Here’s what the average Malaysian consumer should know, from employment incentives to housing initiatives.
The much-anticipated Belanjawan 2020 has finally been tabled by the Finance Minister, Lim Guan Eng on 11 October 2019. To those who followed, how do you feel about it? Well, we thought it was pretty decent – not as exciting as last year, of course.
It could be because of the allocation for Budget 2020 (RM297 billion) is lesser than Budget 2019’s RM314.5 billion. Having said that, there are quite a few incentives for various demographics of the rakyat. Most importantly, it has been made clear that the Goods and Services Tax (GST) will not be making a come back. So yay to that!
Let’s take a look at what are things that will affect you financially in 2020:
1. Lower toll rates beginning next year
Vehicle owners rejoice as there will be a minimum reduction of average toll charges by 18% discount across all PLUS highways starting 2020. According to Lim Guan Eng, the discount on toll charges for the North-South Highway will save highway users up to RM1.13bil in 2020.
Other than that, the introduction of the congestion charges will be lowered by up to 30% of the present toll rates during near peak and normal hours. During off-peak hours the toll rate is FREE. This will provide savings of nearly RM180 million per year to highway users.
Not forgetting, effective 1 January 2020, the toll rates for cars at the Second Penang Bridge will be reduced from RM8.50 to RM7.
2. Fuel subsidy programme (PSP) will begin in January
The RM2.2bil fuel Targeted Subsidy Programme (PSP) will be launched in Peninsular Malaysia with the following eligible categories:
A) PSP for one vehicle for individuals who own not more than two cars and two motorcycles.
- Qualifying criteria for cars: 1,600cc engine and below or 1,600cc and above which is more than 10 years old.
- Qualifying criteria for motorcycles: 150cc and below; if it is over 150cc, it must be at least 7 years old.
- Luxury vehicles are not qualified to receive PSP
B) For eligible recipients of the Bantuan Sara Hidup (BSH):
- Petrol subsidy is RM30 per month for car owners and RM12 per month for motorcycle owners.
- This subsidy will be in the form of cash transfer, deposited into the recipient’s bank account every 4 months.
- The first payment will be made in April 2020 for the period of January to April 2020.
C) For all other motorists who are not BSH recipients:
- To receive a special Kad95 which allows them to enjoy the fuel subsidy at a discount of 30 sen per litre limited to 100 litres per month for cars or 40 litres per month for motorcycles when purchasing RON95 at the petrol station.
- The Kad95 will be implemented progressively during the first quarter of 2020.
3. RON95 and diesel retail prices will be gradually floated
Upon commencement of the fuel subsidy scheme, RON95 and diesel retail prices will be gradually floated. Why, you ask? This is because the government want to reduce leakages and cross-border smuggling of subsidised fuel which is estimated to cost millions of ringgit.
But on the plus side – The usual fuel subsidy will kick-in whenever the RON95 market price determined by the Automatic Pricing Mechanism (APM) is above RM2.08 per litre. Meanwhile, motorists in Sabah and Sarawak will continue to enjoy a fuel price ceiling of RM2.08 per litre for RON95 and RM2.18 per litre for diesel.
4. Unemployed graduates will receive an incentive upon securing a job
In 2018, there were more than half a million unemployed Malaysians and at least 140,000 of them were graduates. Hence, under the #GraduanKerja initiative, the government will be doling out a wage incentive of RM500 per month, over 2 years to unemployed graduates (for more than 12 months) who gets a job. This sum will be credited into your KWSP account.
There’s also an incentive to employers who hires these graduates – RM300 per month for each new hire, for 2 years. A win-win situation, we say.
5. Rent To Own (RTO) housing scheme will be introduced to help homebuyers who can’t afford the initial 10% downpayment
This RTO scheme is for the purchase of first homes and properties priced up to RM500,000 only. How it works, basically is that you will be renting the property for up to 5 years. After the first year, you will have the option to purchase the house based on the price fixed when the tenancy agreement is signed.
On top of this, the government will provide stamp duty exemptions as well – where the exemptions are on the instruments of transfer between the developer and financial institution, and between financial institutions and the buyer.
6. Youth Housing Scheme extended to December 2021
Aside from RTO initiative, The government will also extend the Youth Housing Scheme (administered by Bank Simpanan Nasional) from 1 January 2020 until 31 December 2021. The scheme offers a 10% loan guarantee through Cagamas to enable borrowers of full financing and RM200 monthly instalment assistance for the first two years limited to 10,000 home units only.
7. Initiative to encourage the use of e-wallets
According to a survey report by Nielsen, the overall adoption of e-wallet remains low at only 8%. So, to promote e-wallet usage among Malaysians, the government will credit RM30 into the e-wallet of every Malaysian who is 18 years old and above.
