Prime Minister Najib Razak unveiled Malaysia' 2015 Budget in Parliament last week, which allocates a total of RM273.9 billion and will see both personal income and corporate tax cuts across the nation.
Individual income taxes will be reduced by 1% to 3% points next year, while families that earn less than RM4,000 per month will not have to pay income tax.
To help Malaysia's cope with the rising cost of living, Najib also announced the top rate of income tax will also be reduced by 1% to 2% points from 26% to between 24-25%, while the threshold for the top rate of income tax will increase from RM100,000 to RM400,000.
ALSO READ: Budget 2015: Live updates
A 'people oriented' economy
Najib said the Budget 2015 will balance between a focus on capital economy and the “people economy”.
“When we refer to the People’s Economy, it is an economy that is rakyat-orientated covering priorities and interests of the rakyat such as cost of living, household income, education opportunities, employment and business, quality of life, skills training, entrepreneurship as well as security and safety. In brief, it refers to an economy based on the daily lives of the rakyat which I call the People’s Economy.”
This movement included exempting thousands of items and services from the Goods and Service Tax (GST) which will be introduced in April. This includes various foods such as bread and fruit, but also things like medicine and newspapers. Additionally, GST will not be imposed on the retail sale of RON95 petrol, diesel and LPG.
Boosting entrepreneurship, human capital and women in the workplace
A large portion of Najib's Budget is allocated towards various new schemes and assisting programmes to help Malaysia boost its overall talent pool, make it easier for Malaysians to start their own business, and to ensure women are more likely to return to the workforce.
Among other schemes, the government has set a new target of achieving 30% of women in the workforce to be in decision-making positions. To do this, new training programmes to train women to become female directors of boards of government-led companies will be invested in.
“Presently, women represent only 38% of the total workforce in the country. To enhance the contribution of women in national development, the Government will continue to focus on efforts to intensify the involvement of women in the job market and entrepreneurial activities,” Najib said.
Najib also outlined human resources as a "key factor" contributing to Malaysia's prosperity.
By 202, Najib said at least 46% of jobs will require technical and vocational training qualification, while today there are still around 53,000 graduates who remain unemployed after six months of graduating.
RM56 billion is being allocated to the Ministry of Education for various new teaching and learning programmes. TalentCorp will also provide RM30 million for the Industry Academia Collaboration programme, where universities, Government entities and industries will collaborate to develop the curriculum for the internship programmes and industrial training.
In order to safeguard the welfare of workers, Najib announced a review of the Employment Act 1955 for "better terms and conditions of employment, appointment and dismissal, flexible working arrangements and termination benefits".