KUALA LUMPUR, 14 Oct 2023:
After several barely-disguised attempts to woo voters with rapid government changes and prime ministers, the 2024 Budget tabled by Prime Minister Datuk Seri Anwar Ibrahim has finally returned to focus on the longer-term benefit of the country and rakyat.
Paramount amount the measures announced on Friday Oct 13 in Parliament is the focus to raise revenues, which include:
- raising the service tax to 8% from 6%. Since this increase excludes essential components like food and beverage, and telecommunications, this looks to be the forerunner to the return of the Goods & Service Tax come 2025 Budget or soon thereafter,
- introducing new taxes – 10% capital gains tax on unlisted shares and 5-10% High Value Goods Tax on jewelry and possibly premium smart devices. With hike in excise duty on sugary drinks from 40 cents to 50 cents per litre, others likely to be extended may be lottery winnings later or more stamp duties,
- looking to revise subsidies, especially on diesel and petrol. Those for chicken and eggs subsidy removed, revising that for electricity, to create more targeted distribution,
If these policies are actually implemented, chances are high that deficit national budgets could disappear if spending remains prudent and there aren’t further emergency economic priming needed like for the post-pandemic shutdown.
Wealth-creation is another welcome focus, with key measures being:
- bankruptcy protection for those aged 40 and younger with debts below RM200,000 (up to RM50,000 previously) to promote risk-taking enterprise mindsets. It’s a pity that a similar scheme isn’t proposed for banks to be willing to lend up this amount for business ventures as the BSN micro loan and TEKUN initiatives remain underutilised,
- RM28 million MYStartup platform backed by access to RM200 million in various funding options or RM1.5 billion from government-linked companies. Other possibilities include the RM350 million allocation for the 2026 Visit Malaysia Campaign,
- RM60 million under the Digital Content Fund for local works and support content based on national values plus establishing the Faculty of Artificial Intelligence (AI) at Universiti Teknologi Malaysia with an early allocation of RM20 million,
- RM510 million R&D funding under MOSTI and MOHE – with RM50 million exclusively for a matching grants for public universities to collaborate with the private sector in intensifying research and innovation activities that can be commercialised,
- token tax relief up to RM2,000 for skills improvement or self-improvement courses while the monthly salary ceiling for SOSCO contributions is raised from RM5,000 to RM6,000. Interestingly, a new EPF Flexible Account is to be launched in 2024.
Overall though, the focus remains on the usual strategy of attracting large foreign investments and reinvestments tax benefits. Another plus is in the form of Long-Term Social Visit Pass for recently-graduated foreign students to keep those brains within Malaysia.
After decades of horrible annual disasters, RM11.8 billion is being invested on 33 flood-mitigation projects across Malaysia.
Sadly, the 2024 Budget also needs to address items that shouldn’t even be raised:
- repairing toilets in 8,354 schools nationwide by end-2023, despite the Education Ministry getting a large allocation of RM58.7 billion. The same situation exists at many public hospital and clinic toilets despite the Health Ministry getting RM41.2 billion,
- addressing road accidents by fixing potholes faster and installing LED streetlights,
- caring for forest reserves by hiring rangers from among veterans of the Malaysian Armed Forces, the police, Orang Asli and local communities,
It will also be interesting to see how the Human Resources Development Fund will allocate the RM1.6 billion available to help vulnerable groups such as ex-prisoners, the disabled, the elderly and retirees.