Budget 2019 Highlights

PETALING JAYA: Finance Minister Lim Guan Eng is tabling Budget 2019 in Parliament, the first federal budget by the Pakatan Harapan government.

The tabling of the Supply Bill (Budget) 2019 will commence before Dewan Rakyat Speaker Datuk Mohamad Ariff Md Yusof, and will be debated by the Members of Parliament at the policy level from Nov 12 to 15.

It will be followed by the minister's answer sessions before the debate at the committee level from Nov 26 to Dec 6.

The Budget 2019 carries the theme "Credible Malaysia, Dynamic Economy, Prosperous Rakyat".

It focuses on institutional reforms, the people's wellbeing and promotion of entrepreneurial culture to recapture Malaysia's "Economic Tiger" status. 

These are the highlights of Budget 2019, and we will continue to update this story:

* In his opening remarks on Friday (Nov 2), Lim said the government's real debt and liability as at June 2018 was at RM1,065bil, RM350bil higher than the amount by the previous Government.

*Government expects GDP to grow 4.9% in 2019 despite uncertainties in the global economy. 

*Government noticed the previous administration secretly paid RM7bil of 1MDB debt as at April 30, 2018.

*Government may need to pay as much as RM43.9bil to settle 1MDB debts.

*Government to table Fiscal Responsibility Act by 2021 to avoid uncontrolled spending.

* As at Oct 15, international reserves amounted to US$102.8bil or RM426bil, sufficient to cover 7.4 months of retained imports. The inflation rate remained low at 1.2% for the period January to September 2018. 

*Fiscal deficit in 2018 to reach 3.7%. The increase was due to expenditure commitment by the previous administration. 

* Pakatan administration committed to implement fiscal consolidation steps to reduce deficit to  3.4% of the GDP in 2019, 3% by 2020 and 2.8% in 2021.

* Government to establish Debt Management Office (Pejabat Pengurusan Hutang)  to review and check government debts and liability.

* For 2019, Federal Government's official debt as a percentage of GDP to reach 51.8% while total liability expected to lower to 73.5%.

* Government will continue the LRT3 project with a savings of 47% from the initial estimated cost of RM31.6bil to RM16.6bil.

* Government will be able to save RM15bil based on the announcement.

* The MRT2 will also continue with a savings of 22.4% from the initial estimated cost of RM39.3bil to RM30.5bil.

* The RM5.2bil Klang Valley Double Tracking Project will be re-tendered through open tender and is expected to provide substantial cost savings.

* Under the GST, 545 goods were zero-rated while under SST, almost 10 times more the items were exempted from SST.

* Based on preliminary studies by the Ministry of Domestic Trade and Consumer Affairs, 70% or 291 of the 417 products and services that have been inspected saw prices drop in September 2018.

* Government to create a Real Estate Investment Trust (REIT) for its airports. Through this initiative, the government is expected to rake in RM4bil, disposing 30% of the REIT equity.

* Government will introduce a credit system for sales tax deduction from January next year. The credit system will avoid double taxation and lower business costs.  

* 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 cut credit system for small manufacturers who purchase source materials from importers and not registered factories.  

* The Inland Revenue Board (LHDN)  to look into and investigate "extraordinary wealth" such as owning luxurious goods including jewellery, watches, handbags, luxury cars or real estates.

* 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.  

* Online services imported by users will also be required to register with the Customs Department from Jan 1, 2020. This includes software, music, videos, or any digital advertising.  

* The Government will launch a Special Voluntary Disclosure Programme, giving taxpayers an opportunity to voluntarily declare any unreported income.

* After successfully re-introducing SST, Customs Department will beef up enforcement on smuggling of cigarettes.  

* Government to impose levy for all passengers travelling overseas via air routes starting June 1, 2019, RM20 for passengers travelling to Asean countries and RM40 for other countries.

* For companies, non-citizens and non-PR holders, real property gains tax will be increased from 5% to 10%. For citizens and those with PR, real property gains tax will be increased form 0% to 5%. 

* Government hopes to get back at least RM1bil from efforts to combat smuggling and fraudulent activities that were previously unrecoverable.  

* Stamp duties for property transfers worth more than RM1mil will be raised by 1 percentage point from 3%  to 4%.  

* Casino licence will be increased from RM120mil to RM150mil annually; casino duty will be raised to 35% on gross income.

* In 2019, the Federal Government is expected to collect revenue of RM261.8bil, comprising a special dividend of RM30bil from Petronas.

* Government will subsidise RON 95 petrol for those with cars with the engine capacity of 1,500cc, and under, and those with motorcycles with engine capacity of 125cc and under.

* Subsidy will be RM0.30 per litre and capped at 100 litres a month for cars and 40 litres a month for motorcycles.

* Price of RON 95 will be floated after subsidy is put in place.

* Government will allocate RM10mil to work with NGOs and social enterprises to help underprivileged communities.

* Minimum wage to increase to RM1,100 nationwide starting Jan 1, 2019.

* Government will continue and improve the financial aid (Bantuan Sara Hidup)  to the B40 group by providing more targeted assistance.

* Households with monthly income of RM2,000 and below will receive RM1,000.

- Monthly income from RM2,001 to RM3,000 and below will receive a total of RM750; and

- Monthly income from RM3,001 to RM4,000 will receive a total of RM500.

* Government will introduce an additional aid (BSH) of RM120 for each child aged 18 years and below, to be limited to four persons, except disabled persons (OKU) with no age limit.

* It is estimated that 4.1 million households will continue to receive financial assistance from the government with a total allocation of RM5bil.

* Government to spend RM1.5bil on affordable housing. To help those earning no more than RM2,300, a fund will be set up byb Bank Negara for homes up to RM150,000 at interest rate of 3.5% through selected banks.  

* Monthly electricity subsidy will be given  to the poor and hardcore poor registered with the e-Kasih program, the subsidy rate is increased to RM40 per month and will benefit 185,000 accounts. An allocation of RM80 million will be provided.

* B40 National Health Protection Fund - Protection for four major critical illnesses up to RM8,000 and maximum 14 days of replacement income during hospital treatment at RM50 /day or equivalent to RM700 /year.

* From Jan 1, 2019, no tolls for motorcycles on the First and Second Penang Bridge and the Second Link in Johor.

* RM5.9bil allocation earmarked for Defence Ministry and Home Ministry.

* Labour laws to be reviewed to improve labour market, ensure workers' well-being and prevent discrimination by employers.

* Public transportation users can buy RM100 monthly passes for unlimited trips on RapidKL rail or bus services starting from January 2019.  There is also a RM50 monthly pass for those who only use RapidKL busses. This scheme will be expanded to other bus companies in stages.

* To encourage the hiring of those above the age of 60 who want to work, the government proposes that their mandatory EPF contributions be reduced from 6% to 4%.

- Lim says this group will also not have their income deducted for EPF contributions to increase the money available to them.

- There will also be tax incentives for companies that hire senior citizens, with a salary limit of RM4,000 a month.

* Government has allocated RM10mil annually to extend medical benefits to parents of contractual civil servants.  

* Contractual civil servants whose children have infectious diseases will be eligible for quarantine leave.  

* Government proposes a special payment of RM500 to all civil servants grade 54 and below. 

- A special payment of RM250 will also be given to government pensioners. 

- The amount of this special fee involves a cost of RM1bil.