Malaysia 2016 budget: Taxes up for the rich, higher minimum wage
Embattled Malaysian Prime Minister Najib Razak unveiled a proposed 2016 national budget on October 23 that delivers benefits for the poor while raising taxes on the rich in a balancing act aimed at trimming a fiscal deficit.
Najib, who is fighting for public support amid a financial scandal, announced $1.4 billion in cash handouts to more than 7 million low-income families and individuals, up 17 per cent from this year. He also raised minimum wages by 11 per cent to $238 per month in peninsula Malaysia, along with salaries for civil servants.
At the same time, he said tax rates will be raised from 25 per cent to 26 per cent for individuals earning more than $143,000 a year and to 28 per cent for those making more than $238,000.
Najib said Malaysia’s economy is expected to grow 4-5 per cent next year, compared to 4.5-5.5 per cent in the current year, despite being hit by lower commodity and oil revenues, as well as sharp falls in its currency, the ringgit.
“This budget and future budgets will be premised on striking a balance between the capital economy and people economy. We need to achieve an inclusive and sustainable growth as well as build a competitive, progressive and a morally strong nation, with a society that is united,” he said in a speech to lawmakers.
Najib has come under intense pressure to resign, with massive street rallies in August, after documents leaked in July showed that about $700 million was deposited in his private bank accounts from entities linked to indebted state investment fund 1MDB. Najib has denied any wrongdoing and said the money was a donation from the Middle East.
Critics slammed the proposed budget as short of substance and aimed at wooing support. Opposition lawmaker Tony Pua said it failed to deal with the 1MDB debts, which have ballooned to more than $10 billion in six years, and that the $700 million in Najib’s accounts had hurt confidence in his leadership.
Singapore-based Mizuho Bank said the budget was in line with the government’s fiscal consolidation efforts while trying to address concerns from the rising cost of living. The government’s fiscal deficit is expected to slide to 3.1 per cent of gross domestic product next year from 3.2 per cent this year.
Najib said the government will make 39 billion ringgit ($9.2 billion) next year from an unpopular new goods and services tax, which will help make up for a drop in oil revenues amid weak oil prices. He pledged to continue efforts to improve public welfare and slammed critics, including “enemies within,” for trying to tarnish the country’s image.
At the end of Najib’s speech, opposition lawmakers stood up holding placards saying, “Where is the 2.6 billion ringgit?” in a reference to the $700 million in his bank accounts, based on an earlier exchange rate.
The budget is likely to be approved by Parliament since Najib’s ruling coalition holds a majority of the seats.
Malaysia 2016 budget highlights
($1 = 4.22 ringgit)
BUDGET ALLOCATION
2016 budget allocates total 267.2 billion ringgit ($63.32 billion), an increase from a revised allocation of 260.7 billion for 2015. The initial allocation for 2015 was 273.9 billion.
For 2016, federal government revenue collection is projected at 225.7 billion ringgit, up 3.2 billion ringgit from 2015
TAXES
Income tax increased from 25 per cent to 26 per cent for people earning between 600,000 ringgit and 1 million ringgit. Increased to 28 per cent for those earning above 1 million ringgit. Some tax relief measures to help middle income wage earners.
Goods and services tax to increase government revenue by 39 billion ringgit, versus 27 billion ringgit in the first eight months of 2015. Some basic goods to be zero-rated, including over-the-counter drugs, baby milk, nuts based food, noodles.
[wp_cart_display_product name=”Inside Malaysia 2013/14″ price=”24.99″ thumbnail=”https://investvine.com/wp-content/uploads/2015/11/Inside-Malaysia-201314.png” description=”A 32 page report covering numerous sectors”]
EXPENDITURE
41.3 billion ringgit allocated to improve education
Defense Ministry allocated 17.1 billion ringgit
Allocation of 30.1 billion for development projects, 5.2 billion for security, social development gets 13.1 billion
Government allocates 1.2 billion ringgit to the tourism industry
Majlis Amanah Rakyat, an agency to facilitate the development of ethnic Malays and other indigenous Malaysians, allocated 3.7 billion ringgit
SUBSIDIES AND HANDOUTS
Spending allocation for Bantuan Rakyat 1Malaysia (BR1M), a programme providing cash assistance for low income households, will be raised to 5.9 billion ringgit in 2016, up from an estimated 4.9 billion in 2015.
