The revised Budget 2023, has received a positive response from corporate leaders, with many commending Prime Minister Dato’ Sri Anwar Ibrahim’s efforts to revitalise and “make a miracle” out of the Malaysian economy.
CIMB Group CEO Dato’ Abdul Rahman Ahmad said the bank is pleased to see the Malaysian government’s focus on driving sustainable economic growth through Malaysia MADANI Budget 2023. As Malaysia’s economy continues to recover, then prudent, targeted and inclusive approach taken provides an optimal balance in helping the people and businesses alike to navigate the ongoing uncertain environment.
He said: “In driving economic recovery, we are encouraged to see financing support for start-ups as well as SMEs. These include, among others, RM2 billion in financing to support sustainable technology startups and to help SMEs adopt low carbon practices, as well as RM1 billion to help SMEs automate business process and digitalise their operations.”
The focus on sustainability as well as digitalisation will strengthen the growth and resilience of SMEs, and ensure the economy is future-proofed, he said adding that this is also aligned with CIMB Group’s sustainability agenda and its aspiration to become a sustainability leader in Asean.
CIMB is also committed to continuing to support Malaysia’s position as a leader in the global sukuk market and pioneer in this space. According to Abdul Rahman, the bank welcomes the government’s focus on driving more active market participation as well as equitable distribution of wealth among the rakyat through value-based intermediation (VBI).
Mondelēz International also lauds the government’s “visionary approach to creating a new chapter for the nation”.
“We are heartened by the government’s plans to improve the rakyat’s livelihoods and address concerns about rising living costs. The allocation of RM64 billion in the form of subsidies, assistance and incentives including the fantastic multi-pronged Payung Rahmah initiative is expected to help encourages and provides more spending power to the people, allowing more Malaysians to spend on nutritious and high-quality food.
“This is encouraging for businesses like Mondelēz International as we continue to produce and supply snacks that are made the right way for the right moment. Snacking is increasingly replacing meals for many people today, with 55 percent saying they are more likely to eat a snack at all three standard mealtimes. With the government paving the way with the Payung Rahmah initiative, it is our commitment to keep our products affordable,” said Mondelēz managing director for Malaysia and Singapore, Narmeen Khan.
She said: “We are heartened by the emphasis on sustainability and green economy including boosting the development of environmentally friendly projects including supporting the carbon market and reforestation.
“Ultimately, we recognise urgent climate and sustainability issues cannot be addressed alone; only through collective effort between industry players, public sectors, key agencies, and the public can we achieve shared success as a nation. Guided by our purpose, we look forward to building strategic long-term approach through a more focused effort to cultivate the right mindset, way of work and behavioral change for all in Malaysia.
Hiredly founder and CEO Derek Toh, said he believes that the government is committed to advancing Malaysia’s job landscape, which will inherently contribute towards the country’s GDP.
“This can be seen through the various initiatives that the government has targeted towards the new generation of the workforce, and other minority groups. Now, the Social Security Organisation (Socso) will provide employers with incentives for hiring graduates, especially Technical and Vocational Education Training (TVET) graduates.
“This will help increase the chances for TVET graduates to enter the workforce, allowing them to polish their skills and continuously up-skilling themselves to match with industry trends and demand, which inherently contributes to the economy,” he said.
Key measures under the revised Budget 2023:
- Govt agencies to continue providing various financing facilities to MSMEs with a total value of up to RM40 billion
- To increase the minimum income of rubber smallholders, the government will raise the Rubber Production Incentive from RM2.50 to RM2.70 per kilogram with an allocation of RM350 million.
- Govt to review implementation of low-rate capital gains tax on disposal of private company shares from 2024
- Total individual investment limit of Amanah Saham Bumiputera and Amanah Saham Bumiputera 2 will be increased to RM300,000 from RM200,000
- Size of Amanah Saham Malaysia fund will be increased to about RM5 billion
- Govt agrees to give Aidilfitri Special Financial Assistance of up to RM700 to all civil servants Grade 56 and below, including those on contract, and RM350 to government retirees. Payment will be made in April 2023.
- Health Ministry receives second-largest allocation of RM36.3 billion, up from RM32.4 billion last year. Most of this will be used to buy medicine, reagents, vaccines and consumables, while RM3 billion will be set aside for new permanent positions and appointment of over 1,500 contract medical officers, contract dentists and contract pharmacists.
- Govt has agreed to help those aged 40-54 with EPF savings of less than RM10,000 in their Account 1, by providing an additional contribution of RM500 to their Account 1. The initiative will benefit nearly two million EPF members, with an allocation of nearly RM1 billion.
- Govt to give discount of up to 20% for three months on PTPTN loan repayment starting March 1.
