KUALA LUMPUR― The Pakatan Harapan (PH) administration intends to spend RM314.6 billion in its maiden Budget for 2019, or 8 per cent more than the revised RM290.4 billion for this year’s so-called “mother of all Budgets”.
Of this, RM259.9 billion or 82.6 per cent will go towards operating expenditure (opex) while the remaining RM54.7 billion will be spent on development expenditure (devex).
The top three ministries to benefit from the opex spending will be Education (RM55.1 billion), Health (RM26.5 billion), and Finance (RM23 billion).
Overall, most core ministries will have their opex allocations cut from 2018, except for Health, with the biggest drop reserved for Finance.
The reverse is true with devex, however, with most core ministries getting more except for Finance, Works, and the Prime Minister’s Department that will receive cuts.
Putrajaya will also raise emoluments to RM82 billion from RM81.3 billion this year, with two-thirds of this allocated to the Education and Health ministries to remunerate about 834,000 civil servants, mainly teachers, doctors and nurses.
However, subsidies are estimated to fall to RM22.3 billion from RM28.1 billion this year, as Putrajaya seeks to reintroduce the managed-float system for RON95 petrol and diesel.
RM5 billion has also been allocated for the restructuring of the rebranded BR1M direct cash aid, now dubbed the Living Aid Assistance, or BSH, benefiting 4.1 million recipients.
Putrajaya also reduced grants to statutory bodies by 6.5 per cent to RM13 billion ― due to a reduction in transfers to entities with high cash reserves ― to discourage reliance on such grants.
Instead, more than half of the grants will be directed to public universities and teaching hospitals.
In addition, RM7.6 billion will be provided as grants and transfers to state governments.
FROM MALAYSIAKINI:
Finance Minister Lim Guan Eng is tabling the Pakatan Harapan government’s inaugural budget in the Dewan Rakyat.
This is the first budget to be tabled by a new government since the nation’s independence in 1957 following BN’s defeat in the May 9 general election.
Previously, Lim said this will be a budget of sacrifice, but not one of austerity.
At a glance:
Total budget for 2019: RM314.55 billion (excludes RM2 billion contingency fund), up 10.25 percent.
Operational expenditure: RM259.85 billion, up 10.93 percent.
Development expenditure: RM54.7 billion, up 18.91 percent.
Projected deficit for 2019: 3.4 percent
Revised deficit for 2018: 3.7 percent, up from 2.8 percent projected by the BN administration for Budget 2018.
HIGHLIGHTS
- Financial aid for low-income group
- Casino license fees increases, special draws decreases
- Opposition chants ‘bungalow’
- Customs Department to scrutinise online services
- SST exemptions for some services
- Putrajaya will no longer pay IPIC and Aabar
- Deficit will drop in the future
Malaysiakini reports on the Budget speech live:
4.52pm: Lim says the government will top up RM40 per month to the EPF accounts of housewives, whose husbands make a minimum deposit of RM5 per month. RM45 million has been allocated for this.
Financial aid for low-income group
4.50pm: Starting Jan 1, 2019, households earning below RM2,000 will get RM1,000 in Bantuan Sara Hidup (BSH), the Harapan government’s version of BR1M.
Households earning between RM2,001 and RM3,000 will get RM700 in aid, while those earning between RM3,001 and RM4,000 will get RM500 in aid.
The government will also top-up RM120 in BSH for each child under 18, limited to four children, not including disabled children who have no age limit.
Lim gave an example, that a household earning below RM2,000, who have four kids, will receive RM1,480 in BSH, which is more than the RM1,200 given under BR1M.
The government has allocated RM5 billion for BSH.
Casino license fees increases, special draws decreases
4.50pm: Government announces that casino license fee has been increased from RM120 million to RM150 million. Casino duties also increased by up to 35% of the gross income.
For dealer machine licenses, the annual license fee is increased from RM10,00 to RM50,000. The duty fee, meanwhile, is increased from 20% to 30% of the gross income.
On top of that, the number of special draws has been reduced by 50%.
4.47pm: The government will commence a “special voluntary disclosure” programme for parties with previously undeclared incomes.
For declarations made from tomorrow until March 31, Lim says taxpayers will only have to pay a 10% penalty from the total undeclared income.
