Budget 2023: Key highlights and list of incentives

The revised Budget 2023 was tabled by our Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim at 4 pm on February 24, 2023. Budget 2023 is themed “Membangun Malaysia Madani” (Developing a Civil Malaysia). The 2023 Budget has to be re-tabled because the previous budget iteration announced by the old government was not approved before the Parliament was dissolved on October 10 last year.

Budget 2023 will focus on addressing the high cost of living, further strengthening the social safety net and enhancing the micro, small and medium enterprises (MSMEs) eco-system.

Budget 2023: Malaysia Madani (Developing a Civil Malaysia)

The Malaysia Madani – or Civil Malaysia – slogan conceptualised by Prime Minister Datuk Seri Anwar Ibrahim, earlier this year is about reforming Malaysia into a country that believes in humanity and good values such as fair, just and effective governance. The Madani word is actually an acronym made up of six core values – sustainability, prosperity, innovation, respect, trust and compassion.

The Madani concept is part of a strategic framework that was comprehensive and could respond to changes after the pandemic. Datuk Seri Anwar opines that growth and development must be attained through a larger context of the humane economy that prioritises the needs of the people.

Budget 2023 allocations

• Budget 2023 is revised upward to RM386.14 billion from the previous RM372.3 billion, making it the largest allocation in Malaysia’s history.
• Of the allocation for Budget 2023, 74.8% will be utilised for operating expenditure while the remaining 25.2% is for development expenditure.

Economic growth and fiscal targets

• Malaysia’s gross domestic product or GDP is poised to record a growth of approximately 4.5% in 2023, backed by the nation’s sound macroeconomic fundamentals, robust domestic demand coupled with the effective implementation of the 12th Malaysia Plan (12MP).
• The fiscal deficit is expected to consolidate further to 5.0% of GDP, to -RM93.94 billion from -RM99.48 billion in 2022.

Budget 2023 Highlights

Here is the list of incentives under the recalibrated Budget 2023:

Housing

• To further encourage homeownership, the government will provide stamp duty exemption for first-time homebuyers:
  1. full exemption of stamp duty for those who are buying a home worth RM500,000 and below until 2025
  2. 75% exemption for houses worth more than RM500,000 and up to RM1 million until 31 December 2023
• For the transfer of property by way of love and affection between parents and children, grandparents and grandchildren – Stamp duty on the instruments of transfer of property is fully exempted, limited to the first RM1 million of the property’s value. The remaining balance of the property’s value is subject to the existing stamp duty tier and a 50% remission is provided on the stamp duty imposed. This exemption applies for instruments of transfers executed from 1 April 2023 and is only applicable for Malaysian citizens.
• In 2023, the Housing Credit Guarantee Scheme (HCGS) will be ready to guarantee home financing up to RM5 billion and this is expected to benefit 20,000 borrowers in need.
• Several new People’s Housing Projects (PPR) are being implemented involving an allocation of RM367 million, which is expected to provide a home for 12,400 rakyat.
• RM358 million has been set aside for the Rumah Mesra Rakyat programme under Syarikat Perumahan Negara Berhad (SPNB) to construct 4,250 units of affordable houses.
• The Ministry of Local Government Development has allocated RM50 million to ensure PPRs are a safe place to live with the priority to replace dilapidated elevators. To expedite the procurement process, the quotation limit for the procurement of maintenance and repair works of elevators has been increased to RM1.2 million from RM500,000.
• The government will also provide free internet access at 56 selected PPRs for the benefit of the local community.
• A total of 30 million ringgit will be provided to increase the habitability of public housing in Kuala Lumpur.
• Only 12% of wakaf land has been developed so far. The government will increase efforts to unlock the value of wakaf assets.

READ: SJKP: Cara memohon Skim Jaminan Kredit Perumahan dan syarat kelayakan

Cash aid

• RM64 billion for subsidies, aids and incentives to minimise the cost of living, through price control, cash aids and services for the needy.
• Households with a combined income of less than RM2,500 will obtain up to RM2,500 under the Rahmah cash aid initiative (the amount will depend on the number of children).
• Those in the e-Kasih database under the Women, Family, and Community Development Ministry will receive another RM600 in the form of food baskets or vouchers.
• Two million youths (18 to 20 years old) will be eligible for the “e-Tunai Belia Rahmah” scheme – amounting to RM200 per individual.
• RM700 Aidilfitri assistance for all civil servants grade 56 and below, including contract workers. Pensioners will also get RM350 in special aid.

Tax

• 2% reduction on income tax for those earning in the RM35,000 to 100,000 bracket.
• Income tax for those with an annual income between RM100,000 to RM1 million is increased between 0.5% and 2%. Less than 150,000 people are expected to be affected.
• Beginning 2023, tax relief for medical expenditure has been increased to RM10,000, up from RM8,000 previously.
• The government plans to implement a luxury tax this year for high-priced items such as luxury goods.
• The government will study the introduction of a capital gains tax (at a low rate) – for the disposal of unlisted shares by companies from 2024.
• The gov is also supporting a proposal for excise duty on vapes, gels, and nicotine-based liquids used in e-cigarettes.
• The Inland Revenue Board (IRB) and Customs Department will implement a programme for self-declaration of unpaid tax, where a 100% penalty waiver will be granted between June 1, 2023 and December 31, 2024.
• The taxable income for small and medium-sized enterprises and micro businesses for the first RM150,000 will be reduced from 17% to 15% for YA2023.

