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Manpower and labour highlights: Malaysia Budget 2019

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On 2 November 2018, #Belanjawan2019 (Malaysia Budget 2019) was announced in Malaysian Parliament by Minister of Finance, Lim Guan Eng. Human Resources summarises the key HR and manpower developments and allocations delivered from the Budget speech.

A resurgent Malaysia, a dynamic economy, a prosperous society: this was the message communicated by by Minister Lim during Budget 2019 delivery, where he allocated a total of RM314.5 billion in expenditure as compared to an estimated RM290.4 billion in 2018.

From the total, RM259.8 billion is for operating expenditure while RM54.7 billion is provided for development expenditure. This does not take into consideration the contingency fund of RM2 billion.

Minister Lim provided the economy with three focus areas consisting of twelve key strategies to map out a path to restore the Malaysian economy as an “Asian tiger”. The three focus areas are:

  • To implement institutional reforms;
  • To ensure the socio-economic well-being of Malaysians; and,
  • To foster an entrepreneurial economy.

The key manpower and labour related highlights are listed out below:

Improving employment and employability

With an unemployment rate of only 3.4%, Malaysia is considered to be enjoying full employment. However, the government hopes to tackle the structural problems causing long-term unemployment especially among the youth through the following measures:

  • The Human Resource Development Fund (HRDF) will launch two new programmes, “Apprenticeship” and “Graduate Enhancement Programme for Employability” (GENERATE) to provide skills to school-leavers as well as to increase the marketability of graduates.
  • Policies will be introduced to encourage the employment of those past the retirement age of 60. It is proposed that the employer portion of EPF contributions be cut to 4% from the current 6% effective 1 January 2019.
  • To boost the disposable income of working retirees, it is also proposed that the current mandatory employee contribution for this group be zeroed. It is also proposed to provide additional tax deduction to employers who employ this group up to a monthly salary of RM4,000.
  • The Government will provide an additional tax deduction for companies who employ ex-convicts up to a monthly salary of RM4,000 each.
  • For Government pensioners who are receiving pensions of less than RM1,000 per month, the Government will provide a one-off RM500 assistance to the qualified recipients.
  • There are nearly 30,000 ‘contract of service’ officers who do not enjoy most of the benefits extended to the civil service. As such the Government will allocate RM10 million per annum to make available healthcare service for the parents of these ‘contract of service’ officers.
  • In addition, these officers may apply for ‘Quarantine Leave’ when their children suffer from infectious diseases commencing 12 November 2018.
  • The Government currently approves unrecorded leave for Muslim officers to perform their umrah for up to seven days for the entire duration of service. Given the 201,600 non-Muslims in the service, the Government has agreed to similarly allow for up to seven days of unrecorded leave for this demographic for the purposes of performing their religious pilgrimage and functions.
  • The minimum wage shall be raised to RM1,100 per month for the whole of Malaysia starting 1 January 2019.
  • To reduce wage disparity, regulations will be implemented requiring public-listed companies to publicly disclose key pay metrics each year in their annual report. This will include ‘the lowest wage paid’, ‘average wage per worker’, the ‘highest and lowest wage ratio’ as well as a statement by the company of how they intend to improve their employees’ average pay.
  • The Government will review labour laws to improve the labour market, workers welfare and ban discriminatory practices by employers. It will also expedite the resolution of industrial disputes between employers and employees by setting up Industrial Appeals Court.

Enhancing health and social welfare protection

  • To assist those who have lost their jobs, the Employment Insurance System (EIS) will be effective 1 January 2019. The Social Security Organisation (SOCSO) will compensate those who have lost their jobs, including employment-seeking and skills training allowance. The EIS would also provide advice and help these workers find new jobs at 54 SOCSO offices around the country.
  • In partnership with the private insurance industry, the Government will pilot a national B40 Health Protection Fund to provide free protection against top four critical illness for up to RM8,000 and up to 14 days of hospitalisation income cover at RM50 per day starting 1 January 2019. In other words, hospitalisation income of RM700 per annum is available.
  • The Government will be allocating nearly RM29 billion for Ministry of Health, an increase of 7.8% compared to the previous year. This includes an allocation of RM10.8 billion to provide medicine, to upgrade and improve the quality of health services at its clinics and hospitals.
  • To protect women’s health, RM20 million is being allocated to provide free mammogram screening, PVHPV vaccination as well as pap smear tests for 70,000 women.
  • The Ministry of Health has also set 2045 as the year to achieve its goal to be a “smoke-free Malaysia”. As such, the Ministry will expand the number of locations where smoking will be disallowed starting 1 January 2019.
  • To tackle overweight and obesity issues, the Government has decided to add ‘sugar sweetened beverages’ to the list of manufactured goods subject to excise duty in an effort to help address this issue. The duty proposed will be at RM0.40 per litre to be implemented on 1 April 2019:
    • For non-alcoholic beverages containing added sugars of more than 5gm per 100ml drink; and
    • For fruit or vegetable juice containing added sugars of more than 12gm per 100ml drink.