Declarations made from April 1 to June 30 will incur a 15% penalty, while those made after the programme ends on June 30 will be slapped with a penalty of between 80% to 300% as provided for under the law.
4.45pm: Real Property Gains Tax (RPGT) will be raised for locals from 0% to 5%. However, exceptions will be made for low-cost homes below RM200,000.
Lim says RPGT for companies and foreigners, who are not permanent residents, will be raised from 5% to 10%.
Stamp duty for properties exceeding RM1 million will be raised from 3% to 4%.
Opposition chants ‘bungalow’
4.42pm: Lim says the Inland Revenue Board will investigate all excessive wealth through ownership of luxury items such as jewellery, watches, handbags, expensive cars and properties.
BN lawmakers heckle the finance minister, asking him if bungalows will be investigated as well.
Customs Department to scrutinise online services
4.40pm: Starting Jan 1, 2019, the government will tax imported services to ensure that local service providers such as architects, graphic designers, software developers can compete more competitively.
Lim says online services imported by users will also be required to register with the Customs Department. This includes software, music, videos, or any digital advertising.
4.32pm: Lim says the government’s strategies to increase revenue will involve liquidation of its interest in non-strategic companies.
Another strategy is selling land through open tender under the public-private partnership scheme.
SST exemptions for some services
4.35pm: Effective Jan 1, 2019, the government will grant SST exemptions to specific services provided by registered businesses to other registered businesses.
The finance minister says the government will also introduce a tax credit system for small manufacturers who purchase source materials from importers and not registered factories.
Putrajaya will no longer pay IPIC and Aabar
4.30pm: The government and 1MDB will not pay the remaining US$4.32 billion debt to IPIC and Aabar but will instead demand the US$1.46 billion that had been paid to the company.
Lim says the government will also work with foreign governments to retrieve the money which belongs to 1MDB, which have been seized.
Harapan MPs thump their tables in support.
4.25pm: Lim says the government will create a Debt Management Office that will review and manage the government’s debts.
It will also monitor debts issued by the government, statutory bodies, and special purpose vehicles.
Deficit will drop in the future
4.21pm: For the next three years, Harapan aims to lower the fiscal deficit to 3.4% in 2019, 3% in 2020, and 2.8% by 2021.
4.20pm: Lim says the government’s budget deficit does not reflect the true deficit amount, as many expenses were off the balance sheet.
He says despite the government’s best efforts, it is not realistic to achieve a deficit of 2.8% for 2018.
As such, he adds that the fiscal deficit for 2018 is expected to hit 3.7%.
He blames the previous government for not making provisions to pay off RM1 billion in 1MDB debts; RM1.3 billion for the takeover of the Eastern Dispersal Link (EDL), RM1 billion for Prasrana; RM1.4 billion for rail projects under the Transport Ministry; and RM3.9 billion for GST refunds.
4.16pm: The government will table a Fiscal Responsibility Act by 2021 to prevent uncontrolled spending which creates mega debts.
Lim says the government will also table a Government Procurement Act next year to ensure transparency and open competition in procurement, while also introducing punitive punishments on abuse of power, negligence, and corruption.
‘Investors believe in Harapan’
4.15pm: The finance minister says the Malaysian ringgit is performing better than the Indian rupee, Indonesian rupiah, Filipino peso, China renminbi and Singaporean dollar.
Lim states that KLCI is doing better than the MSCI Emerging Market Index, Singapore, Hong Kong, South Korea, Philippines, Indonesia and Thailand.
“This shows that domestic and foreign investors are confident of the new Harapan government,” he adds.
4.08pm: BN lawmakers jeer when Lim starts his speech by thanking Malaysians for saving the nation from a kleptocratic government.
Referring to the previous BN-led administration, Lim says the rakyat showed courage in replacing the old government with a new, clean and democratic administration.
When opposition MPs respond with boos, Dewan Rakyat Speaker Mohamad Ariff Md Yusof tells them to calm down.
4.05pm: According to the economic outlook report, the Harapan government is set to boost spending with a total budget of RM314.55 billion, excluding an RM2 billion contingency fund.
This is higher than the RM282.3 billion tabled by the previous BN government in 2018.
However, the expansionary budget will also see a spike in the country’s deficit to 3.7%.
MALAY MAIL / MKINI
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