MARI REVIEW BUDGET 2016

KUALA LUMPUR, Oct 23 — Prime Minister Datuk Seri Najib Razak announced Malaysia’s 2016 budget today, highlighting how the government plans to narrow its budget deficit, address rising cost of living. The government also released an economic report.

Following are highlights of Najib’s ongoing speech to parliament:

Budget allocation

• 2016 budget allocates total RM267.2 billion, an increase from a revised allocation of 260.7 billion for 2015. The initial allocation for 2015 was 273.9 billion.
• For 2016, federal government revenue collection is projected at RM225.7 billion, up RM3.2 billion from 2015.

Taxes

• Income tax increased from 25 per cent to 26 per cent for people earning between RM600,000 and RM1 million. Increased to 28 per cent for those earning above RM1 million. Some tax relief measures to help middle income wage earners.
• Goods and services tax to increase government revenue by RM39 billion, versus RM27 billion in the first eight months of 2015. Some basic goods to be zero-rated, including over-the-counter drugs, baby milk, nuts based food, noodles.

Expenditure

• RM41.3 billion allocated to improve education.
• Defence Ministry allocated RM17.1 billion.
• Allocation of RM30.1 billion for development projects, RM5.2 billion for security, social development gets RM13.1 billion.
• Government allocates RM1.2 billion to the tourism industry.
• Majlis Amanah Rakyat, an agency to facilitate the development of ethnic Malays and other indigenous Malaysians, allocated RM3.7 billion.

Subsidies and handouts

• Spending allocation for Bantuan Rakyat 1Malaysia (BR1M), a programme providing cash assistance for low income households, will be raised to RM5.9 billion in 2016, up from an estimated RM4.9 billion in 2015.

Development

• Affordable housing projects allocated RM1.6 billion, to be spent building 175,000 houses.
• RM900 million allocated to resolve Kuala Lumpur traffic congestion.
• Telecommunications infrastructure allocated RM1.2 billion.
• RM1.4 billion earmarked for development of rural roads nationwide. An-Borneo highway to be toll free.
• Government to improve improve infrastructure in rural areas, including building houses and water supply.
• RM5.3 billion allocated to modernize agricultural sector.
• RM515 million allocated to improve electricity supply in Sabah state.

Oil project

• Pengerang oil project to receive RM18 billion in 2016.

Minimum wage

• Increased from RM900 per month to RM1,000 in peninsular Malaysia.

Macroeconomic highlights

• Current account surplus in 2016 to be down more than half to RM11.3 billion from RM23.4 billion this year and RM47.3 billion in 2014.
• Economic growth forecasts at 4.0-5.0 per cent for 2016, compared with 4.5-5.0 per cent this year.
• Fiscal deficit for 2016 reduced to 3.1 per cent of gross domestic product, down from 3.2 per cent in 2015 and 3.4 per cent last year.
• Exports forecast to rebound 1.4 per cent in 2016 after a 0.7 per cent fall this year.
• Inflation seen at 2.0-3.0 per cent in 2016, against 2.0-2.5 per cent this year.
• Government debt limit to remain at 55 per cent of GDP in 2016, forecasting a ratio of 54.0 per cent this year and slightly up from 52.7 per cent in 2014.
• Oil and gas related revenues seen at 14.1 per cent of total revenue in 2016, down from 19.7 per cent in 2015.
• Goods and Services Tax (GST) expected to raise 39 billion next year, against RM27 billion collected in the first eight months of 2015.
• Subsidy allocations seen falling slightly to RM26.1 billion from RM26.2 billion this year. — Reuters