PETALING JAYA: Finance Minister Lim Guan Eng is tabling Budget 2019 in Parliament, the first federal budget by the Pakatan Harapan government.
The tabling of the Supply Bill (Budget) 2019 will commence before Dewan Rakyat Speaker Datuk Mohamad Ariff Md Yusof, and will be debated by the Members of Parliament at the policy level from Nov 12 to 15.
It will be followed by the minister's answer sessions before the debate at the committee level from Nov 26 to Dec 6.
The Budget 2019 carries the theme "Credible Malaysia, Dynamic Economy, Prosperous Rakyat".
It focuses on institutional reforms, the people's wellbeing and promotion of entrepreneurial culture to recapture Malaysia's "Economic Tiger" status.
These are the highlights of Budget 2019, and we will continue to update this story:
* In his opening remarks on Friday (Nov 2), Lim said the government's real debt and liability as at June 2018 was at RM1,065bil, RM350bil higher than the amount by the previous Government.
*Government expects GDP to grow 4.9% in 2019 despite uncertainties in the global economy.
*Government noticed the previous administration secretly paid RM7bil of 1MDB debt as at April 30, 2018.
*Government may need to pay as much as RM43.9bil to settle 1MDB debts.
*Government to table Fiscal Responsibility Act by 2021 to avoid uncontrolled spending.
* As at Oct 15, international reserves amounted to US$102.8bil or RM426bil, sufficient to cover 7.4 months of retained imports. The inflation rate remained low at 1.2% for the period January to September 2018.
*Fiscal deficit in 2018 to reach 3.7%. The increase was due to expenditure commitment by the previous administration.
* Pakatan administration committed to implement fiscal consolidation steps to reduce deficit to 3.4% of the GDP in 2019, 3% by 2020 and 2.8% in 2021.
* Government to establish Debt Management Office (Pejabat Pengurusan Hutang) to review and check government debts and liability.
* For 2019, Federal Government's official debt as a percentage of GDP to reach 51.8% while total liability expected to lower to 73.5%.
* Government will continue the LRT3 project with a savings of 47% from the initial estimated cost of RM31.6bil to RM16.6bil.
* Government will be able to save RM15bil based on the announcement.
* The MRT2 will also continue with a savings of 22.4% from the initial estimated cost of RM39.3bil to RM30.5bil.
* The RM5.2bil Klang Valley Double Tracking Project will be re-tendered through open tender and is expected to provide substantial cost savings.
* Under the GST, 545 goods were zero-rated while under SST, almost 10 times more the items were exempted from SST.
* Based on preliminary studies by the Ministry of Domestic Trade and Consumer Affairs, 70% or 291 of the 417 products and services that have been inspected saw prices drop in September 2018.
* Government to create a Real Estate Investment Trust (REIT) for its airports. Through this initiative, the government is expected to rake in RM4bil, disposing 30% of the REIT equity.
* Government will introduce a credit system for sales tax deduction from January next year. The credit system will avoid double taxation and lower business costs.
* Effective Jan 1, 2019, the government will grant SST exemptions to specific services provided by registered businesses to other registered businesses.
* The finance minister says the government will also introduce a tax cut credit system for small manufacturers who purchase source materials from importers and not registered factories.
* The Inland Revenue Board (LHDN) to look into and investigate "extraordinary wealth" such as owning luxurious goods including jewellery, watches, handbags, luxury cars or real estates.
* Starting Jan 1, 2019, the government will tax imported services to ensure that local service providers such as architects, graphic designers, software developers can compete more competitively.
* Online services imported by users will also be required to register with the Customs Department from Jan 1, 2020. This includes software, music, videos, or any digital advertising.
* The Government will launch a Special Voluntary Disclosure Programme, giving taxpayers an opportunity to voluntarily declare any unreported income.
* After successfully re-introducing SST, Customs Department will beef up enforcement on smuggling of cigarettes.
* Government to impose levy for all passengers travelling overseas via air routes starting June 1, 2019, RM20 for passengers travelling to Asean countries and RM40 for other countries.
* For companies, non-citizens and non-PR holders, real property gains tax will be increased from 5% to 10%. For citizens and those with PR, real property gains tax will be increased form 0% to 5%.
* Government hopes to get back at least RM1bil from efforts to combat smuggling and fraudulent activities that were previously unrecoverable.
* Stamp duties for property transfers worth more than RM1mil will be raised by 1 percentage point from 3% to 4%.
* Casino licence will be increased from RM120mil to RM150mil annually; casino duty will be raised to 35% on gross income.