The money will be credited on 1st January 2020 and will be valid for two months. All you need is to own an identity-verified e-wallet account with selected service providers (gahmen didn’t disclose which e-wallet yet). Take note this is not for everyone; you’ll need to earn less than RM100,000 a year to be eligible for this perk.
8. Women who return to work will receive an incentive & extended tax exemption
Are you a woman between the age of 30 and 50 who has stopped working for more than a year? Then, this is for you. Under the #WanitaKerja initiative, you will be given a salary incentive of RM500 a month for 2 years if you rejoin the workforce. The money will be credited into your EPF account. Employers also will receive a RM300 monthly incentive per month for 2 years for each hire.
On top of that, the current income tax exemption for women who return to work will be extended until 2023.
9. You will also get an incentive if you take over a foreign worker’s job
Have you complained that there are too many foreigners in our country and they are taking the rakyats’ jobs. Well, now you can take over their job and get extra monies for it. You just have to replace a foreign worker’s job and you will be given a monthly incentive of RM350 or RM500 for 2 years (depending on the sector).
Employers, on the other hand, will receive a monthly incentive of RM250 in the same time period. Take note that the incentives will be credited to your EPF account.
10. Digital service tax will come into effect soon
This is not something new, instead, this announcement was more of a reminder. As revealed in the previous budget, the Digital Service Tax will come into effect starting 1 January 2020. Those who subscribe to streaming services such as Spotify and Netflix be prepared to fork out some extra cash.
Other things that are affected include digital software and games distribution companies such as Steam, as well as digital advertising offered by Google.
11. The property acquisition base year for Real Property Gains Tax (RPGT) has been revised
There have been numerous complaints that the new RPGT rulings introduced this year was unfair for genuine homeowners and that it is actually a tax on inflation. Recognising this challenge and in response to the public feedback on the capital gains tax, the government will enhance RPGT treatment by revising the base year for property acquisition to January 1, 2013, for assets acquired before 1 January 2013 as compared to the previous base year of January 1, 2000. This means property sellers will now enjoy a lower tax payment upon disposal of their property.
12. Foreigners can now buy cheaper properties
Some of the locals might not be happy with this decision. But, to help curb the condominiums and apartments overhang, which amounted to RM8.3bil in Q2 2019, the government will lower the threshold on high rise property prices in urban areas (areas yet to be specified) for foreign ownership from RM1mil to RM600,000 in 2020. However, this only applies for unsold existing properties – projects that have yet to be launched will not qualify.
13. You can withdraw your EPF monies to get a professional cert
Have you been thinking about getting a professional certificate to upskill for career progression purposes? Then wait until next year. This is because EPF will expand the scope of its education withdrawal for qualifications attained at certificate level relating to the Fourth Industrial Revolution (IR4.0). Additionally, EPF is looking to expand this withdrawal to include members’ parents and spouses.
14. Parents who send their kids to TASKA will get additional tax relief
Besides creating more TASKAs to improve the working environment for women and parents in general, the government has another good boon for you parents out there. We all know that the cost of raising children is not cheap, hence to help ease this financial burden, parents who enrol their children in registered nurseries and kindergartens will get an additional individual tax relief for fees paid, which is from RM1,000 to RM2,000.
15. Single people will get more welfare assistance
If you are single, above 40 years and is earning less than RM2,000 a month, clap your hands. You will be eligible for the RM300 Bantuan Sara Hidup (BSH) aid. Moreover, disabled individuals aged 18 and above (with monthly salaries below RM2,000) will also be entitled to receive BSH payment of RM300, and qualify automatically as a recipient of the free MySalam Takaful scheme.
16. Housewives stand to benefit from i-Suri initiative
If you didn’t get the memo, housewives can now opt-in for the EPF contributions under the i-Suri initiative. Under this programme, husbands may voluntarily elect to contribute 2% of his 11% EPF employee contribution to their wife’s EPF Account. On top of that, the government will further extend the benefits under i-Suri via social safety coverage under SOCSO.
17. The minimum wage has been raised again!
To improve the livelihood of the lower-income groups, the government has increased the minimum wage to RM1,100 per month effective January 2019. Effective 2020, the minimum wage will be further increased to RM1,200. This will only apply to those who are living in major urban centres.
For the complete list of Budget 2020 announcements, check out: Key highlights of Budget 2020: Live updates
*This article was repurposed from “Budget 2020: 16 Things That Might Affect YOU, Financially“, first published on Loanstreet.com.my | Edited by Reena Kaur Bhatt