By KINIBIZ
For reactions to Budget 2015 go here.
Prime Minister Najib Abdul Razak tabled Budget 2015 today. This is the final year of the 10th Malaysia Plan. The 11th Malaysia Plan will be launched in May 2015.
The prime minister introduced a new strategy called the National Malaysia Development Strategy (MyNDS) where:
Malaysia has to become knowledge-based economy with a focus on creativity and innovation.
MyNDS will implement economic strategies.
Fiscal consolidation is needed to ensure future generations are not burdened with our financial mess.
Economy is projected to grow between 5.5% to 6% in the second half of 2014. At year-end the fiscal deficit should be 3.5% of GDP. The actual realised investment is at the highest yet.
The budget for 2015 is RM273.9 billion an increase of almost RM10 billion from last year.
The FBM KLCI has risen 114% from 884.45 points in January 2009 to 1,892.65 points in July 2014. Market capitalisation also increased 162% from RM667.87 billion to RM1,749.49 billion on 7 October 2014.
The GNI per capita also increased 50% from US$6,700 to US$10,060 in the last five years. I am confident that this year we will achieve strong economic growth between 5.5% and 6%. In addition, the fiscal deficit continues to improve. The fiscal deficit has declined from 6.7% in 2009 to 3.9% in 2013 and is expected to reduce further to 3.5% of GDP in 2014.
For 2015, economic growth is expected to remain strong between 5% and 6% while the fiscal deficit is projected to further decline to 3% of GDP.
The FBM KLCI reached 1,892.65 points in July 2014, a historic new high.
Foreign direct investment (FDI) totalling RM38.7 billion in 2013 was the highest realised investment to date.
The 2015 Budget allocates a total of RM273.9 billion, an increase of RM9.8 billion compared with the 2014 initial allocation. Of the amount, RM223.4 billion is for Operating Expenditure while RM50.5 billion for Development Expenditure.
Under Operating Expenditure, RM65.6 billion is for Emoluments and RM38.1 billion for Supplies and Services. The largest share of RM116.4 billion is for Fixed Charges and Grants, while RM1.5 billion is for Purchase of Assets. The remaining RM1.8 billion is for Other Expenditure.
Under Development Expenditure, the economic sector will receive the highest share at RM29.3 billion, followed by the social sector with RM12.6 billion for education and training, health, housing and the well-being of society. In addition, RM4.9 billion is allocated to the security sector. The balance of RM1.7 billion is for general administration and RM2 billion for contingencies.
In 2015, the Federal Government revenue collection is estimated at RM235.2 billion, an increase of RM10.2 billion from 2014.
Implementing GST
During the announcement of GST in the 2014 Budget, the Government proposed not to impose GST on basic food items and services. Based on the feedback received from all segments of society, the Government agrees to widen the scope of items that will not be subjected to GST as follows:
(i) All types of fruits whether local or imported;
(ii) White bread and wholemeal bread;
(iii) Coffee powder, tea dust and cocoa powder;
(iv) Yellow mee, kuey teow, laksa and meehoon;
(v) The National Essential Medicine covering almost 2,900 medicine brands. These medicines are used to treat 30 types of diseases including heart failure, diabetes, hypertension, cancer and fertility treatment;
(vi) Reading materials such as children’s colouring books, exercise and reference books, text books, dictionaries and religious books; and
(vii) Newspapers.
In addition, the Government has also agreed electricity consumption that is not subject to GST be increased from the first 200 units to 300 units. This will benefit 70% of households.
Government has agreed that the retail sale of RON95 petrol, diesel and LPG be given relief from the payment of GST.
Of the 944 goods and services in the basket of goods of the CPI, the prices of 532 items or 56% are expected to reduce up to 4.1%. Among the goods are medicines, electrical appliances such as refrigerators and washing machines, textile products, plastic products such as pails and plates, shoes and slippers, household furniture, baby diapers, soap, meat, chicken eggs, cooking oil, seafood, rice and vegetables.
About 354 goods and services may experience some price increase but less than 5.8%.
Taxation
For individuals and households for year of assessment 2015
(i) Individual income tax rates will be reduced by one to three 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%. This will result in the existing taxpayer enjoying a tax saving of at least 5.3%.
For year of assessment 2015, cooperative income tax rate will also be reduced by one to two percentage points. In addition, secretarial fee and tax filing fee are allowed as deduction;
For year of assessment 2016, corporate income tax rate will be reduced by one percentage point from 25% to 24%.
For year of assessment 2016, income tax rate for SMEs will also be reduced by one percentage point from 20% to 19%.
Training grant of RM100 million provided to businesses for their employees to attend GST courses.
