Kuala Lumpur: Prime Minister Datuk Seri Anwar Ibrahim tabled his second federal budget Friday with the government’s biggest federal spending yet at RM393.8 billion.
Budget 2024’s amount is over RM7.66 billion than the one tabled last February.
With the expectation of higher government revenue than last year following more tax collection, the Government once again presented an expansionary budget to pave the way for nation-building as it seeks to catapult Malaysia to be among the world’s top 30 economies.
Three ministries – Finance, Education and Health – are the main recipients.
SPONSORED CONTENT Daily Express members: Enjoy 1 for 1 signature cocktails and more at Hyatt Centric Kota Kinabalu Kota Kinabalu: DAILY EXPRESS is partnering with Hyatt Centric Kota Kinabalu to offer an exclusive deal for our members. Read more With the theme of “Economic Reformation, People Empowerment”, this is the second budget presented by Anwar, who is also Finance Minister, since the formation of the Unity Government in November 2022. Last February, Anwar presented a revised budget amounting to RM388.1 billion.
Of the RM393.8 billion allocated in the budget this time, he said as much as RM303.8 billion, or 77.1 per cent, will be channelled to operating expenditure (OE), while the remaining RM90 billion will be allocated to development expenditure (DE) with RM2 billion in contingency savings.
Budget 2024 is divided into three main focuses, namely Best Governance for Service Agility, Restructuring the Economy to Accelerate Growth and Improve People’s Living Standards.
He said the subsidy increase in 2023 was enabled through savings and increasing revenue. For 2023, the revised revenue estimate is RM303.2 billion instead of RM291.5 billion.
The total deficit is projected to be 5 per cent to GDP as forecast.
“For next year the Government expects GDP growth of between 4 and 5 per cent and with the Madani Economy reforms to be implemented, the Government is confident of achieving growth close to 5 per cent,” he said.
According to Anwar, government revenue collection in 2024 is expected to see an increase from RM303.2 billion this year to RM307.6 billion, while the fiscal deficit in 2024 is projected to decrease to 4.3 per cent compared to the target of 5 per cent this year and 5.6 per cent in 2022.
He added that in the medium term, Malaysia will achieve a fiscal deficit of 3 per cent or lower to GDP as the benchmark set in the Madani Economy framework.
Regarding taxes, Anwar said the tax revenue collected by the Government is one of the lowest in Asean, that is only 11.8 per cent to GDP compared to Singapore (12.6 per cent) and Thailand (16.4 per cent).
Starting next year, several taxation reform measures will be implemented to expand the national revenue base, while at the same time not burden the majority of the people.
“The Government plans to increase the (sales and) service tax rate to 8 per cent from 6 per cent. The Government will also enforce the implementation of capital gains tax (CGT) for the disposal of unlisted shares by local companies based on net profit at a rate of 10 per cent from March 1, 2024.
“The Government is also considering the exemption of CGT on the disposal of shares related to certain activities such as approved initial public offerings, internal structuring and venture capital companies subject to set conditions,” he said.
Next, he said, the Government will also enact new legislation to implement the High Value Goods Tax at a rate of 5-10 per cent on certain high value items such as jewellery and watches based on the threshold value of the goods.
In addition, the Government is expected to implement a global minimum tax in 2025 which will only apply to companies with a global income of at least 750 million euros.
“The Government has agreed to enforce mandatory e-invoicing for taxpayers with annual income or sales exceeding RM100 million from Aug 1, 2024,” he said.
As an effort to reorganise the economic framework, the New Industrial Master Plan 2030 (NIMP 2030) introduced by the Government this year targets a total investment of up to RM95 billion with an allocation of up to 10 per cent of the total NIMP investment provided by the Government as a catalyst to drive the plan’s mission.
In order to empower the high growth and high value sector (HGHV), the Government will introduce an incentive approach using a “tiering” system in giving incentives.
“The Government plans to provide reinvestment tax incentives in tiered form in the form of investment tax allowances of 70 per cent or 100 per cent,” he explained.
Anwar said government-linked companies (GLCs) and government investment-linked companies (GLICs) will provide funds of up to RM1.5 billion to encourage start-up companies, including Bumiputera SMEs, to venture into HGHV fields such as digital economy, space technology and electronics and electrical (E&E) in an effort to internationalise local start-up companies and increase their competitiveness and penetrate regional markets.
He said business loan facilities were also given to micro, small and medium entrepreneurs (SMEs) through loans and financing guarantees amounting to up to RM44 billion.
In an effort to invigorate the plantation and commodity sectors, the Government also provided RM2.4 billion to Felda, Felcra and Risda to continue boosting agri-commodity activities and improve the socio-economics of smallholders.
The Government also agreed to raise the activation price of the rubber production incentive to RM3 per kilogramme with an allocation of RM400 million.
In order to realise the aims of the Energy Transition Roadmap (NETR), the Government will provide RM2 billion to the National Energy Transition fund.
Anwar said the Government welcomes an investment of over RM170 million by leading companies such as TNB, Gentari and Tesla Malaysia to install 180 electric vehicle (EV) charging stations.
“The Government plans to extend individual income tax relief of up to RM2,500 on EV charging facility expenses for a period of four years and tax deductions for EV rental costs for another two years,” he added.
Anwar announced that the tender process for 19 work packages for the Pan Borneo Sabah Phase 1B project with a distance of 366 kilometres, involving a cost of RM15.7 billion, will be completed this November while the Sarawak-Sabah Link Road Phase 2 project with a distance of over 320 kilometres, which involves a cost of almost RM7 .4 billion, will be implemented at the end of this year.
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