WHETHER Budget 2022 takes the shape of a pre-election Budget – considering the Malacca State Election slated for Nov 20 is less than a month away – or otherwise, it has to have a “high impact” to facilitate a wholesome economic turnaround/recovery from the devastation of the COVID-19 pandemic.
Budget 2022 is anticipated to reflect an inclusive Keluarga Malaysia (Malaysian Family) approach in line with the policies and strategies outlined in the 12th Malaysia Plan (12MP).
In essence, it is likely to focus on recovery, rebuilding national resilience and catalysing reform to drive socio-economic recovery activities and the national development agenda.
Below are some salient points from Budget 2022 which is being tabled by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz in the Dewan Rakyat beginning 4pm today:
- The theme for Budget 2022 is Keluarga Malaysia, Makmur Sejahtera (Malaysian Family, Prosperous and Peaceful). It is based on three core concepts: people’s well-being, resilient businesses and a prosperous economy;
- The Government has allocated a total of RM332.1 bil for Budget 2022, the highest value compared to previous budgets;
- Government revenue is expected to increase to RM234 bil in 2022;
- A total of RM233.5 bil is allocated for operating expenditure, RM75.6 bil for development expenditure and RM23 bil under the COVID-19 Fund;
- RM2 billion is provided as contingency savings;
- Fiscal deficit for 2022 is projected to shrink to 6% of gross domestic product (GDP) from 6.5% in 2021;
- The Government is introducing Bantuan Keluarga Malaysia worth RM8.2 bil to benefit 9.6 million recipients;
- RM32.4 bil will be allotted for the Health Ministry, the second largest allocation after the Education Ministry with RM2 bil for vaccination expenses and RM2 bil for supplies.
Prihatin one-off cash handouts:
- Families with income of less than RM2,500 a month and more than three children: RM2,000
- Families with income of less than RM2,500 a month with two children or less: RM1,500
- Couples with no children and an income of less than RM2,500 a month: RM1,000
- Single parents with income of less than RM5,000: RM500
- Senior citizens: RM300 a month
Sugar tax expanded, excise duty for e-cigarette products:
Sugar tax will be expanded. Excise duty will be applied to malt, coco and chocolate beverages. Excise duty will be applied to electronic cigarette products.
Education Ministry gets largest slice of Budget 2022:
The Education Ministry will continue to receive the biggest funding. RM1 bil will be allocated for renovation and repair of schools while RM120 mil has been earmarked for Tamil and Chinese vernacular schools.
RM150 handout will be given for pre-school students (RM450 mil allocated to benefit three million students) while RM400 mil is allocated for Supplementary Meal Plan to ensure students get adequate daily nutrition.
Others:
- RM11.4 bil is set aside for Bumiputera empowerment.
- The Employees Provident Fund will extend reduced minimum contribution rate of 9% until June 2022.
- Special RM2,500 tax relief for purchase of handphones, computers and tablets.
- Contracts of 10,000 medical, dental and pharmaceutical officers to be extended from two to four years.
- JaminKerja initiatives to create 600,000 job opportunities with RM4.8 bil allocation.
- National Higher Educaiton Loan Fund (PTPTN) borrowers to get 10-15% discounts depending on chosen repayment option.
- Tax deductions of RM2,000 to RM7,000 for upskilling courses.
- Government through the Securities Commission (SC) will make it compulsory for public-listed companies to have at least one female director on their boards.
More goodies:
- Government to fully bear cost of motor vehicle licenses for the disabled (OKU).
- Income tax exemptions for winners of eligible e-sports championships.
- Tax relief for cost of medical expenses/consultation involving registered psychiatrists, clinical psychologists, counsellors.
- Sales and Services Tax (SST) exemption for cars extended until June 30, 2022.
- Removal of real property gains tax (RPGT) for house sales from the sixth year onwards.
- The Government will provide RM100 for each teacher to buy teaching tools. Students from B40 families in higher learning institutions will be given free tablet computers. Some 600,000 students are expected to benefit from this scheme.
- 80,000 job placements in public sector, GLCs to be continued via MySTEP initiative.
- eStart cashless transaction scheme to be introduced, which will see one-off RM150 deposited into e-wallets of those aged between 18 and 20.
In the Keluarga Malaysia spirit:
- The Government will provide special funding for Chinese new villages to repair houses and funding schemes for entrepreneurs.
- There will also be special funding for Indian entrepreneurs through the Tekun micro-credit scheme and the Malaysian Indian Transformation Unit (MITRA).
- Special funding for natives of Sabah and Sarawak for cultural activities (including subsidies for school-related activities).
- Rukun Tetangga (neighbourhood watch) will be eligible to apply for grants of RM6,000.
