Budget 2014: Strengthening Economic Resilience, Accelerating Transformation And Fulfilling Promises

Budget 2014 Malaysia was tabled by Prime Minister Datuk Seri Najib Razak in Parliament on 25 October 2013 from 4:00pm to 6:00pm.

The spotlight of this budget is on the implementation of GST with effective from 1 April 2015.

(Originally posted on 25 October & now updated on 10 November)

Budget 2014 Highlights & Summary

• Sales tax and service tax to be abolished, to be replaced by Goods and Services Tax (GST) effective April 1, 2015. 
• GST rate is fixed at 6 per cent.  (FAQ about GST) 
  
• The domestic economy is projected to grow at a stronger pace of between 5.0 per cent to 5.5 per cent.
• Special tax relief of RM2,000 for tax payers with monthly income of up to RM8,000 received in 2013.
•  Real Property Gains Tax increased to 30 per cent for properties disposed of within holding period of up to three years.
•  Sugar subsidy of RM0.34 will be abolished by 26 October 2013 (Saturday)
•  BR1M to households with a monthly income of below RM3,000 increased from RM500 to RM650; and for the first time, BR1M assistance of RM450 to be extended to households with monthly income of between RM3,000 and RM4,000.
•  BR1M increased from RM250 to RM300 for single individuals aged 21 and above and with a monthly income not exceeding RM2,000. 

• Corporate income tax rate to be reduced by 1 % from 25 % to 24 % in 2015.
• Income tax rate for SMEs to be reduced by 1 % from 20 % to 19 % from year of assessment 2016.
• Cooperative income tax rate to be reduced by 1% to 2 % from year of assessment 2015.
• Individual income tax rates to be reduced by 1% to 3% for all tax payers in 2015 onwards.
• Chargeable income subject to maximum rate to be increased from exceeding RM100,000 to exceeding RM400,000. *Current maximum tax rate at 26 % to be reduced to 24 %, 24.5 % and 25 %, started from 2015.
• Monthly Tax Deduction as Final Tax, effective from 2014 assessment year.
• 1,000 free treatment kits (costing RM19,000 per unit) allocated for dialysis patient.