Infrastructure and Public Transport

• The Penang International Airport and Subang Airport will be expanded and upgraded by MAHB.
• Government to expedite completion of the Pan Borneo Highway.
• The Tun Razak Exchange will become the country’s international financial hub.
• RM2.7 billion is allocated for the maintenance of federal roads
• RM300 million for G1 to G4 contractors doing minor maintenance works
• RM1.5 billion for upgrading and building new roads in rural areas.
• RM50 million ringgit will be allocated for street lighting in accident-prone road stretches.
• RM100,000 allocated to each district for pothole repairs.
• Government to review the details of the Mass Rapid Transit Line 3 (MRT3) project to ensure savings can be redistributed for the benefit of the rakyat.
• Prasarana will launch a MyBAS50 Unlimited Travel Pass in Johor Baru, benefiting those who commute using the domestic bus services under the Stage Bus Service Transformation (SBST) programme.
• RM150 million will be allocated to expand the implementation of the SBST programme to Melaka, Kuching and Kota Kinabalu.
• The government will continue the My50 monthly public transport pass benefiting 180,000 people.
• The government has agreed to pay for driving tests for motorcycle B2, taxi, bus, and e-hailing licences.

READ: Residential projects close to MRT Putrajaya Line Phase 1

Flood mitigation and natural disaster prevention

• Previously, under the old Budget 2023, – RM15 billion was allocated for flood mitigation plans until 2030, with RM700 million allocated for 2023 alone. Datuk Seri Anwar has announced that the government could have saved RM2 billion from the RM15 billion previously allocated for flood mitigation – had the projects been awarded by tender. Six flood mitigation projects will be re-tendered by June to avoid wastage – in Johor, Klang, and Kelantan.
• RM150mil will be allocated to the National Disaster Management Agency (Nadma) to procure assets, improve warning systems and dissemination of aid to people.

Job Opportunities

• Technical and vocational education and training (TVET) will be improved by having major industry players provide jobs for TVET graduates at decent wages, to ensure they receive a salary of more than RM2,000.
• Socso obtains an RM45 million allocation to incentivise private sector employers with RM600 per month to hire 17,000 TVET graduates for 3 months. Socso will also incentivise employers to hire disabled people, ex-convicts, the homeless, and the chronically unemployed.
• Socso will offer 30,000 existing gig workers an RM4,000 subsidy for training programmes and while undergoing training, these gig workers will be able to claim RM300 a month as compensation for lost income.
• GLCs such as Khazanah Nasional Bhd and funds such as the Employees Provident Fund (EPF) will allocate RM1.5 billion to invest in local start-ups.
• Malaysia Co-Investment Fund (MyCIF) will allocate RM40 million in funding for start-ups.
• The creative industry will receive RM102 million under the Digital Content Fund (DKD) to help market local works and to produce more fresh and artistic products.

Finance and Loans

• The government will amend the Insolvency Act 1967 so that bankruptcy cases can be released automatically in a short time. The government aims to release 130,000 people from bankruptcy with the passing of the amendment. Small bankruptcy cases that owe less than RM50,000 and meet the conditions will be released immediately starting March 1.
• Government agencies will continue to provide loan facilities and financing guarantees up to RM40 billion, of which RM1.7 billion will be disbursed by Bank Negara (BNM), Bank Simpanan Nasional (BSN), and Tekun.
• To curb online scams, BNM will introduce a “kill-switch” policy for all banking institutions. Account holders can immediately freeze their accounts and ATM cards if they detect suspicious activity.

Employees Provident Fund (EPF) and ASB

• More ASB dividend distribution to the people who need it.
• The total individual investment limit of Amanah Saham Bumiputera (ASB) and Amanah Saham Bumiputera 2 (ASB2) will be increased to RM300,000 thousand compared to RM200,000 before this. The size of Amanah Saham Malaysia (ASM) fund will also be increased by 5 billion ringgit.
• Starting 2024, shariah savings in EPF will be segregated and no longer invested with conventional savings.
• For EPF members aged 40 to 54 with savings of less than RM10,000 in their Akaun 1, the gov will add an RM500 contribution to their Akaun 1. An allocation of almost RM1 billion will be provided and this programme is set to benefit almost two million EPF members

Women

• To encourage women to return to work, Socso will amend its act to enable grants matching 80% of the insured salary value. It is estimated that more than 130,000 women returning to work after giving birth will benefit from this grant (a total allocation of RM290 million annually).

Family

• For civil servants, a subsidy of RM180 a month for preschool fees will be given to households earning under RM7,000 a month.
• RM120 million is allocated for Skim Perubatan Madani to help the poor access health services.
• A special unit in the police force will be established to combat child pornography.
• Tax incentives for employers who provide childcare will be extended.
• The government will upgrade 26 hospitals.

Food Security

• RM1 billion in loans to help improve local food production.
• RM228 million to give rice farmers cash aid of RM600
• RM1.6 billion in subsidies for rice farmers.

Education and Higher Education

• (PTPTN) borrowers earning less than RM1,800 will be granted a six-month moratorium in payments, with applications open starting in March 2023.
• A 20% discount on PTPTN repayments will be given for three months, starting in March 2023.
• RM2.3 billion will be provided to upgrade dilapidated school buildings and infrastructures in 380 poor schools; maintenance of school amenities and building OKU-friendly amenities; as well as the building of open halls for school assemblies.
• RM777 million for the Supplementary Food Plan (RMT) will benefit 700,000 students.
• RM108mil for Preschool Food Aid (BMP) to benefit more than 240,000 students, a 21% increase from RM89 million last year.
• RM35 million will be allocated to improve internet connectivity in higher education institutions.
• RM436 million to improve and replace old infrastructure in public varsities.
• The government will provide schools with 50,000 laptops.

Tourism

• RM250 million will be allocated for the tourism sector, of which RM115mil will be set aside for matching grants to promote tourism, arts and culture.
• RM50 million will be given to Malacca and Penang to maintain their UNESCO world heritage sites

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