Updated: Fri, 25 Oct 2013 08:35:24 GMT | By The Malaysian Insider : Malaysia

Budget 2014 highlights

Prime Minister Datuk Seri Najib Razak unveiled Budget 2014 today, seeking to address a large fiscal deficit, shrinking current account surplus and growing debt pile that are sources of concern for investors and ratings agencies. Following are highlights from Budget 2014: CIVIL SERVICE * Pensioners will receive a special financial...


Malaysia Insider

Prime Minister Datuk Seri Najib Razak unveiled Budget 2014 today, seeking to address a large fiscal deficit, shrinking current account surplus and growing debt pile that are sources of concern for investors and ratings agencies.

Following are highlights from Budget 2014:

CIVIL SERVICE

* Pensioners will receive a special financial assistance of RM250 to assist them in meeting the rising cost of living.

* Government to give a half-month bonus for 2013 with a minimum payment of RM500 to be paid in early January 2014.


CASH HANDOUTS (BR1M)

* Cash handouts to households with a monthly income of below RM3,000 will be increased to RM650 from RM500.

* For individuals aged 21 and above and with a monthly income not exceeding RM2,000, cash handouts will be increased to RM300 from RM250.

* For the first time, cash assistance of RM450 will be extended to households with a monthly income of between RM3,000-RM4,000.

* To implement all cash schemes, government will allocate RM4.6 billion which is expected to benefit 7.9 million recipients.

REAL PROPERTY GAINS TAX (RPGT)

* For gains on properties disposed within the holding period of up to 3 years, RPGT rate is increased to 30%.

* For disposals within the holding period up to 4 and 5 years, the rates are increased to 20% and 15%, respectively.

* Raise the minimum price of property that can be purchased by foreigners to 1 million ringgit from RM500,000.

* Prohibit developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS), to prevent developers from incorporating interest rates on loans in house prices during the construction period.

* Financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme. Malaysia's top three banks are Maybank, CIMB and Public Bank.

AFFORDABLE HOMES

* To further increase access to home ownership at affordable prices, an estimated 223,000 units of new houses will be built by the government and the private sector in 2014.

* Government to allocate RM578 million to the National Housing Department (JPN) for low cost flats consisting of 16,473 housing units.

* Malaysian's government to provide 80,000 housing units with an allocation of RM1 billion under affordable housing scheme. The sales price of the houses will be 20% lower than market prices.

* Introduce the Private Affordable Ownership Housing Scheme (MyHome) to encourage the private sector to build more low and medium-cost houses. The scheme provides a subsidy of RM30,000 to the private developers for each unit built.

* Preference will be given to developers who build low and medium-cost houses in areas with high demand and limited to 10,000 units in 2014.

* The scheme is for housing projects approved effective from 1 January 2014 with an allocation of RM300 million.

TAX RELIEF

* Government proposes a special tax relief of RM2,000 be given to taxpayers with a monthly income up to RM8,000 received in 2013.

GOODS AND SALES TAX

* To implement goods and services tax (GST) on April 1, 2015 -17 months from now.

* GST rate fixed at 6%, the lowest among Asean countries.

* GST replaces current sales tax and service tax.

* Basic food items, transportation services, highway tolls, water and first 200 units of electricity for domestic users per month to be exempt from GST.

* Sale, purchase and rental of residential properties as well as selected financial services are exempted from GST.

* Najib: "The reality is that inflation now is low at around 2%. The government is confident this will be the best time to impose GST as inflation is minimal and under control."

* Training grant of RM100 million will be provided to businesses that send their employees for GST training in 2013 and 2014.

* Financial assistance amounting to RM150 million will be provided to small and medium enterprises for the purchase of accounting software in 2014 and 2015.


CORPORATE TAX

* Corporate income tax rate be reduced by 1 percentage from 25% to 24%.

* Income tax rate for small and medium companies will be reduced by 1 percentage point from 20% to 19% from the year of assessment 2016.


INCOME TAX

* Government to give one-off cash assistance of RM300 to low income group

* Personal income tax rates be reduced by 1 to 3 percentage points for all tax payers.

* Individual income tax structure will be reviewed

* Chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000.

* Current maximum tax rate at 26% to be reduced to 24%.

* Measures to be effective in 2015.

SUBSIDIES

* Subsidy programme to be "gradually restructured".

* A portion of savings from restructuring to be distributed in the form of direct cash assistance with the other half to finance development projects.

* To abolish the sugar subsidy of 34 sen effective October 26, 2013.

IMPROVING BUDGET MANAGEMENT

* Committed to reducing the fiscal deficit gradually, with the aim of achieving a balanced budget by 2020.

* To ensure federal debt level will remain low and not exceed 55% of GDP.

* Government to conduct audits on projects valued at more than RM100 million during its implementation.

ISLAMIC FINANCE

* Securities Commission to introduce the a framework for Social Responsible Investment (SRI) Sukuk, or Islamic bonds, to finance "sustainable and responsible" investment initiatives.

AGRICULTURE

* Government to allocate RM6 billion allocated for agriculture programmes.

* Says to RM243 million allocated for rubber, palm oil and cocoa replanting as well as forest plantation programmes.

LOGISTICS

* Government to allocate RM3 billion in soft loans under the Maritime Development Fund through Bank Pembangunan Malaysia.

* The fund is to provide financing to encourage the development of the shipping industry, shipyard construction, oil and gas as well as maritime-related support activities.

AVIATION

* To replace existing air traffic control and management system in Subang, a new air traffic management centre costing RM700 million will be built at Kuala Lumpur International Airport (KLIA).

* Kota Kinabalu, Sandakan, Miri, Sibu and Mukah airports in Sabah and Sarawak to be upgraded with RM312 million allocation.


PUBLIC INVESTMENTS

* Public investments to reach RM106 billion. Projects to be implemented include:

- A 316-kilometre West Coast Expressway. Locally listed Kumpulan Europlus Bhd owns 80% of the project, while IJM Corp owns the balance 20%.

- Double-tracking rail project along west coast Malaysia. The project is carried out by as a joint venture between MMC Corp and Gamuda.

- Various projects from state oil firm Petronas under its RM300 billion capex programme, including a petrochemicals plant in Johor.


INTERNET ACCESS

* To carry out second phase of high-speed broadband project with the private sector involving RM1.8 billion investment. State-linked telco Telekom Malaysia is involved in the project.

* To increase Internet coverage in rural areas, 1,000 telecommunication transmission towers will be built in the next three years, with an investment of RM1.5 billion.

* To increase Internet access in Sabah and Sarawak, new underwater cables will be laid within three years at a cost of RM850 million. - Reuters, October 25, 2013.

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