* In 2019, the Federal Government is expected to collect revenue of RM261.8bil, comprising a special dividend of RM30bil from Petronas.
* Government will subsidise RON 95 petrol for those with cars with the engine capacity of 1,500cc, and under, and those with motorcycles with engine capacity of 125cc and under.
* Subsidy will be RM0.30 per litre and capped at 100 litres a month for cars and 40 litres a month for motorcycles.
* Price of RON 95 will be floated after subsidy is put in place.
* Government will allocate RM10mil to work with NGOs and social enterprises to help underprivileged communities.
* Minimum wage to increase to RM1,100 nationwide starting Jan 1, 2019.
* Government will continue and improve the financial aid (Bantuan Sara Hidup) to the B40 group by providing more targeted assistance.
* Households with monthly income of RM2,000 and below will receive RM1,000.
- Monthly income from RM2,001 to RM3,000 and below will receive a total of RM750; and
- Monthly income from RM3,001 to RM4,000 will receive a total of RM500.
* Government will introduce an additional aid (BSH) of RM120 for each child aged 18 years and below, to be limited to four persons, except disabled persons (OKU) with no age limit.
* It is estimated that 4.1 million households will continue to receive financial assistance from the government with a total allocation of RM5bil.
* Government to spend RM1.5bil on affordable housing. To help those earning no more than RM2,300, a fund will be set up byb Bank Negara for homes up to RM150,000 at interest rate of 3.5% through selected banks.
* Monthly electricity subsidy will be given to the poor and hardcore poor registered with the e-Kasih program, the subsidy rate is increased to RM40 per month and will benefit 185,000 accounts. An allocation of RM80 million will be provided.
* B40 National Health Protection Fund - Protection for four major critical illnesses up to RM8,000 and maximum 14 days of replacement income during hospital treatment at RM50 /day or equivalent to RM700 /year.
* From Jan 1, 2019, no tolls for motorcycles on the First and Second Penang Bridge and the Second Link in Johor.
* RM5.9bil allocation earmarked for Defence Ministry and Home Ministry.
* Labour laws to be reviewed to improve labour market, ensure workers' well-being and prevent discrimination by employers.
* Public transportation users can buy RM100 monthly passes for unlimited trips on RapidKL rail or bus services starting from January 2019. There is also a RM50 monthly pass for those who only use RapidKL busses. This scheme will be expanded to other bus companies in stages.
* To encourage the hiring of those above the age of 60 who want to work, the government proposes that their mandatory EPF contributions be reduced from 6% to 4%.
- Lim says this group will also not have their income deducted for EPF contributions to increase the money available to them.
- There will also be tax incentives for companies that hire senior citizens, with a salary limit of RM4,000 a month.
* Government has allocated RM10mil annually to extend medical benefits to parents of contractual civil servants.
* Contractual civil servants whose children have infectious diseases will be eligible for quarantine leave.
* Government proposes a special payment of RM500 to all civil servants grade 54 and below.
- A special payment of RM250 will also be given to government pensioners.
- The amount of this special fee involves a cost of RM1bil.
- RM500 one-off payment for eligible pensioners receiving less than RM1,000 monthly.
* Soda Tax
- Government to introduce excise duty at 40 cents per litre on two categories of sugary drinks which are manufactured in the form of ready-to-drink packaging, starting April 1, 2019.
- Beverages containing sugar or other sweeteners containing sugar exceeding 5 grams per 100ml; and
- Fruit juices and vegetables containing sugar more than 12 grams per 100ml.
* The Securities Commission has approved the framework for the equity-generation fund platform and P2P lending. To date, a total of RM170mil has been raised by 450 companies from various sectors through these platforms.
* The government will freeze toll charges on all highways in the city in 2019 with an estimated budget RM700mil.
* To promote digital economy, the government will implement the National Fiber Optic and Connectivity Plan (NFCP) with an allocation of RM1bil.
- The plan aims to develop the nation's broadband infrastructure. In addition, the target broadband service speed is 30mbps in rural areas and remote areas within five years to enable Malaysia to achieve world-class infrastructure at an affordable price.
* The Government will also enforce the Mandatory Standard Access Pricing (MSAP) to reduce fixed line broadband prices by at least 25% by the end of 2018.
* Loan deductions for students from B40 households who get first class results.
* Government has earmarked 380 acres of land in Pulau Indah as a Free Trade Zone to support and catalyse shipping and logistics activities in Port Klang.
* Khazanah Nasional will develop 80 acres of land in Subang as a world class aerospace hub. Khazanah will work MARA in producing high-skilled manpower to meet industry needs.