Education for a better future

The Education Ministry remains the single largest recipient of Budget allocation at RM60.2 billion or 19.1% of the total Budget 2019. The measures will include:

  • RM30 million will be introduced to the Training and Vocational Education and Training (TVET) Prestige Fund, a contestable fund where various training institutions will bid for funds to run competitive programmes with specific KPIs on job placements for the graduates. There will also be an allocation of RM20 million to raise youth competency via a TVET sponsored Bootcamp.
  • Research funds amounting to RM400 million allocated will be allocated to institutions of higher learning via a contestable fund.
  • The Government will allocate RM210 million as part of the Bumiputera Empowerment Agenda to strengthen education and human capital development programmes via Program Peneraju Tunas, Program Peneraju Skil, and Program Peneraju Profesional.

Accelerating adoption of Industry 4.0

The Industry 4.0 blueprint, titled “Industry4WRD” aims to make Malaysia the prime destination for high-tech industries. The Government will initiate the following measures to support Industry4WRD:

  • RM210 million will be allocated from 2019 to 2021 to support the transition and migration to Industry4.0. The first 500 SMEs will be assisted to carry out the Readiness Assessment to migrate to Industry4.0 platforms via Malaysia Productivity Corporation.
  • The Government will provide RM2 million in the Knowledge Resource for Science and Technology Excellence (KRSTE.my) to enable greater collaboration between public and private sector based on existing resources.
  • In 2019, the Government will make available 250 facilities and 1,200 scientific equipment and research data for the private sector to access and share. Moreover, it start a Researcher-Mapping programme to place at least 100 researchers at its research facilities with the private sector, with the cost borne by the Government.
  • To incentivise SMEs to invest in automation and modernisation, RM2 billion is allocated under Business Loan Guarantee Scheme (SJPP) where the Government will provide guarantees of up to 70%.
  • A RM3 billion Industry Digitalisation Transformation Fund will be created with a subsidised interest rate of 2% under Bank Pembangunan Malaysia, with the aim to accelerate the adoption of smart technology consisting of driving automation, robotics and artificial intelligence.
  • MIDA will continue to provide matching grants through its High Impact Fund (HIF) with a specific emphasis of Industry4.0 initiatives. This includes R&D, initiatives to obtain international certification, modernising facilities and tools, and licensing or purchase of new or high technology.
  • Khazanah will lead and develop an 80-acre development in Subang as a world class aerospace industry hub. Khazanah will also work with all relevant agencies, especially MARA to produce high-skilled workers to meet the demands of the industry.
  • The Government also intends to upgrade the marketability of graduates and the skill-level of the Industry4.0-related workforce by providing double tax deduction:
    • For scholarships and bursaries provided by companies to students enrolled for technical and vocational training, diploma and degree courses in engineering and technology;
    • For company expenses related to participation in the National Dual Training Scheme for Industry4.0 and other related programmes approved by the Ministry of Human Resources, or the Malaysia Investment Development Authority; and
    • For company expenses in structured training programmes for students in the fields of engineering and technology which are approved by the Ministry of Human Resources.

Women in the workforce

Malaysia’s current women participation rate in the labour force is only 53.5% in 2017 compared to 77.7% for men. Of the number who were not working, 60% or 2.6 million women cited housework as the reason why they did not join the labour force.

According to a report recently published by Khazanah Research Institute, raising women’s employment level by 30% would raise Malaysia’s GDP by around 7 to 12%. Hence, the Government is all set to formulate policies to encourage women to participate in the workforce:

  • RM10 million will be allocated to set up another 50 childcare facilities in Government buildings to ease the burden of working mothers. The private sector will continue to be encouraged and incentivised to follow suit to ensure equal employment opportunities for women.
  • The Government is committed towards increasing women participation to 30% at leadership and decision-making levels in companies. As of today, 36% of the senior officers in the public sector are women.
  • Higher women participation among the public listed companies will be encouraged, as only 23.2% of the appointed Board of Directors are women today among the top 100 largest companies on Bursa Malaysia. The Government calls upon the private sector to ensure the objective of 30% women participation in the Board of Directors is achieved by 2020.

ALSO READ: Malaysia’s DPM on meeting the 2030 target for 30% of women in workforce

Photo / Malaysia Budget live stream

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