Financial assistance amounting to RM150 million provided to SMEs for the purchase of accounting software.
Accelerated Capital Allowance on purchase of ICT equipment and software; and
Expenses incurred for training in accounting and ICT relating to GST will be given additional tax deduction.
Subsidy Rationalisation
The Government had allocated RM588 million for various subsidies in 1994. This amount has increased to RM40.5 billion in 2014.
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. I will announce the new mechanism soon.
BR1M
Government, will increase BR1M from RM650 to RM950. The assistance is for households with a monthly income of RM3,000 and below. It will be disbursed in three instalments of RM300 each to be paid in January and May with the balance of RM350 from September 2015.
For households with a monthly income between RM3,000 and RM4,000, the Government will increase BR1M from RM450 to RM750. This assistance will be disbursed in three instalments that is RM200 to be paid in January and May while the balance of RM350 from September 2015.
For single individuals aged 21 and above and with a monthly income not exceeding RM2,000, BR1M will be increased from RM300 to RM350 a year. This assistance will be disbursed early next year.
Government will replace the group takaful insurance or i-BR1M with Family Bereavement Scheme. The new scheme will entitle the next of kin of BR1M recipients to receive RM1,000 effective for a year.
Developing human capital and entrepreneurship
It is the Government’s aspiration to increase the component of wages to GDP from 34% currently to 40% by 2020.
Promoting High-Quality and Focused Investment
More specialised incentive package will be offered for investment projects based on technology,
innovation and knowledge, involving highly qualified and knowledgeable employees with high salaries.
In 2015, with the implementation of the Goods and Services Tax (GST) Government revenue is estimated at RM23.2 billion. We have exempted several goods from GST amounting to RM3.8 billion.
With the implementation of GST, the Sales and Services Tax (SST), will be abolished resulting in revenue foregone of RM13.8 billion. This means that after deducting RM13.8 billion and RM3.8 billion from a revenue of RM23.2 billion, the Government will have a balance of RM5.6 billion.
Of the total, RM4.9 billion is channelled back to the rakyat through assistance programmes such as the increase in Bantuan Rakyat 1Malaysia (BR1M).
Net revenue collection from GST will only amount to RM690 million.
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:
Setting up a Services Sector Guarantee Scheme amounting to RM5 billion for SMEs in the services sector, with a maximum financing of RM5 million together with 70% Government guarantee. The scheme is expected to benefit 4,000 SMEs.
Establishing a Research Incentive Scheme for Enterprises (RISE) with an allocation of RM10 million to encourage companies to set up research centres in high technology, ICT and knowledge- based industries.
Reintroducing the Services Export Fund (SEF) totalling RM300 million to encourage SMEs to conduct market feasibility studies and undertake export promotion to penetrate new markets;
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 RM20 million is allocated for the scheme.
Strengthening Islamic Financial Market
Currently, the Malaysian Islamic finance accounts for 25% of total assets in the banking system. Internationally, Malaysia remains as the largest sukuk market accounting for 60% of the global sukuk market.
The Government will introduce a new shariah-compliant investment product in 2015 called the Investment Account Platform (IAP). IAP will provide opportunities to investors in financing entrepreneurial activities and developing viable SMEs. IAP will be a platform to attract institutional and individual investors including high net worth individuals to invest in the Islamic financial market. Initially, IAP will be implemented with a startup fund of RM150 million.
To promote investment in IAP, the Government proposes individual investors be given income tax exemption on profits earned from qualifying investment for three consecutive years.
To boost domestic sukuk and bond issuance and trading, the Government introduced the Exchange Traded Bond and Sukuk (ETBS) in January 2013. The Government proposes that the Malaysian Government Securities and Government Investment Issues be listed and traded in ETBS.
In addition, expenses incurred in the issuance of sukuk are given deduction from year of assessment 2003 until year of assessment 2015. Deduction for expenses incurred in the issuance
of sukuk based on Ijarah and Wakalah principles be extended for another three years until year of assessment 2018.
Promoting Domestic Shipping Industry
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.
Incentives for Industrial Area Management
Incentive of 100% income tax exemption for a period of five years to encourage the private sector to manage, maintain and upgrade industrial estates in less developed areas.
Incentive of 70% income tax exemption for a period of five years for the private sector to manage industrial estates in other areas.
Capital Allowance to Increase Automation in Labour Intensive Industries
For high labour intensive industries (such as rubber products, plastics, wood, furniture and textiles), an automation capital allowance of 200% will be provided on the first RM4 million expenditure incurred within the period from 2015 to 2017.
For other industries, automation capital allowance of 200% will be provided on the first RM2 million expenditure incurred within the period from 2015 to 2020.
