Below are the highlights of the 2015 Budget:, 2015 Budget outlined seven main strategies:
Strengthening economic growth, enhancing fiscal governance, developing human capital and entrepreneurship, advancing Bumiputera agenda, upholding the role of women, developing national youth transformation programme, and prioritising well-being the people.
Allocation
2015 Budget allocates RM273.9bil, up RM9.8bil compared to 2014 initial allocation. RM223.4bil is for operating expenditure, RM50.5bil for development expenditure.
Cargo ships:
To assist owners of cargo ships with gross tonnage not exceeding 300 tonnes, the Government will establish a Malaysia P&I Club under Exim Bank. The Club will offer third-party liability protection at reasonable premiums.
Services sector:
In 2013, the services sector contributed 55.2% to GDP. To achieve the target of 60% by 2020, the Government will boost the services sector by implementing the following initiatives:
First: Implementing the Services Sector Blueprint;
Second: Setting up a Services Sector Guarantee Scheme amounting to RM5bil for SMEs in the services sector, with a maximum financing of RM5mil together with 70% Government guarantee.
The scheme is expected to benefit 4,000 SMEs;
Third: Establishing a Research Incentive Scheme for Enterprises (RISE) with an allocation of RM10mil to encourage companies to set up research centres in high technology, ICT and knowledge- based industries;
Fourth: Reintroducing the Services Export Fund (SEF) totalling RM300mil to encourage SMEs to conduct market feasibility studies and undertake export promotion to penetrate new markets; and
Fifth: Strengthening the Franchise Development Scheme under the Ministry of Domestic Trade, Co- operatives and Consumerism in collaboration with the Malaysian Franchise Association. A sum of RM20mil is allocated for the scheme.
GST exemption
GST exemption on petrol (RON95), diesel and LPG. GST will not be imposed on the first 300 unit of electrical bill. This means 70% of households will not pay GST on electricity usage.
Other items exempted from GST:
i) fruits, local and imported,
ii) white bread and wholemeal bread,
iii) coffee powder, milk powder and coco powder,
iv) egg noodle, rice noodle and vermicelli,
v) 2,900 brands of medicines considered to be of national importance, including for heart disease, diabetes, hypertension, cancer and infertility,
vi) reading material,including workbook, children's colouring books, text book, dictionary and religious texts,
vii) newspaper
Personal income tax, GST implementation
* Income Tax: Income tax rates to be cut by one to three percentage points. Families with monthly income of less than RM4,000 will not have to pay tax
* From 2016, the corporate tax rate will be reduced by one percentage point from 25% to 24%, and for small and medium sized enterprises to 19% from 20%.
With the implementation of GST, the Government will be able to reduce the tax burden on the rakyat as follows:
First:For individuals and households for year of assessment 2015:
i) Individual income tax rates will be reduced by 1 to 3 percentage points. With this measure, 300,000 individual taxpayers will no longer pay income tax.
ii) Tax payers with family and income of RM4,000 per month will not have tax liability.
iii) Individual income tax will be restructured whereby the chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000.
The current maximum tax rate at 26% will be reduced to 24%, 24.5% and 25%.
The experience of other countries has shown that a key critical factor in the succesful implementation of GST is the level of readiness by businesses. To assist businesses, the following incentives and assistance will be provided:
i) Training grant of RM100mil provided to businesses for their employees to attend GST courses;
ii) Financial assistance amounting to RM150mil provided to SMEs for the purchase of accounting software;
ii) Accelerated Capital Allowance on purchase of ICT equipment and software; and
iv) Expenses incurred for training in accounting and ICT relating to GST will be given additional tax deduction.
* Goods and Services Tax (GST) : RON95 petrol, diesel and liquefied petroleum gas (LPG) exempted from GST.
* Revenue from GST in 2015 estimated at RM23.2 billion.
* Exemption of GST on several goods amounting to RM3.8 billion.
* Abolishment of SST will see RM13.8 billion in revenue forgone.
* Net revenue collection from GST will only amount to RM690 million.
* Establish another 20 KR1M in Peninsular Malaysia.
* Set up price watch team comprising consumer associations.
* Strengthen GST Enforcement Unit with 2,270 personnel, Price Monitoring Unit with 1,300 personnel and Consumer Squads with 202,800 volunteers as well as involve 579 mukim and village heads.
* Electricity consumption not subject to GST increased from the first 200 units to 300 units, move to benefit 70% of households.
* Income Tax: Income tax rates to be cut by one to three percentage points. Families with monthly income of less than RM4,000 will not have to pay tax
* From 2016, the corporate tax rate will be reduced by one percentage point from 25% to 24%, and for small and medium sized enterprises to 19% from 20%.
Subsidy Rationalisation
The Government had allocated RM588mil for various subsidies in 1994. This amount has increased to RM40.5bil in 2014.