- Govt also agreed to grant a postponement of repayment to borrowers with a monthly income of RM1,800 and below for a six-month period. Application for this postponement can be made from March 1.
- Education Ministry receives highest allocation of RM55.2 billion, up from RM52.6 billion in 2022.
- 3 billion for upgrading infrastructure and implementing the best learning facilities in all schools
- 3 billion allocation for Higher Education Ministry in 2023, up from RM14.5 billion in 2022
- RM436 million to repair infrastructure and replace obsolete equipment at public higher learning institutions
- RM35 million funding to enhance internet connectivity at higher learning institutions under the Malaysian Research and Education Network (MYREN)
- Govt allocates RM6.5 billion for developments in Sabah and RM5.6 billion for developments in Sarawak.
- This includes developing cities bordering Kalimantan, Indonesia, such as Kalabakan, Sabah and Ba’kelalan, Sarawak with a cost of RM1 billion.
- Separately, over RM2.5 billion is provided to implement projects mainly involving public infrastructure for the benefit of Sabah and Sarawak, road projects and street lights as well as water and electricity supply.
- Govt to review the MRT3 project, confident of achieving further savings and bringing down the price tag to under RM45 billion, from RM50 billion announced by the previous government.
- Govt to allocate RM18.5 billion to Home Ministry, with RM4.1 billion earmarked to maintain and procure military assets; to procure littoral mission ships this year
- Allocation of RM17.7 billion to Defence Ministry, with RM1 billion set aside to enhance domestic security, including acquiring 2,100 body cameras for police; new police headquarters and police quarters in Perak will be built at a cost of RM450 million.
- Govt is providing tax incentives and grants to encourage private sector investment in large-scale agriculture and improve advancement and use of technology. Elaun Modal Dipercepatkan and 100% income tax exemption on capital expenditure will be available, and the tax incentive application period for food production projects will be extended until end-2025, with an expanded scope to include modern agriculture projects.
- Khazanah Nasional and EPF to invest in innovative and high-growth local start-up companies with an investment value of RM1.5 billion.
- Individual income tax rate will be cut by 2% for the RM35,000 to RM100,000 taxable income range. This reduction is expected to provide approximately 2.4 million taxpayers with additional disposable income of up to RM1,300.
- Govt to give various subsidies and incentives amounting to RM1.6 billion to rice farmers. In addition, 240,000 rice farmers will receive RM200 cash per month for three months, or one season, for a total of RM228 million.
- Bernas to allocate 30% of net profit from rice imports towards farmers
- Tax deduction of up to RM1.5 million for firms that list on Bursa Malaysia’s ACE and LEAP Markets until assessment year 2025. Tax rebate is also extended to tech companies that list on the Main Market.
- Allocation of RM100 million under Digitization Grant Scheme for SMEs and small vendors to support business automation and digitization. Separately, there is a RM1 billion facility under Bank Negara Malaysia (BNM) aimed at incentivising SMEs to automate processes and digitalise operations.
- Govt to implement Inisiatif Pendapatan Rakyat (IPR) through the Economy Ministry with a RM750 million allocation in 2023, to empower the poor to increase their earning potential.
- To relieve road congestion at tourist hotspots, the govt will:
- Build a new road from Habu to Tanah Rata, Cameron Highlands, Pahang for RM480 million
- Upgrade Jalan Tun Hamzah up to the intersection of Semabok Lebuh AMJ Daerah Melaka Tengah at a cost of RM300 million
- Build a road and a bridge over Sungai Sepang to connect Bukit Pelandok, Port Dickson and Sungai Pelek, Sepang at a cost of RM160 million, and
- Build an overtaking lane on Senai Desaru Expressway and upgrade Lebuhraya Utara Selatan from Yong Peng Utara to Senai Utara — Phase 1, Johor from four to six lanes, in phases, at a cost of RM525 million.
- Govt to ensure Digital Nasional Bhd (DNB) is managed more transparently and inclusively to achieve full participation by telcos and provide comprehensive 5G coverage at a reasonable price for the people. At end-2022, DNB has reached 50% coverage of populated areas, and is targeted to reach 80% coverage by end-2023.
- Govt to accelerate implementation of JENDELA project as national effort to provide internet network facilities.
- For 2023, RM725 million provided to implement digital connectivity in 47 industrial areas and nearly 3,700 schools.
- Govt aims to enact Consumer Credit Act and set up consumer credit monitoring board to regulate companies providing consumer credit such as “Buy Now Pay Later” schemes this year.