Accelerating Public and Private Investment
Construction of the 59-km Sungai Besi – Ulu Klang Expressway (SUKE) at a total construction cost of RM5.3 billion.
Construction of the 276-km West Coast Expressway from Taiping to Banting at a total construction cost of RM5 billion.
Construction of the 47-km Damansara – Shah Alam Highway (DASH) at a total construction cost of RM4.2 billion.
Construction of the 36-km Eastern Klang Valley Expressway (EKVE) at a total construction cost of RM1.6 billion.
Upgrading the East Coast railway line along Gemas – Mentakab, Jerantut – Sungai Yu and Gua Musang – Tumpat with an allocation of RM150 million.
Construction of the 56-km Second MRT Line from Selayang to Putrajaya at an estimated cost of RM23 billion.
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 RM70 million will be established under SME Bank. Initially, 50 electric buses will be introduced.
Increasing Capacity of High-Speed Broadband
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.
Boosting Tourism Industry
RM316 million is allocated for various programmes under Ministry of Tourism and Culture.
Developing Small and Medium Enterprises
SMEs contribute 33% to GDP and the share is targeted to increase to 41% by 2020.
SMEs will be given financing assistance in the form of loans, equity or both, particularly at the startup stage. An initial fund totalling RM375 million will be provided for a period of five years, of which RM250 million is from SME Bank and RM125 million from private investors. In addition, RM10 million will be allocated for the Business Accelerator Programme under SME Corp.
To enhance use of new technology, automation and innovation in the development of SMEs, RM80 million is allocated for a Soft Loan Scheme for Automation and Modernisation of SMEs under the Malaysian Industrial Development Finance Berhad.
TEKUN has channelled loans totalling RM3.1 billion to nearly 300,000 borrowers with loan limits of between RM1,000 and RM100,000. In 2015, TEKUN will provide additional funds of RM500 million which will be distributed as follows:
RM350 million is allocated for Bumiputera entrepreneurs to provide financing to nearly 33,000 new borrowers.
RM50 million will be allocated to the Indian Entrepreneurs Financing Scheme that will benefit 5,000 Indian entrepreneurs.
RM50 million will be allocated to the Young Professional Women Entrepreneurs Development Programme that will benefit 5,000 professional women.
RM50 million will be allocated to the Armed Forces Veteran Entrepreneur Development Programme that will benefit 5,000 veterans.
To assist SME entrepreneurs from the Chinese community, the Government will provide soft loans totalling RM50 million, and RM30 million for hawkers and petty traders.
Developing Innovation and Commercialisation
Malaysia’s R&D expenditure as a share of GDP is low, compared with advanced economies such as Japan and South Korea. In this regard, the Government will allocate RM1.3 billion to the Ministry of Science, Technology and Innovation to implement several related programmes including.
Target 360 high-impact innovative products to be commercialised within the next five years;
Provide research funds amounting to RM290 million to implement various high-impact R&D&C programmes.
Rebrand SIRIM. For this, an SME Technology Penetration and Upgrading Programme and technology auditing will be implemented.
Introduce a new initiative namely Public Private Research Network spearheaded by Ministry of Education in collaboration with the Malaysian Technology Development Corporation with an allocation of RM50 million
Strengthen Technology Commercialisation Platform Programme by Agensi Inovasi Malaysia with an additional allocation of RM50 million.
Tabung Pendidikan Tinggi Nasional
Since the establishment of Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) in 1997 to date, 2.1 million borrowers have taken loans worth RM47.8 billion. However, as at 31 August 2014, only RM5.36 billion or 46% of RM11.76 billion has been collected.
174,000 borrowers have not made any payments since 2010.
A 10% rebate for borrowers who continuously make repayments for 12 months until 31 December 2015. An additional 20% discount will be offered to borrowers who make lump sum repayments from today until 31 March 2015.
Since 2005, National Education Savings Scheme (SSPN-i), SSPN-i account holders with a monthly household income not exceeding RM2,000 have been enjoying matching grants. To encourage more parents to become depositors and obtain the same benefits, the Government proposes contributors’ monthly household income limit be increased to RM4,000.
53,000 graduates remain unemployed after six months of graduating. To enhance graduates’ employability, the Government proposes that the curriculum and skill training programmes at public skill training institutions as well as institutions of higher learning be reviewed.
For this, Talent Corp will provide RM30 million for Industry Academia Collaboration programme where universities, Government entities and industries will collaborate to develop the curriculum for the internship programmes and industrial training.
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 RM600 million to increase Bumiputera ownership in private companies and GLCs. To date, EKUINAS has cumulative investments of RM2.3 billion in various sectors.