- A tax break will be given to companies that assist its staff members to settle their loans by the year ending 2019.
* Individual income tax breaks for the National Education Saving Scheme is increased from RM6,000 to RM8,000.
* Government will help people who lost their jobs by fully implementing the Employment Insurance System (SIP) beginning January next year.
* Perkeso will implement SIP, including employment placement programmes, skills upgrades and compensation for job losses.
* Allocate about RM29bil for health services, which is a 7.8% increase compared with the previous year (RM27bil).
* Great Eastern Life Insurance contributed RM2bil as start-up to the fund to be managed by Bank Negara Malaysia.
* Tax relief for EPF contribution, life insurance or takaful premium will be separated.
* Income tax relief up to RM4,000 on EPF contribution or approved pension fund; and tax relief of up to RM3,000 on takaful or life insurance premium payments.
* For civil servants under the pension scheme, tax relief is up to RM7,000.
* Government plans to exempt 34 stamp duties on all Perlindungan Tenang insurance products for two years beginnng January next year.
* RM100mil for Health Protection Scheme (Peka), with health screening pilot project for 800,000 people from B40 group ages 50 and above.
* RM20mil to continue free mamogram for breast screening, HPV vaccination and pap smear in government hospitals and clinics.
* RM50mil for rare diseases treatment, Hepatitis C, programme to overcome stunting among children, screening and haemodialisis treatment and enhanced primary healthcare.
* Expand public-private partnership where government provides health infrastructure facilities such as with the Federal Territory Katarak Islamic Council Centre in Selayang.
* Government to use Cuplump Modified Bitumen (CMB) technology, especially in road works at harbours and industrial zones in stages. For this purpose RM100mil has been allocated.
* Allocation of RM85mil to improve and repair infrastructure at community halls and villages.
* Government allocates RM926 mil for building and improving highways, roads and bridges.
* Tax exemption facility to be given to duty-free shops at Swettenham Port in Penang to further promote cruise tourism.
* Duty-free islands
- Government is committed to make Pulau Pangkor a duty-free island.
- Langkawi's status as a duty-free island will be further expanded.
- Federal Government to get a 50% share of the tourism tax proceeds received in these states.
* A total of RM2bil will be provided under the Green Technology Financing Scheme to encourage investment in the green technology industry.
* Government allocates RM286.8mil for the operating expenses of the Malaysian Anti-Corruption Commission (MACC), an increase of 18.5% from RM242.1.mil allocated last year.
* Real Estate and Housing Developers' Association Malaysia (Rehda) agrees to reduce house prices as much as 10% for houses which are not subject to price control for new projects.
* RM1.5bil to build and complete affordable homes under the People’s Housing Programme, Civil Servants Housing Project, PR1MA, and Syarikat Perumahan Nasional Bhd.
* RM1bil fund to be set up by the Central Bank of Malaysia (BNM) for those earning under RM2,300 per month to buy affordable houses priced at RM150,000 and below.
* The fund will be made available for two years or until the fund is depleted through AmBank, CIMB Bank, Maybank, RHB Bank and BSN at an interest as low as 3.5%.
* RM25mil will be allocated to Cagamas Berhad to prepare a mortgage guarantee (jaminan pajak gadai) to ensure that first time house buyers with a household income of up to RM5,000 will receive a higher financing, including for their deposit. This is expected to lower the cost between 7% and 11% for buyers, apart from the discounts given by developers.
* Stamp duty exception for the first RM300,000 on the property transfer letter (surat cara pindah milik) and loan agreement for first time house buyers purchasing a house priced at a maximum of RM500,000 for two years until December 2020.
* Financing under the Public Sector Home Financing Board (LPPSA) will be extended from 30 years to 35 years for first-time financing and 25 years to 30 years for second financing (pembiayaan kedua).
* RM400 mil will be allocated to improve the living quarters of civil servants such as police and military personnel and teachers.
* Government is suggesting on an exemption of stamp duty on property transfer letter for first house purchase for houses priced between RM300,001 and RM1mil for the period of six months starting from Jan 1, 2019.
- This will be part of the National House Ownership Campaign, of which developers have agreed to give a 10% discount to houses under existing projects.
* Property crowdfunding platform will be allowed, which will be headed by the private sector. Overseen by the Securities Commission, it will allow house buyers to use peer-to-peer lending to finance their purchase.
* Stamp duty rate for property transfers for properties priced at more than RM1mil increased from 3% to 4%.
For full coverage of Budget 2019, go to http://bit.ly/budget2019TheStar.