Malaysia 2009 Budget

What a day...Lets analysis the budget...
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The following are the salient points in Prime Minister Abdullah Ahmad Badawi’s 90-minute 2009 Budget speech. The 2009 Budget is Abdullah’s fifth since taking over as prime minister from Dr Mahathir Mohamad in October 2003. MCPX Gov't to spend record RM208 bil for 2009 The total expenditure was set at RM207.9 billion for 2009 compared to RM176.9 billion in 2008. Of this amount, RM154.2 billion is for operating expenditure, while RM53.7 billion is for development expenditure. In 2008, the operating expenditure was RM128.8 billion and RM48.1 billion for development expenditure. Budget deficit up The budget deficit is estimated to be 3.6 percent of GDP in 2009 and 4.8 percent of GDP in 2008. Abdullah had in the previous year’s budget speech forecast a deficit of 3.1 percent for 2008. Economic growth slowing GDP growth for 2009 is estimated at 5.4 percent and 5.7 percent for 2008. The most recent official forecast is for GDP growth in 2008 is 5 to 6 percent. Cut in income tax, more rebate Those earning below RM35,000 per annum will get rebate of RM400 compared to RM350 previously. Those earning between RM35,000 to RM50,000 per annum will get a one percentage point reduction in their marginal tax rate to 12 percent from 13 percent previously. Those in the highest bracket of RM250,000 per annum will get a similar reduction to 27 percent from 28 percent previously. Current tax exemption medical benefits to be extended to maternity expenses and traditional medicine, namely acupuncture and ayurvedic. Free electricity Those whose use less than RM20 of electricity per month will not be charged. One-month bonus for civil servants Government servants will get one-month bonus or at least RM1,000 to be paid in two installments - in September and December. Those from Sabah and Sarawak will get free airfares to go home every two years, beginning January 2009. Special allocations for Sabah, Sarawak Sabah to get an additional allocation of RM580 million for upgrading infrastructures, while Sarawak will get RM420 million. Hike in cigarette taxes Excise duty will rise by 3 sen per stick from 15 sen to 18 sen. There was no increase last year. Smokers will have to pay up to 60 sen extra for a 20-pack. Staff training incentives Firms can claim working capital allowance for upgrading their staff skills. 50% cut in toll charges for buses Toll charges for buses to cut by 50 percent for the next two years beginning Sept 15. However, not cut in tolls at border entry points- Johor Causeway, Second Link and Bukit Kayu Hitam. The government is to compensate toll operators RM45 million per year for this loss of revenue. To improve public transportation, the government has allocated RM35 billion in the next five years. Benefits for transport operators Government to provide RM3 billion in soft loans under public transportation fund to be administered by Bank Pembangunan to finance acquisiton of buses and rail assets. Government will also reduce toll charges for all buses for 2 years beginning 15 Sept 2008. Eligibility criteria for welfare help raised The eligibility criteria will be raised to RM720 per month of household income from RM400 previously for Peninsular Malaysia. The eligibility criteria will be raised to RM830 per month of household income for Sarawak and RM960 for Sabah. Low-income pensioners to get more Those who have serve for at least 25 years will get pension of at least RM720 permonth. Interest income exempted Interest income of 5 percent on fixed deposits with banks exceeding RM100,000 to be exempted. Import duties cut or removed Government to reduce import duties on various consumer durables from between 10 to 60 percent to between 5 and 30 percent. This includes blenders, rice cookers, electric kettles. Government to fully exempt import duty on several food item, i.e. vermicelli, biscuits, fruit juices, canned sweet corn. Diesel-engine vehicles to benefit Government to reduce road tax on private passenger vehicles with diesel engine to the same level as petrol engines. Incentives for food security From the RM5.6 billion provided under the National Food Security Policy for the 2008 to 2010 period, the government will in 2009 allocate RM300 million to increase fish landings and RM1 billion for padi farmers to increase production. Poultry farmers will also get incentive in the form of a reinvestment allowance of 60 percent for a period of 15 years for expansion of chicken and duck farms to increase poultry output. Funds for fertilisers and pesticides Allocation of RM475 million in the form of agricultural inputs, fertilisers and pesticides to assist padi farmers. Help for low-cost housing Allocation of RM330 million for 4,400 units of Program Perumahan Rakyat, 1,500 units of PPR Bersepadu and 600 units of PPR Dimiliki. In addition, Syarikat Perumahan Negara Bhd to build 33,000 low-cost houses. Stamp duties for home owners slashed Purchase of medium-cost houses up to RM250,000 to get 50 percent reduction in stamp duty on transfer document and loan agreement. More for public education Education Ministry to get RM31 billion allocation to benefit 5.8 million students, RM1.6 billion to finance additional posts created following the opening of 26 primary and 41 secondary schools and the additional expenditure for maintenance, food assistance, scholarship, per capita grant and new equipment. Government to build 110 new primary and 181 new secondary schools. Higher Education Ministry to get RM14.1 billion, of which RM8 billion is for operating expenditure of public institutions of higher learning, RM4.4 billion for development expenditure and RM627 million for polytechnics and community colleges. Additional sums for growth corridors To utilise RM6 billion out of the RM10 billion additional allocation from the mid-term review of the Ninth Malaysia Plan. Cheaper hybrid cars 100 percent importy duty and 50 percent excise duty on new hybrid CBU cars, with engine capacity below 2,000cc will be given to franchise importers. The exemption is for two years to prepare for the local assembly of such cars. Tax exemptions for Islamic capital markets Tax exemption to be given for three years on fees and profits earned by institutions undertaking activities relating to the arranging, underwriting, distributing, trading on non-ringgit sukuk. Police to get more funds Allocation of RM5.4 billion to enhance the Royal Malaysian Police. What’s not in 2009 Budget No lowering the Employee Provident Fund contribution. No hike in gambling taxes or alcohol duty. No increase in the number of food items under price control.