Strengthening Bumiputera Entrepreneurship
To increase the number of Bumiputera entrepreneurs, several initiatives will be implemented including:
Strengthening the role of the National Entrepreneurship Institute (INSKEN) as a Centre of Excellence for Bumiputera Entrepreneurship;
Further accelerate the Bumiputera Entrepreneurs Startup Scheme (SUPERB) with additional allocation of RM30 million. This programme will be extended to entrepreneurs in Sabah and Sarawak;
Introducing pre-export programme for high-performing Bumiputera companies (TERAS) for enhanced branding, international certification and market surveys for Bumiputera products. The programme targets 60 TERAS companies to increase their capacity and penetrate international markets; and
Expanding carve-out and compete programme through meritocracy for Government and privatised projects including MRT second phase and Pan-Borneo Highway.
Bumiputera SMEs
For Bumiputera SMEs, among the initiatives under 2015 Budget include the
following:
Lembaga Tabung Haji will allocate RM200 million 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 RM1 million from January 2015; and
Amanah Ikhtiar Malaysia (AIM) will use internal sources of RM1.8 billion for financing to benefit 346,000 Sahabat AIM.
Upholding the role of women
Women represent only 38% of the total workforce in the country. To enhance the contribution of women in national development, the Government will continue to focus on efforts to intensify the involvement of women in the job market and entrepreneurial activities.
The Ministry of Women, Family and Community Development is allocated RM2.26 billion for development and operating expenditure. Among the programmes include:
Strengthening Women Directors Programme to achieve the 30% participation of women in decision-making positions. In 2015, the Government plans to train 125 potential women directors to fill the position as members of the board of Government-linked companies and the private sector. I urge the Government-owned companies and the private sector to provide more opportunities for professional women to be represented in Boards of Directors.
Improving opportunities for women to return to the job market through the 1Malaysia Support for Housewife programme which emphasises skills training and incentives for housewives.
Talent Corp will set up the Women Career Comeback Programme for professional women returning to the job market based on professional qualifications.
Te Government will buy the premises for the Women Special Protection Homes in the Eastern, Northern and Central zones. In addition, to provide opportunities for single mothers who are interested in entrepreneurship, the Government will continue the Single Mother Skill Incubator Programme (I-KIT), Women Entrepreneurship Incubator Programme (IkUnita) and Women Core Development Programme.
A sum of RM30 million will be allocated through Amanah Ikhtiar Malaysia (AIM) to inculcate the spirit of entrepreneurship among Indian women.
Furthermore, for civil servants, the Government will improve the Child Care Leave eligibility by revising the conditions so that the eligibility is not tied to the duration of maternity leave, effective from 1 January 2015. The leave is limited to children until they reach one year and is extended to
female personnel with step children, legally adopted children, foster children and children with disabilities.
Youth programmes
Home ownership appears to be a big issue especially cost of houses and financing.
The Youth Housing Scheme 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 instalments. The Government will also give a 50% stamp duty exemption on the instrument of transfer agreements and loan agreements.
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 instalment and other related costs.
This opportunity which is offered on a ‘first come first served basis’ for 20,000 units only.
Development and Maintenance of Education Facilities
Government will allocate RM800 million for the following:
– National Schools RM450 million;
– National-type Chinese schools RM50 million;
– National-type Tamil schools RM50 million;
– Religious schools RM50 million;
– Fully residential schools RM50 million;
– Government Aided Religious Schools RM50 million;
– MARA Junior Science Colleges RM50 million;
– Registered Sekolah Pondok RM25 million; and
– National-type Chinese Secondary Schools (Conforming Schools) which use the national curriculum RM25 million.
The Government is pleased to announce that the electricity and water bills of all National-type schools under the Ministry of Education will be paid in full up to a maximum limit of RM5,000 a month compared with RM2,000 previously.
Sponsoring Education
Government will allocate RM3 billion for sponsoring education of which RM1.9 billion will be given to the Public Services Department, Ministry of Education RM759 million and Ministry of Health RM258 million.
Expanding MyBrain15 Programme
Government has introduced MyBrain15 Programme to produce 60,000 PhD holders by 2023. To date, 34,525 students are pursuing post-graduate studies with a cost of over RM386 million. In 2015, RM112 million will be allocated for this programme. MyBrain15 Programme, which is currently for the private sector, is proposed to be extended to civil servants and employees of statutory bodies who are keen to further their studies on part-time basis in local higher learning institutions.