To improve the public finance position, the Government is committed to implementing subsidy rationalisation, particularly for petroleum.
At present, the Government allocates more than RM21 billion a year to subsidise RON95 petrol, diesel and LPG cooking gas. As a result, the allocation for subsidies has increased 14 times from RM1.65 billion in 2002 to RM23.5 billion in 2013, solely to maintain the low retail petrol price. This is due to the increase in number of vehicles from 13.6 million units in 2008 to 23.7 million units in 2013.
To ensure a more targeted subsidy and taking into account the rakyat's awareness and readiness to subsidy rationalisation, the Government will develop a new mechanism for providing petroleum subsidy.
The new mechanism will be announced soon.
Infrastructure projectsIn 2015, several infrastructure projects will be implemented:First: Construction of the 59-km Sungai Besi – Ulu Klang Expressway (SUKE) at a total construction cost of RM5.3bil;Second: Construction of the 276-km West Coast Expressway from Taiping to Banting at a total construction cost of RM5bil;Third: Construction of the 47-km Damansara – Shah Alam Highway (DASH) at a total construction cost of RM4.2bil;Fourth: Construction of the 36-km Eastern Klang Valley Expressway (EKVE) at a total construction cost of RM1.6bil;Fifth: Upgrading the East Coast railway line along Gemas - Mentakab, Jerantut - Sungai Yu and Gua Musang - Tumpat with an allocation of RM150mil;Sixth: Construction of the 56-km Second MRT Line from Selayang to Putrajaya at an estimated cost of RM23bil; andSeventh: LRT 3 Project, which will link Bandar Utama to Shah Alam and Klang, at an estimated cost of RM9 billion, will be implemented.The Pengerang Integrated Petroleum Complex project with a total investment of RM69 billion is expected to create more than 10,000 job opportunities.
Additionally, to develop the electric vehicle manufacturing industry in Malaysia, a Sustainable Mobility Fund of RM70mil will be established under SME Bank. Initially, 50 electric buses will be introduced.
Encouraging establishment of principal hub
For this the Government will continue its efforts to further increase the number of multinational companies’ global operational centres in Malaysia. In line with this, customised incentives for Principal Hubs will be introduced early next year.
Spurring Creative Industry
To develop creative industries such as animation, filming, designing and cultural heritage, the Government has allocated RM200 million to MyCreative Ventures in 2012. To further promote the industry, a Digital Content Industry Fund will be set up under the Communications and Multimedia Commission with an allocation of RM100 million.
Increasing Capacity of High-Speed Broadband
The High-Speed Broadband (HSBB) will continue to be implemented in areas of high economic impact, covering state capitals and selected major towns nationwide. A sum of RM2.7 billion will be spent over the next three years to build 1,000 new telecommunication towers and laying of under sea cables.
Increasing equity ownership of Bumiputeras
In the context of corporate equity ownership, the Bumiputera have yet to achieve the 30% target.
Meanwhile, their effective control over corporations is currently only around 10%. Hence, EKUINAS will be allocated RM600mil to increase bumiputera ownership in private companies and GLCs. To date, EKUINAS has cumulative investments of RM2.3bil in various sectors.
Bumiputera SMEs, among the initiatives under 2015 Budget include the following:
First: Lembaga Tabung Haji will allocate RM200mil for the establishment of the shariah-compliant Restricted Investment Account (RIA) under Bank Islam. The purpose of this account is to provide financing and credit between RM50,000 and RM1mil from January 2015; and Second: Amanah Ikhtiar Malaysia (AIM) will use internal sources of RM1.8bil for financing to benefit 346,000 Sahabat AIM.
The Government is concerned and gives importance to the development and improving the welfare of the rakyat in Sabah and Sarawak in the national development agenda.
Pan-Borneo Highway
As the North-South Highway project has transformed the development from Perlis to Johor, the Government intends to start construction of the 1,663-km Pan-Borneo Highway comprising 936 km in Sarawak and 727 km in Sabah at a total construction cost of RM27bil.
Youth and home ownership
The Government also aims to provide a comprehensive ecosystem for youth to increase their capabilities and progress in work, business and entrepreneurship as well as enjoy housing, recreational and sports facilities. For this, the Government will establish 1Malaysia Youth City with an allocation of RM100mil to fund three pilot projects in the Peninsula, Sabah and Sarawak.
Youth Housing Scheme which is a smart partnership between the Government, Bank Simpanan Nasional, Employees Provident Fund and Cagamas.
The scheme offers a funding limit for a first home not exceeding RM500,000 for married youth aged between 25 and 40 years with household income not exceeding RM10,000. The maximum loan period is 35 years.
Under the scheme, the Government will provide monthly financial assistance of RM200 to borrowers for the first two years to reduce the burden of monthly installments. The Government will also give a 50% stamp duty exemption on the instrument of transfer agreements and loan agreements.
