Budget 2023 was retabled in the parliament today by Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister.
Here are the interesting key points to take note of.
1. It’s Malaysia’s highest allocation yet at RM388.1 billion
In the original Budget 2023, the allocation had been RM372.3 billion, meaning an addition of over RM10 billion has been allocated in this retabled version.
The education ministry gets the biggest chunk of RM55.2 billion. The Health Ministry receives the second-largest allocation of RM36.3 billion.
2. Luxury Goods Tax to be introduced
The government plans to introduce a Luxury Goods Tax this year on products such as luxury watches and clothing. There will be a certain value limit depending on the type of luxury goods.
3. Capital Gains Tax to be considered
The government will be conducting a study to introduce a low-rate capital gains tax for the disposal of unlisted shares by companies from 2024 onwards.
4. Taxes to be introduced on vapes and e-cigarettes
The government will impose an excise duty on liquid or gel products containing nicotine, including vapes and electronic cigarettes.
Half of the revenue from this tax will be allocated to the health ministry.
5. Lowered taxes for MSMEs
Taxes will be reduced from 17% to 15% on the first RM150,000 of revenue of MSMEs.
6. RM40 billion allocated for SME financing facilities
The government is setting aside RM40 billion worth of loan facilities and financing guarantees for SMEs.
RM1.7 billion will come from BNM, BSN, and TEKUN.
Out of this, RM300 million will be set aside for small businesses owned by women and the youth.
Nearly RM10 billion in loan funds will be provided by BNM, while Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) is set to guarantee up to RM20 billion in SME loans.
7. RM500 contribution to 40 to 54-year-olds with less than RM10,000 in EPF
The government will contribute RM500 for those aged 40 to 54 with EPF savings of less than RM10,000 in their Account 1.
The initiative will benefit nearly two million EPF members, bringing the total allocation to nearly RM1 billion.
8. Khazanah and EPF commit to invest RM1.5 billion in startups
Khazanah Nasional and EPF will invest in innovative and high-growth local startups with an investment value of RM1.5 billion.
9. Tun Razak Exchange (TRX) is officially Malaysia’s international financial hub
The government had mandated the Tun Razak Exchange (TRX) as our international financial hub.
This means TRX must work to become an attractive destination for high-quality foreign investment to strengthen Malaysia’s business ecosystem.
10. RM10 million to combat online scams
To combat the rise of online scams, the government will be allocating RM10 million to The National Scam Response Centre (NSRC).
According to the PM, 25,000 cases of such scams were recorded in 2022, which cost RM850 million.
BNM will also enforce the “kill switch” policy on all banking institutions. This will let users take immediate action to freeze their accounts.
11. Greentech startups to be provided loan funds of up to RM2 billion
To encourage sustainable practices, BNM will be providing sustainable tech startups loan funds of up to RM2 billion. This is also to help SMEs implement low-carbon practices.
The government is also allocating other funds to encourage sustainability. State governments will receive RM150 million under the Ecological Fiscal Transfer for Biodiversity Conservation.
Khazanah will provide RM150 million to boost the development of environmentally friendly projects as well, and the Green Technology Financing Scheme is said to be improved with an increased guaranteed value of RM3 billion until 2025.
12. Individual income tax rate lowered by 2% for the RM35,000 to RM100,000 taxable income range
Previously, this tax deduction was only applicable to those earning between RM50,001 to RM100,000.
13. RM725 million allocated for digital connectivity
RM725 million will be allocated for digital connectivity in 47 industrial areas and over 3,700 schools, accelerating the implementation of the Jendela digital infrastructure project.
In the original tabling, only RM700 million was allocated for this.
The government also promises comprehensive 5G coverage at a reasonable price.
14. Gig workers to receive a monthly allowance of RM300
SOCSO will provide an allowance of RM300 for three months. This is to supplement the income of gig workers who are undergoing a training programme.
15. Special PDRM unit will be set up to combat child pornography
A special unit under the Sexual, Women and Child Investigations Division (D11) will be set up to counter child pornographic activities.
RM8 million will be allocated to One-Stop Social Support Centres (Pusat Sokongan Sosial Setempat) to strengthen their role as an early intervention against mental health and domestic violence issues.
The Women, Family and Community Development Ministry will also set up a Child Development Department under the Social Welfare Department. This will give more comprehensive support to children.
16. RM1.2 billion allocated to expedite the repair of schools and clinics
The government is putting aside RM1.2 billion to fix dilapidated schools and clinics nationwide.
RM2.3 billion will be allocated for upgrading infrastructure and implementing improved learning facilities in all schools.
RM436 million will also be allocated to repair infrastructure and replace obsolete equipment at public higher learning institutions.
Furthermore, the government plans to extend the period of the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) until December 31, 2025.
17. Flood mitigation and Jana Wibawa projects awarded to be re-tendered
Originally awarded through direct negotiations, flood mitigation projects worth RM15 billion and Jana Wibawa projects worth RM7 billion had been scrapped.
Jana Wibawa refers to the Program Jana Ekonomi Pemerkasaan Kontraktor Bumiputera Berwibawa, an initiative implemented by the government under the leadership of the former Prime Minister, Tan Sri Muhyiddin Yassin.
Bersatu’s Head of Information, Datuk Wan Saiful Wan Jan, was charged on February 21 with two charges of corruption in relation to this initiative.
The PM said the government is expected to save RM3 billion by re-tendering these projects. Six flood mitigation projects will be re-tendered immediately, the latest by June 2023.
18. RM6.5 billion for developments in Sabah, RM5.6 billion for Sarawak
In addition to the above, over RM2.5 billion will be provided to implement projects mainly involving public infrastructure for the benefit of Sabah and Sarawak.
19. MRT3 project costs will be revised to RM45 billion estimate
The Mass Rapid Transit Line 3 project was estimated to cost RM68 billion in 2018, which was when it was first announced, but was lowered to RM50 billion last year.
Now, the estimate is further lowered to RM45 billion.
20. SOCSO will amend act to encourage mothers to return to work
SOCSO will amend its act to allow the disbursement of a grant equivalent to 80% of the insured salary value of workers. This is to encourage women to get back into the workforce after long maternity or parental leave.
An estimated 130,000 women returning to work after giving birth will benefit from this grant, which will involve a total of RM290 million per year.
21. Cash aid of up to RM2,500 for B40 group
Members of the B40 community with a household income of less than RM2,500 are eligible for Rahmah cash aid of up to RM2,500 depending on the number of children. This is the same amount as the original Budget 2023.
Furthermore, food baskets and vouchers for staple food items worth RM600 will be extended to Rahmah cash aid recipients who are registered in the eKasih system.
- Read more of our Budget 2023 coverage here.
Featured Image Credit: Datuk Seri Anwar Ibrahim