Enhancing Graduate Employability
To date, it is estimated that 53,000 graduates remain unemployed after six months of graduating. To enhance graduates’ employability, the Government proposes that the curriculum and skill training programmes at public skill training institutions as well as institutions of higher learning be reviewed.
Talent Corp will provide RM30 million for Industry Academia Collaboration programme where universities, Government entities and industries will collaborate to develop the curriculum for the internship programmes and industrial training.
In addition, graduates’ self-confidence and English proficiency skills will be enhanced. Currently, students need to have a minimum of Band 1 in Malaysian University English Test for entry into public institutions of higher learning (IPTA). Beginning next year:
(i) for entry into IPTAs the minimum MUET band will be increased according to the field of study, for example:
(a) Arts and Social Science courses – Band 2
(b) Science, Technology, Engineering and Mathematics (STEM) courses – Band 3
(c) Law and Medical courses – Band 4
(ii) to graduate, students must achieve:
(a) Arts and Social Science courses – Band 3
(b) STEM courses – Band 4
(c) Law and Medical courses – Band 5
Improving the Well-being of Employees
In the second quarter of 2014, there were a total of 13.5 million jobs, an increase of around 1.6 million jobs compared to 2010. To safeguard the welfare of workers:
(i) The Employment Act 1955 and related labour acts will be reviewed, including better terms and conditions of employment, appointment and dismissal, flexible working arrangements and termination benefits;
(ii) The JobsMalaysia portal will be improved to meet the needs of an increasingly dynamic labour market;
(iii) The Government will introduce an Employment Insurance System aimed at assisting retrenched workers by giving temporary financial assistance as well as providing opportunities for reskilling and upskilling; and
(iv) Providing technical training and education assistance to Indian youth, particularly those from low-income families with an allocation of RM30 million.
In 2011, Skim Latihan 1Malaysia has enabled around 45,000 graduates from the low-income households and rural areas to obtain jobs. The Government supports CSR effort by the employers in its implementation through double deduction incentive to companies for the purpose of tax computation until 31 December 2016. I propose the tax incentive be extended until 31 December 2020.
To intensify upskilling and reskilling programmes, the Government will introduce a new programme, namely Globally Recognised Industry and Professional Certification Programme or 1MalaysiaGRIP with an allocation of RM300 million in matching grants between the Government and the Human Resources Development Fund to train 30,000 workers.
The Government will increase skills training programmes in institutes under Department of Labour (JTK). The training programme is for students with Malaysia Skills Certificate (SKM), university or college graduates as well as industrial workers particularly semi-skilled workers. In order to optimise the 32 JTK training institutes, the Government will leverage the double shift training capacity for full-time programmes comprising 176 courses with high demand in the labour market. With intake of two times per year, an estimated 48,000 students will be trained in the five year period of implementation with an allocation of RM570 million.
The Government aspires to position Malaysia as a choice location for Startups in the region. Among the efforts is the establishment of MaGIC which aims to create a more conducive ecosystem to facilitate the Startups to commence operations. 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.
Developing Bumiputera Human Capital
RM2 billion is allocated to MARA for sponsoring education to eligible Bumiputera students.
RM72 million will be used by Yayasan Peneraju Pendidikan Bumiputera to implement three programmes in the form of scholarship, training and financial assistance to benefit 5,000 people;.
Establishing a Professional Accounting Centre in Universiti Teknologi MARA in collaboration with Malaysian Institute of Accountants.
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.
In this regard, 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 RM27 billion.
Through NBOS, a mini UTC and RTC each will be established in Sabah and Sarawak to facilitate transactions for the communities in interior and urban areas.
The Government will undertake the construction of Tenom Health Clinic, Sabah and Lubok Antu, Sarawak as well as upgrade facilities at Hospital Tawau. Nuclear medical and radiotherapy services will also be provided to treat cancer patients at Hospital Wanita dan Kanak-kanak Likas, Sabah.
Sabah has a long and wide coastline. To enhance security in Eastern Sabah Security Zone (ESSZONE) and Eastern Sabah Security Command (ESSCOM), the Government will allocate RM660 million.
Two battalions comprising a battalion PGA PDRM and an Army battalion with 1,280 new personnel have been approved. Two new camps will also be built in ESSZONE, namely Kem Batalion 20 PGA in Beluran and Kem ATM in Felda Sahabat, Lahad Datu, Sabah.
In addition, military and security operation equipment will be further improved, such as procurement of high-capability monitoring radar. The Government will also use a modified oil rig and an auxillary vessel as Sea Basing in the ESSZONE waters, with an allocation of RM230 million through Petronas CSR programme.
Furthermore, to enable high-capacity aircraft to land, the Government will upgrade the runway at the airport in Lahad Datu, as well as relocate Squadron Hawk from Butterworth to Labuan, with an allocation of RM50 million.
