KUALA LUMPUR, Oct 25 (Reuters) - Malaysian Prime Minister Najib Razak unveiled his governments budget for 2014 on Friday, seeking to address a large fiscal deficit, shrinking current account surplus and growing debt pile that are sources of concern for investors and ratings agencies. For a preview of the budget, click on For Malaysias economic reports, see Malaysias CPI hits 20-month high Following are highlights from Najibs ongoing speech to parliament: CIVIL SERVICE * Pensioners will receive a special financial assistance of 250 ringgit to assist them meet the rising cost of living. * Government to give a half-month bonus for 2013 with a minimum payment of RM500 to be paid in early January 2014. CASH HANDOUTS * Cash handouts to households with a monthly income of below 3,000 ringgit will be increased to 650 ringgit from 500 ringgit. * For individuals aged 21 and above and with a monthly income not exceeding 2,000 ringgit, cash handouts will be increased to 300 ringgit from 250 ringgit. * For the first time, cash assistance of 450 ringgit will be extended to households with a monthly income of between 3,000-4,000 ringgit. rising cost of living borne by the lower middle-income group. * To implement all cash schemes, government will allocate 4.6 billion ringgit which is expected to benefit 7.9 million recipients. REAL PROPERTY GAINS TAX * For gains on properties disposed within the holding period of up to 3 years, RPGT rate is increased to 30 percent. * For disposals within the holding period up to 4 and 5 years, the rates are increased to 20 percent and 15 percent, respectively. Malaysian property firms with exposure to this tax change include UEM Sunrise, Mah Sing Group and Tropicana Corp . * Raise the minimum price of property that can be purchased by foreigners to 1 million ringgit from 500,000 ringgit. * Prohibit developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS), to prevent developers from incorporating interest rates on loans in house prices during the construction period. * Financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme. Malaysias top three banks are Maybank, CIMB and Public Bank. AFFORDABLE HOMES * To further increase access to home ownership at affordable prices, an estimated 223,000 units of new houses will be built by the government and the private sector in 2014. - Companies that specialise in affordable housing development include Hua Yang Bhd. * Government to allocate 578 million ringgit to the National Housing Department (JPN) for low cost flats consisting of 16,473 housing units. * Malaysians government to provide 80,000 housing units with an allocation of 1 billion ringgit under affordable housing scheme. The sales price of the houses will be 20 percent lower than market prices. * Introduce the Private Affordable Ownership Housing Scheme (MyHome) to encourage the private sector to build more low and medium-cost houses. The scheme provides a subsidy of 30,000 ringgit to the private developers for each unit built. * Preference will be given to developers who build low and medium-cost houses in areas with high demand and limited to 10,000 units in 2014. * The scheme is for housing projects approved effective from 1 January 2014 with an allocation of 300 million ringgit. TAX RELIEF * Government proposes a special tax relief of 2,000 ringgit be given to tax payers with a monthly income up to 8,000 ringgit received in 2013. GOODS AND SALES TAX * To implement goods and services tax (GST) on April 1, 2015 - 17 months from now. * GST rate fixed at six percent, the lowest among ASEAN countries. * GST replaces current sales tax. * Basic food items, transportation services, highway tolls, water and first 200 units of electricity for domestic users per month to be exempt from GST. * Sale, purchase and rental of residential properties as well as selected financial services are exempted from GST. * PM Najib: The reality is that inflation now is low at around 2 percent. The government is confident this will be the best time to impose GST as inflation is minimal and under control. * Training grant of 100 million ringgit will be provided to businesses that send their employees for GST training in 2013 and 2014. * Financial assistance amounting to 150 million ringgit will be provided to small and medium enterprises for the purchase of accounting software in 2014 and 2015. CORPORATE TAX * corporate income tax rate be reduced by 1 percentage from 25 percent to 24 percent. * income tax rate for small and medium companies will be reduced by 1 percentage point from 20 percent to 19 percent from the year of assessment 2016. INCOME TAX * government to give one-off cash assistance of 300 ringgit to low income households * personal income tax rates 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 100,000 ringgit to exceeding 400,000 ringgit. * Current maximum tax rate at 26 percent to be reduced to 24 percent * measures to be effective in 2015 SUBSIDIES * Subsidy programme to be gradually restructured * A portion of savings from restructuring to be distributed in the form of direct cash assistance with the other half to finance development projects. * To abolish the sugar subsidy of 34 sen effective October 26 2013. IMPROVING BUDGET MANAGEMENT * committed to reducing the fiscal deficit gradually, with the aim of achieving a balanced budget by 2020. * to ensure federal debt level will remain low and not exceed 55 percent of GDP. * government to conduct audits on projects valued at more than 100 million ringgit during its implementation. ISLAMIC FINANCE - Securities Commission to introduce the a framework for Social Responsible Investment (SRI) Sukuk, or Islamic bonds, to finance sustainable and responsible investment initiatives. AGRICULTURE - Government to allocate six billion ringgit allocated for agriculture programmes. * Says to 243 million ringgit allocated for rubber, palm oil and cocoa replanting as well as forest plantation programmes. Main plantation companies in Malaysia include Sime Darby , IOI Corp and KL Kepong. LOGISTICS - Government to allocate 3 billion ringgit in soft loans under the Maritime Development Fund through Bank Pembangunan Malaysia. * The fund is to provide financing to encourage the development of the shipping industry, shipyard construction, oil and gas as well as maritime-related support activities. AVIATION - To replace existing air traffic control and management system in Subang, a new air traffic management centre costing 700 million ringgit will be built at Kuala Lumpur International Airport (KLIA). * Kota Kinabalu, Sandakan, Miri, Sibu and Mukah airports in Sabah and Sarawak to be upgraded with 312 million ringgit allocation. - Malaysia Airports manages and operates all airports across the country except for one in Johor. PUBLIC INVESTMENTS * Public investments to reach 106 billion ringgit. Projects to be implemented include: - A 316-kilometre West Coast Expressway. Locally listed Kumpulan Europlus Bhd owns 80 percent of the project, while IJM Corp owns the balance 20 percent. - Double-tracking rail project along west coast Malaysia. The project is carried out by as a joint venture between MMC Corp and Gamuda. - Various projects from state oil firm Petronas under its 300 billion ringgit capex programme, including a petrochemicals plant in southern Johor state. * INTERNET ACCESS - To carry out second phase of high-speed broadband project with the private sector involving 1.8 billion ringgit investment. State-linked telco Telekom Malaysia Bhd is involved in the project. - To increase Internet coverage in rural areas, 1,000 telecommunication transmission towers will be built in the next three years, with an investment of 1.5 billion ringgit. - To increase Internet access in Sabah and Sarawak, new underwater cables will be laid within three years at a cost of 850 million ringgit.
Posted on: Fri, 25 Oct 2013 13:14:06 +0000