Budget 2016 Highlights

MALAYSIA BUDGET 2016 Highlights

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.
• The first priority of Budget 2016 is to spur domestic investment to contribute 26.7% to the GDP in 2016.
• The Budget aims to increase private investment to RM218.6bil and public investment to RM112.2mil.
• Subsidy allocations seen falling slightly to RM26.1 billion from RM26.2 billion this year. 

Taxes

• Income tax increased from 25% to 26% for people earning between RM600,000 and RM1 million. Increased to 28% for those earning above RM1 million. 
• Income tax relief for each child below 18 years of age is increased to RM2,000 from RM1,000 from year of assessment 2016.
• Tax relief for individual taxpayers whose spouse has no income is increased to RM4,000 from RM3,000.
• Children supporting their parents, even if not living together with their parents, to get tax relief of RM1500 (for the mother) and RM1,500 (for the father), if the parents are above 60 years of age.
• Parents of disabled children get RM6,000 tax relief and another RM14,000 if their child furthers his or her studies.
• Tax exemption of RM8,000 instead of RM6,000 is also set aside for every child above 18 years of age in an education institution, both local and overseas.
• GST 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.
• The GST sum is to be credited into value of prepaid reloads from Jan 1 next year.
• All domestic economy class flights will be exempted from GST for rural folk.

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.
• Majlis Amanah Rakyat, an agency to facilitate the development of ethnic Malays and other indigenous Malaysians, allocated RM3.7 billion.
• RM100 million is to be provided by Communications & Multimedia Ministry for eRezeki, eUsahawan programmes which is expected to benefit some 100,000 people.
• RM360mil is proposed to improve National Service, with RM160mil allocated for non-governmental organisations.
• TEKUN to provide RM600mil + RM500mil for Bumiputras and RM100mil for Indian entrepreneurs.
• RM90mil is allocated as micro-credit loans for small traders and Chinese entrepreneurs.
• RM300mil is proposed to improve the welfare and development of the Orang Asli community. RM45mil is also set aside to assist with extra food, pocket money and school transport fees for the Orang Asli community.
• RM930mil is allocated to the Youth and Sports Ministry, with RM145mil set aside for training athletes.

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.
• The Government will allocate a BR1M payout of RM400 to unmarried persons above 21 with incomes below RM2,000. 
• A BR1M payout of RM1,050 (for those with incomes below RM1,000), RM1,000 (for those with incomes below RM3,000), RM800 (for those with incomes below RM4,000).
• From Jan 2016, RM100 will be given in schooling aid to students from households with a monthly income of RM3,000 and below.
• RM250 1Malaysia book vouchers will be available for 1.2mil students.
• A payment of RM500 for all civil servants and RM250 is allocated for Government retirees to help with cost of living.

Development

• Affordable housing projects allocated RM1.6 billion, to be spent building 175,000 houses.
• RM28 billion is allocated for new MRT projects.
• 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.
• Pan-Borneo highway to be toll free when completed in 2021.
• Government to 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.
• RM200mil will be allocated to improve roads in Felda settlements.
• RM1.2bil is allocated to improve Internet speeds, from 5mbps to 20mbps.
• RM67mil is allocated for bus operation routes outside the city.

Tourism

• Government allocates RM1.2 billion to the tourism industry.
• Tourism is expected to contribute RM103bil to the economy. 
• E-Visa for seven countries (China, India, Myanmar, Nepal, Sri Lanka, United States and Canada) to be launched in mid-2016.

Oil project

• Pengerang oil project to receive RM18 billion in 2016.

Minimum wage

• Increased from RM900 per month to RM1,000 in peninsular Malaysia, from RM800 to RM920 in East Malaysia, starting from July 2016.
• The minimum starting salary in the civil service is set at RM1,200 a month from July 2016. The move is expected to benefit some 60,000 civil servants.
• From July 2016, the minimum pension rate is set at RM950 a month for pensioners with at least 25 years of service.

Source: The Star & Malaymailonline