The Government will also relocate water villages in Semporna and Sandakan in stages. The Government hopes that through the initiative, the safety of Malaysians in Sabah will be safeguarded and economic activities to rebound.
To strengthen the food supply chain in Sabah and Sarawak, the Government will introduce for the first time, a hill paddy subsidy, with an allocation of RM70 million. The assistance will benefit paddy farmers in Sabah and Sarawak covering 76,000 hectares of crop area.
To standardise the prices of essential goods between Peninsular, Sabah and Sarawak, the following measures will be implemented by the Ministry of Domestic Trade, Co-operatives and Consumerism:
Providing an allocation of RM262 million to finance the cost of transportation and the enforcement of price control on essential goods especially in Sabah and Sarawak.
Setting up two more KR1M in Sabah bringing the total to 16, and three in Sarawak, bringing the total to 19.
Primary & Secondary School Education
To ease the burden of school expenses incurred by the parents and guardians of students, particularly for low-income group, the Government will continue the schooling assistance programme. Starting January 2015, a RM100 each will be given to all primary and secondary school students with an allocation of RM540 million which will benefit 5.4 million students.
In addition, for the purpose of purchasing reference books and instruments the Government will continue to implement the 1Malaysia Book Voucher Programme with the assistance of RM250 per student. A sum of RM325 million will be allocated for this programme and is expected to benefit about 1.3 million students.
To Strengthen Food Supply Chain
Government will allocate RM6 billion to Ministry of Agriculture and Agro-Based Industry to implement the following initiatives:
From 2015 to 2017, the Government will establish 65 permanent farmers’ markets and 50 fish markets that will operate daily in selected locations. To date, there are 526 farmers’ markets and 50 fish markets nationwide.
Introduce a weekly auction programme for quality vegetables at reasonable prices at 85 FAMA Trading Operation Centres and selected farmers’ markets nationwide.
Accelerating planting and replanting of fruit trees such as durian, mangosteen, langsat, rambutan as well as intensifying Jom Bertani Programme so the rakyat can cultivate cash crops and vegetables for their own consumption.
Providing RM100 million matching grant to Farmers’ Organisation Authority to enable the members to obtain loans to improve farm productivity and marketing channels.
Government will accelerate the development of four new Integrated Agriculture Development Area in Rompin, Batang Lupar, Kota Belud and Pekan involving paddy cultivation areas of 25,905 hectares. For a start, the Government will allocate RM100 million.
Increase the living allowance for fishermen in Zone A to RM300 from RM200 a month. For the fishermen in Zone B and C, the living allowance will be increased to RM250.
Provide a monthly allowance of RM200 for the first time for full-time coastal fishermen. The allowance will benefit around 44,000 fishermen.
Further accelerate aquaculture activities such as cage farming of fish, shrimp, mussels and oysters to diversify sources of income of fishermen who are affected especially during the monsoon season. For this, a total of RM60 million is allocated.
Install the Automatic Identification System on fishing boats to increase fish landing, ensure the fishing boats’ bearings are according to landing zones and reduce operating costs. For this, RM27 million will be allocated.
RM250 million for housing projects and to improve the living condition of fishing villages.
Among the measures that will be implemented by the Ministry of Domestic Trade, Co-operatives and Consumerism include:
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.
Public Transport
To improve the public transport system, the Government will introduce the following programmes:
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.
Provide Electric Train Service (ETS) for Ipoh-Butterworth route starting April 2015.
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.
Plantations Smallholders
The Government provided a one-off special assistance of RM500 to rubber smallholders affected by the decline in rubber prices. The Malaysian Rubber Board (MRB) will allocate RM100 million to implement a regulatory price mechanism at the farm level to protect smallholders from losses incurred, particularly when the world market price falls below a minimum fixed price. MRB will also provide soft loans of RM6.4 million as working capital to 64 smallholder cooperatives to purchase rubber directly from 442,000 rubber smallholders nationwide.
For oil palm smallholders, the Government will continue to provide incentives for new planting and replanting with an allocation of RM41 million. Further, export duty exemption for crude palm oil (CPO) will be extended until December 2014.
Health Services
For health services and facilities for the rakyat, the Government will allocate RM23.3 billion to implement the following initiatives:
Build two hospitals namely Hospital Dungun in Terengganu and Hospital Seri Iskandar in Perak. Another 20 Health Clinics and four dental clinics, including health clinics in Kuala Lipis, Pahang and dental clinic in Kluang, Johor will be built.
