Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz announced on Friday (Oct 7) that RM372.3 billion will be set aside for Budget 2023 versus last year’s RM332.1 billion allocated in the previous budget.
In tabling Budget 2023, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the government has allocated RM15.bil for the Higher Education Ministry and RM6.7bil for various Technical and Vocational Education and Training (TVET) activities.
Budget 2023: Income tax cut by 2% for RM50,000-RM100,000 taxable range
The personal taxation rate will be reduced by 2% on taxable income ranging from RM50,000 to RM100,000 for domiciled individuals.
In tabling Budget 2023 in Parliament on Friday (Oct 7), Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said for the taxable income range RM50,001 to RM70,000, the rate will be reduced from 13% to 11%.
[LIVE] Tabling of 2023 Budget in Parliament
[LIVE] Special programme on 2023 Budget with former finance minister II Datuk Seri Johari Abdul Ghani and PKR deputy president Rafizi Ramli.
PETALING JAYA: Finance Minister Tengku Zafrul Aziz has tabled Budget 2023, announcing an allocation of RM372.3 billion.
This represents a RM40.2 billion increase compared to the RM332.1 billion allocated for 2022.
Around RM272.3 billion has been allocated for operational expenditure and RM95 billion for development.
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Here are the highlights of Budget 2023:
Education
RM55.6 billion allocated for education, the biggest in the budget for a ministry.
RM825 million in early school aid for students, with students receiving RM150 regardless of their parents’ incomes.
RM777 million for supplementary food programme (RMT), benefiting 800,000 students and 7,300 canteen operators.
RM2.3 billion to ensure students have a conducive and safe learning environment.
RM1.1 billion to repair and maintain all schools, including vernacular and religious schools.
RM430 million to construct five new schools in Sabah, Sarawak, Terengganu, Cyberjaya and Selangor.
RM20 million to improve facilities in special needs schools.
RM188 million to set up 10 Kemas daycare centres.
Development
RM1.5 billion for sustainable development.
RM562 million to implement the Sabo dam project.
RM510 million to improve road infrastructure to Pengerang.
Pan Borneo Highway to be completed by 2024.
RM11.4 billion for maintenance and repair of existing government buildings.
RM5.2 billion for maintenance of state roads.
RM150 million for the development of border towns near Thailand and Kalimantan.
RM3.7 billion for small and medium projects across the nation.
RM500 million on G1-G4 infrastructure projects.
Social Welfare
In total, Putrajaya will spend RM10 billion in welfare and Bantuan Keluarga Malaysia (BKM) aid.
RM2.5 billion in welfare aid benefiting 450,000 households.
RM2,500 in BKM aid for households earning less than RM2,500 monthly.
Up to RM1,250 BKM aid for singles and RM3,000 for single parents.
One-off RM500 incentive for female BKM recipients who give birth in 2023.
RM7.8 billion for BKM which will benefit 8.7 million people.
RM1 billion in welfare aid for the elderly.
RM1.2 billion to support disabled people to be financially independent.
RM10 million in e-hailing vouchers for the disabled.
RM8 million for social support centres.
RM734 million for MySalam programme. This will benefit 1.5 million people from the B40 group.
Voluntary Employees Provident Fund (EPF) contributions raised from RM60,000 to RM100,000 a year.
RM21 million in grants for operators of welfare homes.
Limits for Amanah Saham Bumiputera (ASB) and ASB2 savings to increase to RM300,000.
Government to provide incentives to establish more daycare centres for the disabled.
RM120 million for Kasih Suri Keluarga Malaysia programme, benefiting 200,000 housewives.
Security
RM431 million to procure new assets for the police.
RM42 million to upgrade police quarters.
RM118 million for the maintenance of armed forces homes.
RM28 million to upgrade prison staff quarters.
RM73 million to enhance cybersecurity.
The government will set up a national scam response centre.
Health
Total of RM36.1 billion allocated for the health ministry.
RM11 million for subsidies for mammograms and cervical cancer screening.
RM20 million to promote Malaysia as a medical tourism destination.
RM4.9 billion for public healthcare.
RM420 million to repair dilapidated hospitals and clinics.
RM1.8 billion to purchase new equipment for hospitals and clinics.
The government to set up a mental health centre of excellence.
RM10 million to purchase 3D printing machines for dental health services.
Allocations to treat rare diseases increased to RM25 million.
RM80 million for Socso health screening programme.
RM15 million for Agenda Nasional Malaysia Sihat programme to encourage healthier lifestyles.
RM80 million for the PEKA B40 programme.
Import duty and sales tax exemptions for nicotine replacement therapy products.
Economy
RM235 million to support the development of female entrepreneurs.
RM50 million for young trader scheme under Bank Simpanan Nasional.
2% reduction in income tax of micro SME operators.
One-off RM1 billion grant to all registered MSMEs and taxi drivers. To benefit one million recipients.
RM45 billion Semarak Niaga funds for entrepreneurs.
RM10 billion in funds from Bank Negara Malaysia (BNM) to automate and digitise SMEs.
RM200 million to boost income and productivity of smallholders.