The Government will also provide a 10% loan guarantee to enable borrowers to obtain full financing including cost of insurance. Borrowers can also withdraw from EPF Account 2 to top up their monthly installment and other related costs.
It is offered on a ‘first come first served basis’ for 20,000 units only.
* Property: Budget extends 50% stamp duty exemption for first time home buyers and increases the purchase limit from RM400,000 to RM500,000. The exemption will be given until the end of 2016.
* A 10% loan guarantee to enable borrowers to obtain full financing including cost of insurance. Borrowers can also withdraw from EPF Account 2 to top up their monthly installment and other related costs.
* This guarantee is offered on a "first come, first served basis’ for 20,000 units only.
* Ceiling of household income for PR1MA homes increased to RM10,000, RM1.3 billion to be allocated to build 80,000 units PR1MA homes.
* Education: RM325 million to be allocated for the 1Malaysia Book Voucher Programme, benefitting about 1.3 million students.
* RM100 schooling assistance to all 5.4 million primary and secondary students to continue.
* A total of RM1.2 billion will be allocated to increase student intake in vocational colleges and community colleges as well as upgrading colleges.
* RM1.05 billion allocated to develop and maintain education facilities, and for school upgrade programmes.
* RM3 billion allocated for education sponsorship via the Public Service Dept (JPA) , Education Ministry and Health Ministry.
* RM30 millon fund set up for training and technical assistance of youth from low income Indian families.
* Health: Tax relief for medical expenses and treatment for serious illnesses such as cancer, kidney failure and heart attack increased to RM6,000 per year.
* 30 more 1Malaysia clinics and a health clinic in Cyberjaya will be built. The Government will station 30 doctors in these clinics.
* Sports: An allocation of RM103 million to implement a Sporting Nation Blueprint.
* Identify sports talent starting from primary school through Malaysian Talent Identification programme. The programme involves testing, screening and talent specialisation among students.
* Improve the quality of high-performance sports for six selected fields in the first phase - Football, Cycling, Badminton, Sepak Takraw, Swimming and Athletics.
* Entrepreneurship: In 2015, TEKUN to provide additional funds of RM500 million, of which RM350 million allocated for Bumiputera entrepreneurs, Young Indian Entrepreneurs Financing Scheme (RM50 million), Young Professional Women Entrepreneurs Development Programme (RM50 million), and Armed Forces Veteran Entrepreneur Development Programme (RM50 million).
* Soft loans totalling RM50 million for SME entrepreneurs from Chinese community, and RM30 million for hawkers and petty traders.
* To attract more expatriate entrepreneurs establish startups in Malaysia, the paid-up capital for startups is set at RM75,000.
* Eligible expatriate startup entrepreneurs will be given work pass for one year.
* Additional allocation of RM30 million to entrepreneurs under programme Skim Usahawan Permulaan Bumiputera (Superb), with participation to be enlarged to include East Malaysian entrepreneurs.
* RM30 million to be allocated through Amanah Ikhtiar Malaysia, to inculcate the spirit of entrepreneurship among Indian women.
* BR1M for those earning RM3,000 and below will be increased to RM950 from RM650.
* For those earning RM3,000 to RM4,000, BR1M increased to RM750 (from RM450).
* For the above two categories, payment will be made in three instalments - January, May and September.
* For those aged 21 and above, with income not exceeeding RM2,000, BR1M increased to RM350 (from RM300) in one-off payment early next year.
Public transport:
To improve the public transport system, the Government will introduce the following programmes:
First: Provide intercity bus services to those residing outside Kuala Lumpur (KL) but work in KL. The service will be offered with a discounted monthly fare of 30%. For a start, three bus routes will be operational namely the Rawang-KL; Klang-KL and Seremban-KL;
Second: Provide Electric Train Service (ETS) for Ipoh-Butterworth route starting April 2015; and
Third: Upgrade stage bus services in several states through a contracting system with existing bus companies. The programme will be implemented in phases in Kuching, Ipoh, Seremban, Kuala Terengganu and Kangar.
RPGT
Currently, gains from the disposal of property under the Real Property Gains Tax Act 1976, are assessed formally.
The Government has implemented the Self-Assessment System for individual and company income tax effective from the year 2001 and 2004, respectively.
In tandem with the Government's aspiration to modernise the tax system and given that people are more responsible, it is proposed that tax on gains from the disposal of property be self-assessed by the taxpayer effective from the year 2016.
Water supply
Water supply sources will be diversified through groundwater exploration, and reuse of treated water for industries and agriculture as well as expanding the use of storm water retainer system. To address water supply shortage in the Klang Valley, the construction of Air Langat 2 Water Treatment Plant will be expedited. Costing RM3 billion, the plant will increase the supply of treated water to 1,130 million litres daily.
In addition, the Government will intensify efforts to address the problem of non-revenue water. A sum of RM112mil is allocated for setting up leakage control zones as well as detecting and repairing leaking pipes.