Establish an additional 30 1Malaysia clinics, bringing the total to 290 clinics nationwide and build a health clinic in Cyberjaya. The Government will station 30 doctors in these clinics.
Replace 635 units of haemodialysis machines in Government hospitals and clinics with an allocation of RM30 million. To encourage private sector participation, the Government will also provide space in Government hospitals and health clinics to place another 244 haemodialysis machines which will be contributed by the private sector as part of their corporate social responsibility.
Provide medicines for patients undergoing chronic and acute haemodialysis treatment with an allocation of RM45.4 million. Expenses incurred for treatment of serious diseases such as cancer, kidney failure and heart attack are given a tax relief up to RM5,000 per year. To reduce the burden of medical expenses and treatment of serious diseases, the Government proposes the existing tax relief be increased to RM6,000 per year. The relief is available to the tax payer, the spouse and children.
Dengue fever epidemic is getting worse. To contain the epidemic from spreading, dengue prevention programme will be enhanced through community awareness and purchasing dengue prevention equipment such as reagents, Ultra Low Volume and Mist Blower. Apart from that, the Government will distribute 55,000 dengue test kits free of charge to private clinics to expedite early dengue detection process. For this, RM30 million will be allocated.
Financial assistance
Government is concerned over those who need help and support. Consistent with this, the Government will allocate RM2.2 billion to the Ministry of Women, Family and Community Development. Among the programmes that will be implemented include:
Provide RM1.2 billion in financial assistance for poor families, children, senior citizens and the disabled (OKU). The Government also agrees to increase the allowance for working OKU from RM300 to RM350. Financial assistance for non-working OKU will be increased from RM150 to RM200. This will benefit 110,000 OKU involving RM66 million.
Increase tax relief for each disabled child from RM5,000 to RM6,000.
Increase tax relief for the purchase of basic supporting equipment for the tax payer, spouse, children and parents with disabilities from RM5,000 to RM6,000.
Increase the daily food allowance from RM8 to RM16 for 8,700 residents in 63 institutions under the Social Welfare Department.
Increase the annual grant for the National Council for Persons with Disabilities from RM500,000 to RM1 million.
Establish an additional five Senior Citizens Activity Centres bringing it to a total of 50 centres nationwide as well as Senior Citizens Care Services programme which provides free transportation for senior citizens to hospitals.
Government will allocate RM711 million to the Ministry of Education, Tabika Kemas, PERMAT and Tabika Perpaduan.
Home Ownership
To address the issue of home ownership at affordable prices, various projects and programmes will continue to be implemented, among them:
Build 80,000 units under the 1Malaysia People’s Housing Programme (PR1MA) with an allocation of RM1.3 billion. To enable more people to own houses, the ceiling of household income is raised from RM8,000 to RM10,000. In addition, a Rent-To-Own Scheme will be introduced specifically for individuals who are unable to obtain bank financing.
National Housing Department (JPN) to build 26,000 units under the People’s Housing Programme (PPR) with an allocation of RM644 million.
Syarikat Perumahan Negara Bhd (SPNB) to build 12,000 units of Rumah Mesra Rakyat (RMR) and 5,000 units of Rumah Idaman Rakyat. SPNB will also build 20,000 units of Rumah Aspirasi Rakyat on privately-owned land.
To enable more people to own their first home and reduce the cost of buying a house, the Government has agreed to extend the 50% stamp duty exemption on instruments of transfer and loan agreements and increase the purchase limit from RM400,000 to RM500,000. The exemption will be given until Dec 31, 2016.
Government also agrees to improve Skim Rumah Pertamaku under the purview of Cagamas by raising the ceiling price to RM500,000 in line with the stamp duty exemption. In addition, the age of borrowers to qualify for the scheme will be increased from 35 to 40 years.
To make the living conditions more comfortable for the rakyat who live in public low-cost housing, RM40 million will be allocated under the Public Housing Maintenance Programme. Meanwhile, RM100 million will also be allocated under the 1Malaysia Maintenance Fund for maintenance of private low-cost housing.
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.
Rural facilities
The Government remains committed to providing and upgrading rural facilities and infrastructure. A sum of RM4.5 billion will be allocated, particularly in Sabah and Sarawak for the implementing of the following programmes:
Construction of 635 km of rural roads including former logging roads in Sabah and Sarawak with an allocation of RM943 million.
Implement electricity connection for 15,000 houses with an allocation of RM1.1 billion.
Implement rural clean water supply for 7,500 houses with an allocation of RM394 million.
Build and rehabilitate dilapidated houses involving 9,500 units with an allocation of RM200 million.
Increase the quality of rural air services in Sabah and Sarawak through maintenance and lease of new aircraft with an allocation of RM160 million.