DEVELOPMENT
Affordable housing projects allocated 1.6 billion ringgit, to be spent building 175,000 houses
900 million ringgit allocated to resolve Kuala Lumpur traffic congestion
Telecommunications infrastructure allocated 1.2 billion ringgit
1.4 billion ringgit earmarked for development of rural roads nationwide. An-Borneo highway to be toll free.
Government to improve improve infrastructure in rural areas, including building houses and water supply
5.3 billion ringgit allocated to modernize agricultural sector
515 million ringgit allocated to improve electricity supply in Sabah state
OIL PROJECT
Pengerang oil project to receive 18 bln ringgit in 2016
MINIMUM WAGE
Increased from 900 ringgit per month to 1,000 ringgit in peninsular Malaysia
MACROECONOMIC HIGHLIGHTS
Current account surplus in 2016 to be down more than half to 11.3 billion ringgit from 23.4 billion ringgit this year and 47.3 billion ringgit in 2014
Economic growth forecasts at 4.0-5.0 per cent for 2016, compared with 4.5-5.0 per cent this year
Fiscal deficit for 2016 reduced to 3.1 per cent of gross domestic product, down from 3.2 per cent in 2015 and 3.4 per cent last year
Exports forecast to rebound 1.4 per cent in 2016 after a 0.7 per cent fall this year
Inflation seen at 2.0-3.0 per cent in 2016, against 2.0-2.5 per cent this year
Government debt limit to remain at 55 per cent of GDP in 2016, forecasting a ratio of 54.0 per cent this year and slightly up from 52.7 per cent in 2014
Oil and gas related revenues seen at 14.1 per cent of total revenue in 2016, down from 19.7 per cent in 2015
Goods and Services Tax (GST) expected to raise 39 billion next year, against 27 billion ringgit collected in the first eight months of 2015
Subsidy allocations seen falling slightly to 26.1 billion ringgit from 26.2 billion ringgit this year
Embattled Malaysian Prime Minister Najib Razak unveiled a proposed 2016 national budget on October 23 that delivers benefits for the poor while raising taxes on the rich in a balancing act aimed at trimming a fiscal deficit. Najib, who is fighting for public support amid a financial scandal, announced $1.4 billion in cash handouts to more than 7 million low-income families and individuals, up 17 per cent from this year. He also raised minimum wages by 11 per cent to $238 per month in peninsula Malaysia, along with salaries for civil servants. At the same time, he said tax rates...
Embattled Malaysian Prime Minister Najib Razak unveiled a proposed 2016 national budget on October 23 that delivers benefits for the poor while raising taxes on the rich in a balancing act aimed at trimming a fiscal deficit.
Najib, who is fighting for public support amid a financial scandal, announced $1.4 billion in cash handouts to more than 7 million low-income families and individuals, up 17 per cent from this year. He also raised minimum wages by 11 per cent to $238 per month in peninsula Malaysia, along with salaries for civil servants.
At the same time, he said tax rates will be raised from 25 per cent to 26 per cent for individuals earning more than $143,000 a year and to 28 per cent for those making more than $238,000.
Najib said Malaysia’s economy is expected to grow 4-5 per cent next year, compared to 4.5-5.5 per cent in the current year, despite being hit by lower commodity and oil revenues, as well as sharp falls in its currency, the ringgit.
“This budget and future budgets will be premised on striking a balance between the capital economy and people economy. We need to achieve an inclusive and sustainable growth as well as build a competitive, progressive and a morally strong nation, with a society that is united,” he said in a speech to lawmakers.
Najib has come under intense pressure to resign, with massive street rallies in August, after documents leaked in July showed that about $700 million was deposited in his private bank accounts from entities linked to indebted state investment fund 1MDB. Najib has denied any wrongdoing and said the money was a donation from the Middle East.
Critics slammed the proposed budget as short of substance and aimed at wooing support. Opposition lawmaker Tony Pua said it failed to deal with the 1MDB debts, which have ballooned to more than $10 billion in six years, and that the $700 million in Najib’s accounts had hurt confidence in his leadership.
Singapore-based Mizuho Bank said the budget was in line with the government’s fiscal consolidation efforts while trying to address concerns from the rising cost of living. The government’s fiscal deficit is expected to slide to 3.1 per cent of gross domestic product next year from 3.2 per cent this year.
