Malaysia’s 2014 budget: The highlights – 6% sales tax from 2015
Malaysia’s Prime Minister Najib Razak delivered his eagerly-awaited Budget 2014 speech on October 25 at 4pm local time. He announced the introduction of the 6 per cent Goods and Services Tax (GST) and proposed the abolition of the sales and services tax. He said the new tax will be effective on April 1, 2015.
Following are the other highlights:
Central theme: “Strengthening economic resilience, accelerating transformation and fulfilling promises”
* The domestic economy is projected to grow at a stronger pace of between 5.0 to 5.5 per cent.
* The unemployment rate is estimated at 3.1 per cent while the inflation rate will remain low at between 2 and 3 per cent.
* The per capita income for 2014 is expected to reach RM34,126 compared with RM24,879 in 2009, an increase of 37 per cent over six years. (RM1=$3.16)
* It is even possible that Malaysia will achieve developed nation status much earlier than 2020.
* The 2014 Budget allocates a total of RM264.2 billion to implement programmes and projects.
* Of this amount, RM217.7 billion is for operating expenditure and RM46.5 billion for development expenditure.
* In 2014, the federal government revenue collection is estimated at RM224.1 billion, an increase of RM4 billion from 2013.
* The federal government’s fiscal deficit will further decline from 4 per cent of GDP in 2013 to 3.5 per cent in 2014.
* Private investment is expected to increase further to RM189 billion or 17.9 per cent of GDP, particularly in oil and gas, textile industry, transport equipment and real estate development.
* Public investment is estimated to reach RM106 billion.
* Projects to be implemented include 316-kilometer West Coast Expressway from Banting to Taiping as well as double-tracking projects from Ipoh to Padang Besar and later from Gemas to Johor Baharu.
* Projects undertaken by Petronas include Sabah Ammonia Urea Project in Sipitang; integrated oil and gas production development project, Kebabangan; regasification plant project, Lahad Datu; and RAPID, Pengerang.
* The government allocates RM1.6 billion for development in the five regional corridors.
* Agropolitan project and oil palm-based industries to be implemented in Sabah Development Corridor, Samalaju Industrial Park and Halal hub in Sarawak Regional Corridor.
* Services Sector Blueprint to be launched next year.
* Logistics Sector Master Plan and National Aviation Policy to be formulated.
* RM3 billion in soft loans under the Maritime Development Fund through Bank Pembangunan Malaysia.
* To replace existing air traffic control and management system in Subang, a new air traffic management center costing RM700 million will be built at KLIA.
* Kota Kinabalu, Sandakan, Miri, Sibu and Mukah airports to be upgraded with RM312 million allocation.
* Passenger terminals in Langkawi International Airport and Kuantan Airport to be upgraded.
* Second phase of HSBB project to be implemented in collaboration with private sector involving RM1.8 billion investment.
* To increase Internet coverage in rural areas, 1,000 telecommunications transmission towers to be built over next 3 years, with a RM1.5 billion investment.
* To increase Internet access in Sabah and Sarawak, new underwater cables will be laid within 3 years, at a cost of RM850 million.
* Bank Negara Malaysia to lead in formulating the Netting Act to protect enforcement rights of “close-out netting” under the financial contract.
* Environmental, Social and Governance Index (ESG) to be introduced.
* Securities Commission to introduce Framework of Socially Responsible Sukuk Instrument.
* To establish a SRI Fund to be invested in listed companies.
* Valuecap to allocate RM1 billion to invest in companies that score high on the Environmental, Social and Governance Index Index.
* National Entrepreneur Development Office to be established to plan and coordinate all activities related to entrepreneurship.
* RM50 million allocation for Malaysian Global Innovation and Creativity Centre (MaGIC).
* Committed 1Malaysia Entrepreneurs (1MeT) to be given further guidance at MaGIC.
* Government targets 5,000 young entrepreneurs to be trained yearly.
* RM50 million to reduce graduate unemployment under Graduate Entrepreneurship Fund to be managed by SME Bank.
* The Fund will provide soft loans of up to RM500,000 at interest rate of 4 per cent.
* RM120 million for an integrated package to increase innovation and productivity of SMEs.
* Some incentives under Green Lane Policy programme to be extended until December 31, 2017.
* Difference in minimum wages paid by employers for the period of January 1, 2014 to December 31, 2014 to be given further tax deduction.
* RM100 million to create Night Market Traders Entrepreneur Scheme under Bank Simpanan Nasional.
* Ministry of Health, Ministry of International Trade and Industry, and Ministry of Finance to undergo performance evaluation based on Outcome-Based Budgeting (OBB).
* To conduct audit on projects valued at more than RM100 million.
* Monthly Tax Deduction as Final Tax, effective from 2014 assessment year.