- New management of govt agencies such as Tabung Haji, Felda and Felcra should study possibility of closing loss-making subsidiaries that are also not aligned with these agencies’ original functions, such as travel agencies, security companies, and IT firms. Govt mulls banning companies and statutory bodies from this practice.
- Govt to allocate RM80 million to improve sustainability of palm industry and intensify the fight against anti-palm oil campaign
- Govt amending Insolvency Act 1967 to enable bankruptcy cases to be discharged more quickly.
- The amendment, combined with immediate release of cases owing less than RM50,000 starting March 1, will allow 130,000 people to be released from bankruptcy status. This will benefit the Malays, who make up the majority of the 260,000 bankruptcy cases as of January, and will allow them to contribute to the national economy.
- Govt to provide RM50 million in matching grants to encourage automation of plantation sector through use of robotics and artificial intelligence
- All govt agencies, including LHDN, MACC and police, are actively investigating corruption, including those named in the Pandora Papers. LHDN will also continue investigating ‘unusual wealth’ to fight corruption rather than allow it to continue to fester.
- From 2024, shariah savings assets under EPF will be fully segregated to provide competitive returns to 1.25 million members holding shariah accounts.
- Allocation of RM1.2 billion to expedite repairs of 400 clinics and 380 schools that are dilapidated and raise quotation limit for procurement related to school and clinic repair services.
- Another RM1.5 billion is allocated to develop new rural roads and village link roads.
- Govt plans to strengthen development of Iskandar Malaysia in Johor via creation of a special financial zone and competitive remuneration package to attract international investors and skilled workers to settle in Malaysia
- For Malaysia’s electrical & electronics (E&E) and aerospace sectors, govt plans to:
- Extend tax incentives to manufacturing companies that transfer their operations to Malaysia as well as a 15% tax rate for C-suite executives until 2024 to attract investment from companies affected by Covid-19
- Extend income tax incentives as well as investment tax allowances to the aerospace sector until Dec 31, 2025 to encourage capacity expansion of existing companies and attract investment from new companies.
- RM6 billion strategic financing by Bank Pembangunan Malaysia to promote sustainable and automation agenda
- Expansion and improvement of airport capacity in Penang and Subang among efforts proposed by govt to encourage entry of investors, businesses and tourists.
- The proposed expansion will be led by Malaysian Airports Holdings Bhd and is expected to benefit economic growth at a much lower cost than the proposal to build a new airport in Kulim, which was at an estimated RM7 billion.
- The government will continue to encourage green business initiatives:
- BNM will provide financing of up to RM2 billion to support green technology start-ups and help SMEs implement low-carbon practices.
- Khazanah will provide RM150 million to environmentally friendly project development including supporting the carbon market and reforestation.
- In addition, the Green Technology Financing Scheme (GTFS) will be implemented with an increased allocation of RM3 billion until 2025.
- The government plans to extend the green incentive period for Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) schemes until Dec 31, 2025 for eligible green activities.
- Allocation for Ecological Fiscal Transfer for Biodiversity Conservation (EFT) to state governments will be increased to RM150 million a year from RM70 million previously
- Loan facility from BSN, BNM and TEKUN worth RM1.7 billion to help micro entrepreneurs, women and youth
- BSN will provide over RM1 billion with a focus on micro-entrepreneurs; TEKUN will provide RM330 million, including RM10 million to help youths from poor families; and the government has agreed to cover driving test fees for class B2 motorcycle licences, licences for taxis and buses, and ehailing licences
- For assessment year 2023, MSME tax rate on taxable income for first RM150,000 reduced to 15% from 17% — a saving of up to RM3,000 for 150,000 MSME taxpayers
- 1% dividend for Amanah Saham Bumiputera members with savings of less than RM30,000, to benefit 87% of members
- Govt to impose tax on luxury items such as watches, fashion products
- Excise duty to be imposed on vape and e-cigarettes
- Govt decides not to impose GST for now
- Govt committed to achieving sustainable fiscal deficit level in the medium term with a target of 3.2% of GDP by 2025
- Fiscal deficit is expected to shrink to 5% in 2023, from 5.6% in 2022
- Budget 2023’s allocation of RM388.1 billion comprises RM289.1 billion opex and RM99 billion development expenditure
- Inflation rate in 2022 stood at 3.3%, with high food inflation of 5.8%. Inflation in 2023 is expected to be the same as in 2022, but it will be higher if uncertainties in the global supply chain are not addressed.
- RM10 billion worth of diesel subsidies misappropriated due to leakages
- Govt expects total debt to reach RM1.2 trillion, or over 60% of GDP, in 2023
- Govt lost RM72 million due to weak import duty system
- Budget 2023 allocation revised upward to RM386.14 billion from RM372.3 billion budget in October 2022
