The revamped Budget 2023, under the theme Belanjawan Madani, sees an RM15.8 billion increase compared to the RM372.3 billion initially allocated by the previous government of Dato’ Sri Ismail Sabri. It’s the first budget tabled by the new Unity Government after the 15th General Election (GE15)
During his speech, Anwar presented a realistic picture of Malaysia’s economy (high national debt of RM1.5 trillion) and stressed the need to achieve a sustainable level of fiscal deficit, spurring economic growth and investments, and protecting the people. The revised Budget 2023 places emphasis on driving an inclusive and sustainable economy, inspiring confidence with institutional and governance reforms, and facilitating social justice by reducing inequality.
PwC Malaysia tax leader Jagdev Singh welcomed this, stating: “The re-tabled Budget 2023 takes a very structured approach to address the challenges the nation is expected to face in view of continuing global economic uncertainty. In his Budget speech, the finance minister shared proposed measures to address these challenges. This is a shift from previous Budgets and adopts an approach that is more strategic and reformist in nature in dealing with issues faced by the nation as a whole.”
Below are the key highlights.
The education ministry gets RM55.2 billion, the highest allocation.RM1.2 billion will be allocated to repair 400 dilapidated clinics and 380 dilapidated schools, and RM560 million to build seven new schools.
The higher education ministry gets RM15.3 billion: RM436 million to improve and replace old infrastructure in public universities, RM35 million to improve internet connectivity in higher education institutions, and RM428 million for research and development activities.
Additionally, PTPTN borrowers with monthly salaries of RM1,800 and below will be eligible for a moratorium of six months for repayments.
A new luxury tax that targets high-end goods such as luxury watches and fashion items has been proposed, allowing the government to earn more in tax revenues. There will also be excise duty on electronic cigarettes and vape products.The top 20 per cent (T20) of Malaysian households will face increased tax rates by 0.5 to two percentage points for income over RM100,000 to fuel government expenditure.
The personal income tax rate will be lowered by two percentage points for those earning RM100,000 and below annually. Personal income tax cuts amounting to RM900 million will see at least 2.4 million people in the middle 40 per cent (M40) category benefitting.Income tax for SME operators will be decreased from 17 per cent to 15 per cent for the first RM150,000 earned.
The government will be conducting a study to introduce a low-rate capital gains tax for the disposal of unlisted shares by companies from 2024 onwards.
To boost tourism in the post-pandemic era, RM250 million has been allocated to promote the tourism sector, in line with a targeted arrival of 23.5 million international arrivals and a projected income of up to RM76.8 billion under the planned Visit Malaysia Year campaign in 2025.A sum of RM115 million will be made available as matching grant funds to collaborate and work together with the Tourism, Arts and Culture industries to fund tourism promotion activities and organise major events such as international sporting and cultural events. The government also plans to expand and upgrade Penang International Airport and Subang Airport to improve capacity and attract more investors, traders, and tourists.
- Front and female
The Social Security Organisation (Sosco) will amend its Act to allow the disbursement of grants equivalent to 80 per cent of the insured salary value of workers to encourage women to get back into the workforce after long maternity or parental leave.More than 130,000 women who return to work after taking long maternity or parental leave will benefit from the grant, which involves an allocation of RM290 million a year.
The government will also provide childcare centre subsidies of RM180 per month for civil servants and increase the monthly household income eligibility limit from RM5,000 to RM7,000.Kincentric Malaysia market leader Ridhima Khanduja applauds this, stating: “The measures under the revised Budget 2023 such as HRD Corp’s RM1 billion budget for purposes of upskilling employees, and the call for employers to provide childcare facilities to support working mothers who wish to participate in the economy will contribute towards an inclusive economic growth that benefits the rakyat across the board.”
RM725 million to expedite the National Digital Infrastructure Plan (Jendela) initiative to improve internet connectivity in 47 industrial areas and over 3,700 schools.
The government also promises comprehensive 5G coverage at a reasonable price.
RM324 million for sports development, upgrading sports facilities and enhancing training programmes for athletes has been allocated.Additionally, an allocation of RM5 million to the National Athletes’ Welfare Foundation (Yakeb) for the wellbeing of national athletes who had served the country.The government will also provide a matching grant of RM50 million to encourage private sector sponsorship, especially for unity-based sports and the organisation of national level competitions.
- Sustainability and environment
The government will increase allocations given to states to preserve forests from RM70 million a year to RM150 million a year. Khazanah will provide RM150 million to boost environmentally friendly projects, including supporting the carbon market and reforestation.The current import duty and excise duty exemption for fully imported (CBU) EVs will be extended for another year to December 31, 2025, while the excise duty and sales tax exemption for locally assembled (CKD) EVs has also been extended until December 31, 2027.The import tax exemption period for components used in local CKD assembly of EVs has been extended by two years to December 31, 2027.As part of the government’s measures to encourage green practices among local businesses, Bank Negara will provide RM2 billion in funding for sustainable technology start-ups and help small and medium enterprises implement low-carbon practices.
Additionally, the Green Technology Financing Scheme (GTFS) will be improved by increasing the guarantee value to RM3 billion until 2025.
These measures were lauded by the Institute of Corporate Directors Malaysia (ICDM) president and chief executive officer Michele Kythe Lim, who said: “The Budget 2023’s priority on green practices, Islamic Finance, and innovation reflects a values-driven focus and approach in rebuilding, and at the same time, future-proofing Malaysia’s economy for the rakyat.”
Healthcare gets the second highest allocation in the budget this year at RM36.3 billion.The main component of this RM36.3 billion will go towards the procurement of medicine, reagents, vaccines and disposable materials. It will also include a RM3 billion allocation for new permanent and contract appointments of more than 1,500 medical officers, dental officers and pharmacists.Malaysians will get more tax relief for medical bills up to RM10,000 from the tax assessment year of 2023 onwards, an increase from the initial RM8,000. This will also be expanded to cover up to RM4,000 of the costs of recovery for neurodevelopmental disorders such as autism, down syndrome, and specific learning disabilities.To tackle overcrowding in government health facilities, the government will upgrade 26 hospitals including expanding the Kuala Kangsar hospital in Perak, the hospital in Jelebu in Negeri Sembilan, and also the Pontian hospital in Johor which is almost a decade old.
This article was first published in Tatler on 28 Februrary 2023.