The theme of the budget 2017: Accelerating growth, ensuring fiscal prudence, enhancing well-being of the Rakyat.
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| Prime Minister Najib presenting Budget 2017 last Friday |
Here's a quick look on what Budget 2017 has to offer:
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| Operating Expenditure: RM214.8bil, Development Expenditure: RM46 bil |
RM260.8 billion has been allocated for expenditure, representing an increase of 3.4% from previous year. According to some economists, the higher allocation for expenditure will help to drive the economy in 2017.
From the breakdown, we could see that RM214.8 billion is for operating expenditure (82%) as compared to only RM46 billion for development expenditure (18%).
This continues to be the weakness according to reports, as the leakages from budget allocation could be reduced further.
Here are some of the forecasts for the economic growth in 2017, with a fiscal deficit target of 3.0% and 4 to 5% of GDP growth, assuming that the revenue is RM219.7 billion.
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| Forecast of Malaysia economy in 2017 |
OPERATING EXPENDITURE
Here's a quick look on the operating expenditure of RM214.8 billion.
- Fixed charges & Grants - RM103.9 billion
- Emoluments - RM77.4 billion
- Supplies & Services - RM32 billion
- Others - RM816.6 million
- Purchase of assets - RM691 million
DEVELOPMENT EXPENDITURE
Here's a quick look on the development expenditure of RM46 billion.
- Economic sector - RM25.9 billion
- Social sector - RM12.2 billion
- Security sector - RM5.3 billion
- General admin - RM2.5 billion
- Contingencies - RM2 billion
A MILD EXPANSIONARY BUDGET WITH SOME SURPRISES AHEAD OF ELECTION
Accelerating economic growth
- Lower corporate tax rate. Reduce tax rate between 1 and 4 percentage points for companies with significant increase in taxable income for year of assessment 2017 and 2018.
- Lower tax rates for SMEs. Reduce tax rate from 19% to 18% for SMEs with taxable income up to first RM500,000.
- Extend double taxation promotion on operating expenditure borne by anchor companies for the Vendor Development Programme until 31 December 2020.
- Promote tourism with allocation of RM400 million for initiatives.
- E-Visa to be extended to Balkan region and South Asia to help achieve target of 32 million tourist arrivals in 2017.
- Allocation of RM1.2 billion for building village roads and RM4.5 billion allocated to maintain state roads.
- RM5k grant to taxi drivers to buy new vehicles.
- Promote tourism with allocation of RM400 million for initiatives such as ecotourism measures and extension of investment tax allowance for new 4 & 5 start hotels.
- Broadband prices to decline by up to 50% within the next 2 years.
- Malaysian Communications and Multimedia Commission (MCMC) will provide RM1 billion to ensure the coverage and quality of broadband nationwide reaches up to 20 megabytes per second.
- New East Coast Rail Line project costing RM55 billion to be implemented. Pan Borneo Highway project to be accelerated.
- Allocation of RM100 million to restore East Coast railway line along Gua Musang – Tumpat that was destroyed during flood.
- Increase trip frequency of ETS for JB-Padang Besar route, RM1.1 billion allocation to buy more train sets up to 2019.
- For ride-sharing drivers who don't own car, down payment can be made using BR1M, rebate RM4k to buy Proton Iriz.
- Export promotion programmes to local SMEs by MATRADE, MIDA and SME Corp with allocation of RM130 million.
- Allocation RM400 million will be allocated, among others for clean air and ecotourism initiatives.
- Allocation RM800 million for upgrading community projects, bridges, drainages, markets - with priority for local G1 and G2 contractors.
- Allocation RM495 million for flood mitigation projects.
- Allocation RM732 million for supply clean water targeting 5,200 houses.
- Introduction of Digital Free Zone, and MDEC allocated RM162 million to implement e-commerce digital programs.
- Reconstruciton of Sandakan Power Station Project.
- Allocation of RM200 million from Working Capital Guarantee Scheme fund for startups.
- Boost export-oriented SMEs, provision 2% rebate on interest rates charged to SME borrowers under SJPP scheme. Rebate limited to accumulated funding of RM1 billion.
- Allocation RM522 million for MIDA to promote investments in chemicals, electrical and electronics, and R&D activities.
- Launch of new series discourse branded 2050 National Transformation (TN50) to span three decades to form calibre nation state. Aimed to kick-start yound diverse geenration of all races through national discourse.
- Government Linked Companies to allocate RM3 billion fund to invest in Small-Mid cap stocks.
- Capital Market Research Institute will set up Capital Market Development Fund with initial funding of RM75 million.
- Income tax exemption for entities carrying out Islamic Banking and Takaful Business through the International Currency Business Unit (ICBU) in foreign currencies and stamp duty exemption on instruments of such activities extended to YA 2020.
- Higher BR1M cash aid of 12.5%-20% with allocation of RM6.8 billion to benefit 7 million recipients.
- Lifestyle tax relief up to RM2.5k yearly effective in 2017. Tax relief to be provided for purchase of reading materials, computers, sports equipment, smartphones, tablets, internet subscription and gym memberships.
- Broadband prices to decline by up to 50% within the next 2 years.
- No GST rate hike for 2017.
- Public servants to receive a special assistance payment of RM500 and special RM250 payment for retirees in early 2017.
- Allocation RM1.3vbillion for food production at competitive price. Encouraging development of dairy industry to reduce dependence on imported animal feed.
- Introduce Social Security Organisation (SOCSO) for taxi drivers with income up to RM3k with grant of RM60 million.
- School assistance totalling RM3.1 billion for meals, books, funds for improvement and maintenance of schools. Allocated RM7.4 billion for 20 public universities.
- Discounts and incentives to encourage payment of PTPTN loans between Oct 2016 to Dec 2017.
- Allocation RM424 million to assist senior citizens with RM300 monthly living allowance and pocket money. To benefit 120,000 senior citizens. Eight senior citizen centres to be established.
- Book vouchers replaced with student debt cards worth RM250 for purchase of books, computer accessories and internet access to benefit 1.3 million students.
- Allocation RM4.3 billion for scholarships in 2017 through various ministries.
- Allocation RM40 million to reintroduce grant to registered Residence Association for improving security and maintenance.
- Allocation RM12 billion building of police headquarters, procurement of vehicles and equipment. Create Sea Basing in East Coast Sabah and deployment of helicopter squadrons.
- One-off increase of the existing RM500 incentive to RM1k to PRS contributors to encourage youth savings Minimum accumulated investment of RM1,000 during the two years. Allocation of RM165 million will be provided.
- Civil servant housing loans limit to increase to RM750k.
- Build more units of 1Malaysia Civil Servans Housing (PPA1M) with selling price 20% below market prices.
- Allocation of government land to build 30k homes worth RM150k-300k.
- Build 10,000 houses in urban areas for rental to eligible youths with permanent job, rental up to 5yrs, below market rate.
- Easy financing scheme to provide 90-100% financing for affordable housing (PR1MA) with lower loan rejection rate in collaboration with Maybank, CIMB, Ambank, RHB, EPF and BNM to be implemented on Jan 2017. Scheme will be limited to first time housebuyers for house purchase below RM300k.
- Stamp duty exemption of 100% from 50% for first time home buyers for home purchases valued up to RM300k from Jan-17 to Dec-18
- People Centric projects continued through Private Finance Initiative with allocation of RM 10 billion.
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