Malaysia's Prime Minister Najib Razak delivered his eagerly-awaited Budget 2014 speech on October 25 at 4pm local time. He announced the introduction of the 6 per cent Goods and Services Tax (GST) and proposed the abolition of the sales and services tax. He said the new tax will be effective on April 1, 2015. Following are the other highlights: Central theme: “Strengthening economic resilience, accelerating transformation and fulfilling promises” * The domestic economy is projected to grow at a stronger pace of between 5.0 to 5.5 per cent. * The unemployment rate is estimated at 3.1 per cent while the...
Malaysia’s Prime Minister Najib Razak delivered his eagerly-awaited Budget 2014 speech on October 25 at 4pm local time. He announced the introduction of the 6 per cent Goods and Services Tax (GST) and proposed the abolition of the sales and services tax. He said the new tax will be effective on April 1, 2015.
Following are the other highlights:
Central theme: “Strengthening economic resilience, accelerating transformation and fulfilling promises”
* The domestic economy is projected to grow at a stronger pace of between 5.0 to 5.5 per cent.
* The unemployment rate is estimated at 3.1 per cent while the inflation rate will remain low at between 2 and 3 per cent.
* The per capita income for 2014 is expected to reach RM34,126 compared with RM24,879 in 2009, an increase of 37 per cent over six years. (RM1=$3.16)
* It is even possible that Malaysia will achieve developed nation status much earlier than 2020.
* The 2014 Budget allocates a total of RM264.2 billion to implement programmes and projects.
* Of this amount, RM217.7 billion is for operating expenditure and RM46.5 billion for development expenditure.
* In 2014, the federal government revenue collection is estimated at RM224.1 billion, an increase of RM4 billion from 2013.
* The federal government’s fiscal deficit will further decline from 4 per cent of GDP in 2013 to 3.5 per cent in 2014.
* Private investment is expected to increase further to RM189 billion or 17.9 per cent of GDP, particularly in oil and gas, textile industry, transport equipment and real estate development.
* Public investment is estimated to reach RM106 billion.
* Projects to be implemented include 316-kilometer West Coast Expressway from Banting to Taiping as well as double-tracking projects from Ipoh to Padang Besar and later from Gemas to Johor Baharu.
* Projects undertaken by Petronas include Sabah Ammonia Urea Project in Sipitang; integrated oil and gas production development project, Kebabangan; regasification plant project, Lahad Datu; and RAPID, Pengerang.
* The government allocates RM1.6 billion for development in the five regional corridors.
* Agropolitan project and oil palm-based industries to be implemented in Sabah Development Corridor, Samalaju Industrial Park and Halal hub in Sarawak Regional Corridor.
* Services Sector Blueprint to be launched next year.
* Logistics Sector Master Plan and National Aviation Policy to be formulated.
* RM3 billion in soft loans under the Maritime Development Fund through Bank Pembangunan Malaysia.
* To replace existing air traffic control and management system in Subang, a new air traffic management center costing RM700 million will be built at KLIA.
* Kota Kinabalu, Sandakan, Miri, Sibu and Mukah airports to be upgraded with RM312 million allocation.
* Passenger terminals in Langkawi International Airport and Kuantan Airport to be upgraded.
* Second phase of HSBB project to be implemented in collaboration with private sector involving RM1.8 billion investment.
* To increase Internet coverage in rural areas, 1,000 telecommunications transmission towers to be built over next 3 years, with a RM1.5 billion investment.
* To increase Internet access in Sabah and Sarawak, new underwater cables will be laid within 3 years, at a cost of RM850 million.
* Bank Negara Malaysia to lead in formulating the Netting Act to protect enforcement rights of “close-out netting” under the financial contract.
* Environmental, Social and Governance Index (ESG) to be introduced.
* Securities Commission to introduce Framework of Socially Responsible Sukuk Instrument.
* To establish a SRI Fund to be invested in listed companies.
* Valuecap to allocate RM1 billion to invest in companies that score high on the Environmental, Social and Governance Index Index.
* National Entrepreneur Development Office to be established to plan and coordinate all activities related to entrepreneurship.
* RM50 million allocation for Malaysian Global Innovation and Creativity Centre (MaGIC).
* Committed 1Malaysia Entrepreneurs (1MeT) to be given further guidance at MaGIC.
* Government targets 5,000 young entrepreneurs to be trained yearly.
* RM50 million to reduce graduate unemployment under Graduate Entrepreneurship Fund to be managed by SME Bank.
* The Fund will provide soft loans of up to RM500,000 at interest rate of 4 per cent.
* RM120 million for an integrated package to increase innovation and productivity of SMEs.
* Some incentives under Green Lane Policy programme to be extended until December 31, 2017.
* Difference in minimum wages paid by employers for the period of January 1, 2014 to December 31, 2014 to be given further tax deduction.
* RM100 million to create Night Market Traders Entrepreneur Scheme under Bank Simpanan Nasional.
* Ministry of Health, Ministry of International Trade and Industry, and Ministry of Finance to undergo performance evaluation based on Outcome-Based Budgeting (OBB).
* To conduct audit on projects valued at more than RM100 million.
* Monthly Tax Deduction as Final Tax, effective from 2014 assessment year.