- The Government is increasing tax rebates for those who attend reskilling courses to RM2,000 from the previous RM1,000. This tax relief can be applied up to 2023.
- The Government will introduce the JaminKerja job placement scheme aimed at putting 600,000 people to work to reduce unemployment rate to 4% (unemployment rate was 4.6% as of end-August 2021).
- Under this scheme, the Government will subsidise 20% of the salary for the first six months and 30% for the next six months (however, this scheme is limited to salaries below RM1,500 only).
- JaminKerja will also incentivise the hiring of disabled persons with higher subsidies – 30% for the first six months and 40% for the next six months (limited to salaries below RM1,200 only)
- The Government will build more childcare centres in government offices. Tax relief for childcare valued at RM3,000 will be extended until 2023.
- More funding for the D11 police unit which specialises in sexual crimes and crimes against children. Another 100 people will be added to this team.
Tax-related matters
- The Government intends to provide individual tax relief and tax deduction to employers on costs associated with taking self-purchased booster vaccines.
- The EPF minimum contribution tax reduction period will be extended to 9% from 11% cent until June 2022, involving an estimated value of RM2 bil.
- Sales tax exemption of 100% will be extended for completely knocked down (CKD) passenger vehicles and 50% on completely built up (CBUs) vehicles, including MPVs and SUVs for six months until June 30, 2022.
- Deferment of income tax installment payment for micro, small and medium enterprises (MSMEs) for six months until June 30, 2022.
- All businesses are allowed to amend their estimated income tax payable in the 11th month before Oct 31, 2022.
- Electric vehicles (EV) will be effectively tax-free (not to be subjected to import duties, excise duties and sales tax). EV owners will also benefit from tax relief of RM2,500.
- Expansion of tax base with foreign income received in Malaysia will be taxable from Jan 1 onwards.
- Low-value goods imported from abroad that are sold online and brought into the country through airmail will be subjected to sales tax.
- A service tax will be imposed on delivery services provided by online marketplaces (except for food and beverage deliveries and logistics services).
- All companies vying for government contracts must obtain a compliance certificate from the Inland Revenue Board from Jan 1, 2023.
- The Government plans to legislate a Fiscal Responsibility Act to improve the accountability and transparency in the country’s fiscal management (The bill is expected to be ready next year).
- The Government is also planning to implement a “public expenditure review” in cooperation with the World Bank to ensure the efficiency and efficacy of public spending on the delivery system.
- Bursa Malaysia will manage a “voluntary carbon market” in order for the trade of the carbon credit.
- The Government will raise another RM10 bil through its Sukuk Kelestarian (sustainability bonds) for social or environmentally friendly projects.
- Income tax exemptions for organisers of artistic and cultural activities as well as sports competitions and international-level recreational activities to be extended until 2025.
Selected funding support/financial assistance
- The Government provides guarantees of up to RM2 bil to banks through the Housing Credit Guarantee Scheme to provide gig workers, small entrepreneurs and farmers access to financing to purchase houses.
- A financing package worth RM40 bil is provided under the Semarak Niaga Keluarga Malaysia Programme.
- A RM2 bil allocation is set aside to continue wage subsidy programme targeting 300,000 workers.
- Funding facilities worth RM2.1 bil through equity and quasi-equity investments will be introduced to help companies facing gearing or leverage problems.
- Viable Bursa Malaysia-listed companies affected by the COVID-19 pandemic will receive an injection of additional funds through a government-owned special purpose vehicle in the form of equity instruments or other related instruments.
- Khazanah Nasional Bhd will be mandated to assist the government in providing the infrastructure to manage a fund totalling at least RM3 bil.
- Credit Guarantee Corporation Malaysia Bhd to be enhanced through guarantees for scheduled and restructured financing with an additional guarantee limit of RM10 bil.
- Bank Pembangunan Malaysia Bhd to offer RESET Scheme with Bank Negara Malaysia (BNM) to provide a Business Recapitalisation Fund worth RM1 bil.
- A total of RM14.2 bil of funds to be made available to SMEs.
- Targeted wage subsidies for employers in tourism industry who have their income affected by at least 30%. Likewise, RM85 mil is set aside as special assistance to over 20,000 registered tour operators.
- 7 bil in subsidies, incentives for farming and fisheries industries, including RM1.5 bil in subsidies for seeds and fertilizer Government to provide Microcredit financing worth RM1.8 bil.
- Loans up to RM10,000 at 0% cent interest as well as 12-month moratorium to be offered under the Informal and Micro Financing Scheme.
- Bank Simpanan Nasional (BSN) and Agrobank will offer micro loans of up to RM75,000 at 0% interest with a moratorium facility of up to six months.
- A matching grant of RM100 mil is provided for Bumiputera SMEs to explore business opportunities in the aerospace field. – Oct 29, 2021