Najib said the government will make 39 billion ringgit ($9.2 billion) next year from an unpopular new goods and services tax, which will help make up for a drop in oil revenues amid weak oil prices. He pledged to continue efforts to improve public welfare and slammed critics, including “enemies within,” for trying to tarnish the country’s image.
At the end of Najib’s speech, opposition lawmakers stood up holding placards saying, “Where is the 2.6 billion ringgit?” in a reference to the $700 million in his bank accounts, based on an earlier exchange rate.
The budget is likely to be approved by Parliament since Najib’s ruling coalition holds a majority of the seats.
Malaysia 2016 budget highlights
($1 = 4.22 ringgit)
BUDGET ALLOCATION
2016 budget allocates total 267.2 billion ringgit ($63.32 billion), an increase from a revised allocation of 260.7 billion for 2015. The initial allocation for 2015 was 273.9 billion.
For 2016, federal government revenue collection is projected at 225.7 billion ringgit, up 3.2 billion ringgit from 2015
TAXES
Income tax increased from 25 per cent to 26 per cent for people earning between 600,000 ringgit and 1 million ringgit. Increased to 28 per cent for those earning above 1 million ringgit. Some tax relief measures to help middle income wage earners.
Goods and services tax to increase government revenue by 39 billion ringgit, versus 27 billion ringgit in the first eight months of 2015. Some basic goods to be zero-rated, including over-the-counter drugs, baby milk, nuts based food, noodles.
[wp_cart_display_product name=”Inside Malaysia 2013/14″ price=”24.99″ thumbnail=”https://investvine.com/wp-content/uploads/2015/11/Inside-Malaysia-201314.png” description=”A 32 page report covering numerous sectors”]
EXPENDITURE
41.3 billion ringgit allocated to improve education
Defense Ministry allocated 17.1 billion ringgit
Allocation of 30.1 billion for development projects, 5.2 billion for security, social development gets 13.1 billion
Government allocates 1.2 billion ringgit to the tourism industry
Majlis Amanah Rakyat, an agency to facilitate the development of ethnic Malays and other indigenous Malaysians, allocated 3.7 billion ringgit
SUBSIDIES AND HANDOUTS
Spending allocation for Bantuan Rakyat 1Malaysia (BR1M), a programme providing cash assistance for low income households, will be raised to 5.9 billion ringgit in 2016, up from an estimated 4.9 billion in 2015.
DEVELOPMENT
Affordable housing projects allocated 1.6 billion ringgit, to be spent building 175,000 houses
900 million ringgit allocated to resolve Kuala Lumpur traffic congestion
Telecommunications infrastructure allocated 1.2 billion ringgit
1.4 billion ringgit earmarked for development of rural roads nationwide. An-Borneo highway to be toll free.
Government to improve improve infrastructure in rural areas, including building houses and water supply
5.3 billion ringgit allocated to modernize agricultural sector
515 million ringgit allocated to improve electricity supply in Sabah state
OIL PROJECT
Pengerang oil project to receive 18 bln ringgit in 2016
MINIMUM WAGE
Increased from 900 ringgit per month to 1,000 ringgit in peninsular Malaysia
MACROECONOMIC HIGHLIGHTS
Current account surplus in 2016 to be down more than half to 11.3 billion ringgit from 23.4 billion ringgit this year and 47.3 billion ringgit in 2014
Economic growth forecasts at 4.0-5.0 per cent for 2016, compared with 4.5-5.0 per cent this year
Fiscal deficit for 2016 reduced to 3.1 per cent of gross domestic product, down from 3.2 per cent in 2015 and 3.4 per cent last year
Exports forecast to rebound 1.4 per cent in 2016 after a 0.7 per cent fall this year
Inflation seen at 2.0-3.0 per cent in 2016, against 2.0-2.5 per cent this year
Government debt limit to remain at 55 per cent of GDP in 2016, forecasting a ratio of 54.0 per cent this year and slightly up from 52.7 per cent in 2014
Oil and gas related revenues seen at 14.1 per cent of total revenue in 2016, down from 19.7 per cent in 2015
Goods and Services Tax (GST) expected to raise 39 billion next year, against 27 billion ringgit collected in the first eight months of 2015
Subsidy allocations seen falling slightly to 26.1 billion ringgit from 26.2 billion ringgit this year
