Prime Minister Najib Razak tabled Malaysia’s 2014 Budget last week, which aims to strengthen economic activity and fiscal management in the country, and boost excellence in human capital, to help move the country towards becoming a developed nation.
The Budget, themed “Strengthening Economic Resilience, Accelerating Transformation and Fulfilling Promises”, amounted to RM264.2 billion, with RM217.7 billion allocated for operating expenditure and RM46 billion for development.
As part of the Budget, Najib underlined five thrusts which are to be the basis of the Budget. On top of the economic, fiscal and human capital thrusts, this includes intensifying urban and rural development and ensuring the well-being of the people.
Najib said the global economy is expected to grow at 2.9% – a slower growth rate – and Malaysia would not be immune to the modest growth.
For 2013, Malaysia’s economy is expected to grow between 5% and 5.4%, due to private investments – increasing 16.2% to an estimated RM165 billion – and private and public consumption, which are expected to grow 7.4% and 7.3% respectively.
Next year, private investment is expected to increase further to RM189 billion or 17.9 per cent of GDP, particularly in the areas of oil and gas, textile industry, transport equipment and real estate development. Public investment is also estimated to reach RM106 billion.
When it comes to the unemployment rate, this is estimated at 3.1%, which the inflation rate will stay low as somewhere between 2% and 3%.
Per capita income for 2014 is expected to reach RM34,126, which is an increase of 37% over the last six years, which Najib said would boost Malaysia’s chance of achieving a developed nation status by 2020, and reaching the targeted per capita income of RM46,500.
“In short, we are on the right track to achieve the developed nation status much earlier than 2020. The government will also continue to provide a conducive environment to attract more domestic and foreign investment,” he said.
Other Budget 2014 highlights:
– Cash handouts to households with a monthly income of below RM3,000 will be increased to RM650 from RM500.
– For individuals aged 21 and above and with a monthly income not exceeding RM2,000, cash handouts will be increased to RM300 from RM250.
– For the first time, cash assistance of RM450 will be extended to households with a monthly income of between RM3,000 to RM4,000. Rising cost of living borne by the lower middle-income group.
– To implement all cash schemes, government will allocate RM4.6 billion, which is expected to benefit 7.9 million recipients.
Government proposes a special tax relief of RM2,000 be given to tax payers with a monthly income up to RM8,000 received in 2013.
– Government to give one-off cash assistance of RM300 to low income households
– Personal income tax rates will be reduced by 1 to 3 percentage points for all tax payers.
– Individual income tax structure will be reviewed
– Chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000.
– Current maximum tax rate at 26% to be reduced to 24%
– Measures to be effective in 2015