government proposes to increase the limit of house prices from a maximum of RM220,000 to RM400,000. This improved scheme will be available to house buyers through joint loans of husband and wife beginning January 2012.” (Qs: if the joint income unable to meet the bank requirement to purchase houses >RM300,000, then what’s the point?)
“Most houses are sold before construction starts and buyers bear risks of projects being delayed or abandoned. To protect buyers, the Government will encourage the construction of more houses using the build then sell concept. For this purpose, Islamic banks have agreed to provide syariah-compliant financing and undertake construction risks. Instalments only commence after the house is completed. This scheme will be implemented for houses costing RM600,000 and below.”
“To increase disposable income and encourage savings among the low-income group, the Government will introduce Skim Amanah Rakyat 1 Malaysia or SARA 1 Malaysia. The scheme is available to households with income below RM3,000 per month and will benefit 100,000 households. Participants can apply for a RM5,000 loan with a repayment period of 5 years. At the end of 5 years, the participant is expected to receive an attractive net return. The scheme will be implemented by Permodalan Nasional Berhad in collaboration with selected financial institutions, effective January 2012.”
“In 2011, the Government allocated RM120 million to TEKUN. To incentivise small entrepreneurs, I propose that this allocation be increased to RM300 million. Amanah Ikhtiar Malaysia (AIM) will also provide RM2.1 billion for micro financing to entrepreneurs, particularly for women. From this total, RM100 million each is provided for Malaysian Indian and Chinese entrepreneurs, through a special unit under AIM. The Government proposes that micro financing loan instruments be given stamp duty exemption.”
“The Government will allocate RM320 million to implement various activities comprising skills training, leadership programmes, resilience and entrepreneurship at the state and district levels including contribution to Majlis Belia Malaysia, Majlis Belia Negeri and Majlis Belia Daerah. In addition, a total of RM200 million will be allocated in 2012 for skill training to youth who do not continue their schooling through the Strategic Action for Youth (SAY 1 Malaysia) programme. This scheme will provide various skills training which will be conducted by institutions such as Community College, Institut Kemahiran Mara, Institut Latihan Perindustrian and Giat Mara. Trainees will be provided practical trainings in GLCs and private companies to enable them to secure employment.”
“From 1 January 2012, all senior citizens aged 60 years and above will be exempted from paying the outpatient registration fee in all Government hospitals and health clinics including 1 Malaysia clinics as well as the Government dental clinics. They will also be entitled to a 50 per cent discount on LRT and Monorail fares.”
“In the 2011 Budget, to ensure private sector employee and self-employed to have sufficient savings upon retirement, I announced a tax relief up to RM6,000 for EPF and life insurance be extended to the Private Pension Fund now known as Private Retirement Scheme. In order to ensure the welfare of retirees upon reaching retirement age to live a comfortable life, I propose:
1) A new tax relief up to RM3,000 on contribution to a Private Retirement Scheme and insurance annuity for 10 years. Thus, the existing relief on Private Retirement Scheme and insurance annuity is rationalised;
2) Tax deduction on employers’ contributions to a Private Retirement Scheme for their employees; and
3) Tax exemption on income of Private Retirement Fund.
Currently, retirees have insufficient savings to bear the cost of living upon retiring. The study shows nearly 70 per cent of the retirees used up all their savings within 10 years of their retirement. To increase savings for old age, the Government proposes that the employers’ contribution be increased from 12 per cent to 13 per cent for contributors who earn RM5,000 and below.”
“Assistances of RM500 to households with a monthly income of RM3,000 and below. This unprecedented measure reflects the Government’s commitment to reduce the impact of the increasing cost of living on the low-income group. A total of 3.4 million or 53 per cent of total households are expected to benefit from this assistance. This assistance involves an allocation of RM1.8 billion. To be eligible, the head of each household must register with the Inland Revenue Board Malaysia which is entrusted to implement this programme. This assistance will be distributed through banks and post offices”
“Schooling assistance of RM100 to all primary and secondary students from Year 1 to Form 5 nationwide. As this assistance is targeted to low- and middle-income groups, families who can afford may opt not to receive it. This measure will reduce schooling expenses and is expected to benefit 5.3 million students which involves an allocation of RM530 million.”
“Book voucher worth RM200 to all Malaysian students in public and private local institutions of higher learning, matriculation as well as Form 6 students nationwide. This assistance is expected to benefit 1.3 million students with an allocation of RM260 million.”
“Government will allow EPF to ring-fence RM1,300 from the Account 2 of contributors. Through this, the existing EPF savings of RM1,300 will remain with EPF but contributors are eligible to register for hajj.”
Note that at the moment the government will not increase tax for cigarettes as it is understood that the use of contraband cigarettes have gone up to 40%. Thus, this move will probably reduce the phenomenon. Good news for smokers as well as tobaccos vendors huh?..
“Realising the increasing responsibility and heavy workload of members of Parliament and the need to internalise a culture of new politics, in accordance with the Political Transformation Programme which I announced recently, the Government will review the current allowances and benefits of members of Parliament, on condition that… both parties from the Government and the opposition agree, including the independent members. Upon this agreement, a revised allowances and benefits scheme will be made effective from 1 January 2012.” (after all the promising and so called ‘convincing’ proposals suddenly this part cripple the entire thing.. *sighhh)
THE END**
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