Implement economic development programmes, infrastructure facilities and improve the living standard of the Orang Asli community with an allocation of RM352 million.
Install an additional 10 lamp posts bringing it to 20 in every village nationwide, involving 22,000 villages and an allocation of RM26 million. This brings to a total of RM56 million for the provision of street lighting in villages.
Water supply
Water supply is important for our daily life as well as for industries. In this regard, the Government will formulate a National Water Blueprint to ensure sustainable long-term water supply nationwide. These include holistic management of rivers, construction and improving water treatment plants.
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.
Government will intensify efforts to address the problem of non- revenue water. A sum of RM112 million is allocated for setting up leakage control zones as well as detecting and repairing leaking pipes.
To increase the level of safety and public order as well as national security, RM17.7 billion is allocated to the ATM while RM9.1 billion, to the PDRM. A sum of RM804 million is also allocated to Maritime Enforcement Agency Malaysia to strengthen maritime enforcement.
Crime Rate Reduction
Government is committed to reducing the crime rate in the country, one of the NKRAs. For this, the Government will increase the intake of policemen by 11,757 personnel, build 14 Police Headquarters (IPK) and Police Stations including a new block for IPK Perlis as well as strengthen the PDRM police patrol through the purchase of 1,000 units of motorcycles.The Government will also allocate RM121 million for PDRM to implement various programmes under NKRA.
To increase the readiness of ATM’s personnel and assets, RM7 billion will be allocated to purchase and maintain the defence assets. Apart from this, the welfare of armed forces personnel will also be improved, including health services and housing.
Meanwhile, to improve maritime safety, APMM will be allocated RM393 million. This is for improving operational efficiency and the purchase of seven new patrol vessels.
Jabatan Sukarelawan Malaysia or RELA under the Ministry of Home Affairs will continue to be a voluntary agency to assist the security forces to maintain peace and security of the nation. A sum of RM117 million will be allocated to strengthen the role of RELA, particularly for training and capacity building.
NGOs
Government recognises the important role played by NGOs. Therefore, I am pleased to declare 2015 as the year of empowerment of NGOs and volunteerism or MyNGO 2015. For this, the Government will provide a one-off grant of RM50 million to creditable NGOs, including uniformed bodies that are involved in community development programmes, unity, social welfare, consumerism, health and security.
Financial Assistance
Contract officers and staff of KEMAS, JASA, JPNIN, JAKIM and Seranta Felda who have served more than 15 years and have retired, the Government agrees to provide a monthly assistance of RM300 benefiting 1,655 people.
Increase in the minimum eligibility for housing loans from RM80,000 to RM120,000 and the maximum eligibility limit from RM450,000 to RM600,000. In addition, the processing fee for housing loan application of RM100 is abolished. Both proposals will take effect on Jan 1, 2015.
Government is committed to increasing the construction of houses under 1Malaysia Civil Servants’ Housing or PPA1M. Currently, 10,639 PPA1M houses have been approved for construction. In 2015, to enable more civil servants to buy PPA1M houses, the Government agrees to build an additional 5,380 units including 1,600 units in Putrajaya, Bukit Jalil (1,530 units), Papar, Sabah (1,290 units) and Bukit Pinang, Kedah (960 units). In addition, the Government will improve PPA1M as follows:
Reducing the minimum price of houses currently at RM150,000 to RM90,000 per unit with a minimum floor area of 850 square feet.
Raising the qualifying requirement of household income from RM8,000 to RM10,000 per month.
Providing a facilitation fund of up to 25% from the project cost for developers participating in the scheme.
Government allocates RM500 million for repair and maintenance that will be implemented in stages for military, police, teachers’ and medical staff’s quarters nationwide. In addition, RM105 million is allocated to Ministry of Urban Wellbeing, Housing and Local Government for maintenance of Government quarters under the MyBeautiful Malaysia Programme covering 126 locations.
The allowance of MPs of Dewan Rakyat will be increased from the equivalent grade 54 to equivalent grade Jusa C, consistent with their responsibility.
The allowance of MPs of Dewan Negara will be increased from equivalent grade 48 to equivalent between grade 54 and Jusa C.
The salaries and allowances of the Speaker of Dewan Rakyat and Speaker of Dewan Negara as well as their respective Deputies will be increased effective 1 January 2015.
Government will review the salary scheme of members of the administration and make a decision at an appropriate time. This includes the Prime Minister, the Deputy Prime Minister, Ministers and Deputy Ministers.
For civil servants, a half-month bonus with a minimum payment of RM500 to be paid in January 2015. Government pensioners will also receive special financial assistance of RM250.
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