•  The unemployment rate is estimated at 3.1 per cent while the inflation rate will remain low at between 2 per cent and 3 per cent.
• Goods exports are expected to grow 2.5 per cent due to improving external demand while on the supply side, the construction sector is expected to grow 9.6 per cent.
• The per capita income for 2014 is expected to reach RM34,126 compared with RM24,879 in 2009, an increase of 37 per cent over six years.
• Budget Malaysia 2014: It is even possible that Malaysia will achieve developed nation status much earlier than 2020.
• Public investment is estimated to reach RM106 billion.
• Projects to be implemented include 316-kilometre West Coast Expressway from Banting to Taiping as well as double-tracking projects from Ipoh to Padang Besar and later from Gemas to Johor Baharu.
• Projects undertaken by Petronas include Sabah Ammonia Urea Project in Sipitang; integrated oil and gas production development project, Kebabangan; regasification plant project, Lahad Datu; and RAPID, Pengerang.
• The Government allocates RM1.6 billion for development in the five regional corridors.
• Agropolitan project and oil palm-based industries to be implemented in Sabah Development Corridor, Samalaju Industrial Park and Halal hub in Sarawak Regional Corridor.
• Services Sector Blueprint to be launched next year.
• Logistics Sector Master Plan and National Aviation Policy to be formulated.
• RM3 billion in soft loans under the Maritime Development Fund through Bank Pembangunan Malaysia.
• To replace existing air traffic control and management system in Subang, a new air traffic management centre costing RM700 million will be built at KLIA.
• Kota Kinabalu, Sandakan, Miri, Sibu and Mukah airports to be upgraded with RM312 million allocation.
• Passenger terminals in Langkawi International Airport and Kuantan Airport to be upgraded.
• Second phase of HSBB project to be implemented in collaboration with private sector involving RM1.8 billion investment.
• Internet speed to be increased to 10 Mbps.
• To increase Internet coverage in rural areas, 1,000 telecommunications transmission towers to be built over next 3 years, with a RM1.5 billion investment.
• To increase Internet access in Sabah and Sarawak, new underwater cables will be laid within 3 years, at a cost of RM850 million.
• Bank Negara Malaysia to lead in formulating the Netting Act to protect enforcement rights of “close-out netting” under the financial contract.
• Budget Malaysia 2014: Environmental, Social and Governance Index (ESG) to be introduced.
• Securities Commission to introduce Framework of Socially Responsible Sukuk Instrument.
• To establish a SRI Fund to be invested in listed companies.
• National Entrepreneur Development Office to be established to plan and coordinate all activities related to entrepreneurship.
• RM50 million allocation for Malaysian Global Innovation and Creativity Centre (MaGIC).
• Committed 1Malaysia Entrepreneurs (1MeT) to be given further guidance at MaGIC.
• Government targets 5,000 young entrepreneurs to be trained yearly.
• Malaysia to host 5th Global Social Business Summit on Nov 7-9, 2013.
• RM50 million to reduce graduate unemployment under Graduate Entrepreneurship Fund to be managed by SME Bank.
• The Fund will provide soft loans of up to RM500,000 at interest rate of 4 per cent.
• RM120 million for an integrated package to increase innovation and productivity of SMEs.
• Some incentives under Green Lane Policy programme to be extended until Dec 31, 2017.
• Difference in minimum wages paid by employers for the period of Jan 1, 2014 to Dec 31, 2014 to be given further tax deduction.
• RM100 million to create Night Market Traders Entrepreneur Scheme under Bank Simpanan Nasional.
• Ministry of Health, Ministry of International Trade and Industry, and Ministry of Finance to undergo performance evaluation based on Outcome-Based Budgeting (OBB).
• To conduct audit on projects valued at more than RM100 million.
• To set up Implementation and Coordination Unit, with JPM to lead the initiative to avoid duplication in welfare assistance provision.
• Cost of purchasing ICT equipment and software is given Accelerated Capital Allowance until year of assessment 2016.
• Training grant of RM100 million to be provided to businesses that send employees for GST training in 2013 and 2014.
• Expenses incurred for training in accounting and ICT relating to GST to be given further tax deduction for years of assessment 2014 and 2015.
• Training grant of RM100 million to be provided to businesses that send employees for GST training in 2013 and 2014.
• RM150 million financial assistance for SMEs to purchase accounting software in 2014 and 2015.
• GST Monitoring Committee to be established and chaired by Second Minister of Finance Datuk Seri Ahmad Husni Hanadzlah to ensure smooth implementation of GST.
• RM2.9 billion allocated for Ipoh-Padang Besar double-tracking project and later extending to Johor Baharu as well as upgrading rail tracks nationwide.
• RM62 million for ‘park and ride’ facilities at LRT, KTM Komuter and ERL stations.
• RM15.3 million for Centralised Taxi Service System to ensure efficient mobilisation of taxi services.
• M28 million for building ‘last city terminals’, upgrading of bus stops and providing ‘drop-and-ride’ facilities.
• RM28 million for refurbishing Electric Multiple Unit trains to ensure frequency and efficiency of services.
• RM20 million for Rural Business Challenge programme.
• Bumiputera equity holdings and property ownership to be increased through Skim Jejak Jaya Bumiputera, Skim Amanah Saham Bumiputera 2 and strengthening of Bumiputera real estate institutions.
• SME Bank to establish Bumiputera Equity Fund with an allocation of RM300 million to provide loans to credible Bumiputera companies to take over listed companies or companies with potential to be listed on Bursa Malaysia.
• RM200 million loan facility by SME Bank for development programmes for Malay Reserve Lands in strategic areas.
•  Bumiputera Entrepreneurs Start-Up Scheme (SUPERB) to be set up with RM30 million initial fund.
• Expenses incurred by anchor companies, especially GLCs, to be given double tax deduction in order to enhance vendor development programmes.
• Soft loan facilities for SMEs from Amanah Ikhtiar Malaysia (RM300 million fund) and TEKUN (RM700 million fund).
•  RM50 million to be provided through Skim Pembiayaan Muda India (SPUMI) under TEKUN.
•  Loans also available for Malaysian Indian entrepreneurs through Amanah Ikhtiar Malaysia.
•  Minimum price of property that can be purchased by foreigners increased from RM500,000 to RM1 million.
•  223,000 units of affordable houses to be built by government and private sector in 2014.
•  RM578 million for National Housing Department (JPN) to build 16,473 Program Perumahan Rakyat housing units.  *RM146 million for JPN to build 600 units for Program Perumahan Rakyat Disewa and Perumahan Rakyat Bersepadu.
•  RM1 billion for PR1MA to provide 80,000 housing units at prices 20 per cent lower than market prices.
•  SPNB to build 15,122 units of affordable houses, 3,000 units of Rumah Idaman Rakyat and 8,000 units of Rumah Mesra Rakyat.
•  New category of Rumah Mesra Rakyat introduced with sales price from RM45,000 to RM65,000 and subsidy of RM15,000 to RM20,000 per unit.
•  Private Affordable Ownership Housing Scheme (MyHome) introduced with subsidy of RM30,000 to private developers for each unit built.
•  RM1 billion for Housing Facilitation Fund under Public Private Partnership Unit (UKAS).
•  National Housing Council to be set up to further strengthen real estate market and increase opportunities for rakyat to own houses.
•  RM331 million allocation to continue price uniformity programme and subsidies including transport costs in Sabah and Sarawak.
•  RM30 million to open 60 Kedai Rakyat 1Malaysia (KR1M) to help reduce prices of daily necessities.
•  RM82 million allocated to rehabilitate 20 abandoned housing projects involving 8,197 houses.
•  Proposed establishment of National Housing Council to further strengthen the real estate market and increase opportunities for the people to own houses.
•  Pensioners to receive special financial assistance of RM250.
•  A half-month bonus for 2013 with minimum payment of RM500 announced, to be paid in early January 2014.
•  Budget Malaysia 2014: Prime minister said irresponsible people won’t be allowed to take over the government; expressed hope that the Budget Malaysia 2014 will take Malaysia to greater heights and competitiveness in the international arena.