GLCs and GLICs to invest up to RM50 billion in 2023.
Government-linked companies (GLCs) and government-linked investment companies (GLICs) to invest RM50 billion in 2023, including RM45 billion in direct domestic investments.
The government will provide incentives for multinational companies to establish operations in Malaysia.
RM100 million to support development of local technology companies.
RM10 million in matching grants allocated to help SMEs.
RM800 million to provide RM100 e-wallet credit for 8 million people in the M40.
Petronas will contribute RM2 billion to the National Trust Fund (KWAN).
RM1.4 billion to boost connectivity in the five main economic corridors.
Civil service
RM100 subsidy for civil servants for insurance coverage.
RM1.5 billion for RM100 increment for all civil servants between Grade 11 to Grade 56.
RM1.3 billion for one-off RM700 special aid for 1.3 million civil servants under Grade 56.
RM350 one-off aid for one million retired civil servants.
Aidilfitri aid for civil servants increased to RM600.
Special leave for over 500,000 teachers.
Higher education
RM15.1 billion allocated for the higher education ministry.
RM3.8 billion for scholarships and education loans.
RM6.6 billion for Bumiputera education loans.
RM6.7 billion for TVET training and education.
RM180 million to fund TVET training, benefitting 13,000 trainees.
Up to 20% discounts for PTPTN repayments from Nov 1 to April 30, 2023.
Environment
RM15 billion for flood mitigation initiatives.
RM2 billion to build retention ponds.
RM500 million to widen rivers in Kelantan.
RM3 billion for Green Technology Financing Scheme (GTFS).
RM150 million from Khazanah Nasional Berhad to support development of green projects.
RM165 million for Tenaga Nasional Berhad (TNB) to set up solar rooftops and EV charging stations.
Carbon tax to be introduced.
100 million trees to be planted by 2025.
The government will step up forest restoration projects.
RM100 million for ecological fiscal transfer (EFT).
RM36 million to support conservation of elephants and other endangered species.
RM216 million to clean rivers nationwide.
Job creation and community support
The MyStep programme will provide 50,000 jobs including 15,000 in the public sector and 35,000 in government-linked companies (GLCs).
RM750 million to upskill 800,000 workers.
RM100 million for Mitra to develop entrepreneurs.
Socso to provide incentives for employers to hire the disabled, Orang Asli, ex-convicts and women returning to work. The incentive worth up to RM750 a month will be given for three months per employee.
Socso will provide incentives for employers to hire jobless youths.
RM50 million to boost Bumiputera commercial property ownership.
RM20 million to set up new urban transformation centres (UTC).
RM11 million on mobile bank initiatives.
RM63 million for development of human capital.
RM50 million to support development of female contractors.
RM100 million for Khazanah’s Yayasan Hasanah to conduct various community initiatives.
Sabah and Sarawak
Total RM11.7 billion allocated for Sabah and Sarawak.
RM1.2 billion to improve the infrastructure in dilapidated schools in Sabah and Sarawak.
RM209 million to subsidise air travel to rural areas in Sabah and Sarawak.
RM1.5 billion to improve transport infrastructure in Sabah and Sarawak.
RM100 million to improve the water supply system in Sarawak.
RM250 million for expansion of the Sapangar Bay Container Port (SBCP).
Taxes
Personal income tax reduced by 2% for those earning between RM50,001 to RM100,000.
This will benefit over one million people in the M40.
Income tax exemptions of up to RM3,000 for Tadika and daycare fees.
Tax incentives to attract investors.
Government reiterates implementation of Tax Identification Number to widen tax base.
Tax incentives for local pharmaceutical companies will be extended.
Tax incentives and RM50 million to support development of aerospace components.
The government will provide special incentives for investors in the chemical and petrol chemical industry.
Import duties and sales tax exemptions for the purchase of film equipment.
Tax incentives for NGOs involved in sports at the grassroots level.
Tax incentives for green initiatives extended to Dec 31, 2025.
100% income tax exemption for manufacturers of EV charging parts.
Additional tax deductions for employers who hire former residents of juvenile institutions.
Government to introduce qualified domestic minimum top-up tax.
Tourism
RM200 million to promote tourism recovery.
RM90 million in grants to promote tourism activities.
New chartered flights to and from East Asia and the Middle East.
RM10 million to promote eco-tourism.
RM25 million in incentives to promote domestic tourism.
RM500 million in tourism financing from BNM.
RM10 million for the ThinkCity initiative in Kuala Lumpur.
Arts and Culture
RM50 million to support the local film industry.
RM102 million to support local artists.
RM5 million to strengthen national language programmes.
RM10 million to support preservation of local languages and cultures.
Commodities
RM200 million to subsidise the logistic cost for the distribution of essential goods.
The government will hold Keluarga Malaysia sales offering essential items at more affordable prices.
The government will continue measures to combat the illicit cigarette trade.
RM20 million in matching grants to support development of local products.
RM10 million to support the made in Malaysia campaign.
RM92 million for development of the halal industry.
Approved permit fees for import of EVs extended to Dec 31 next year.
RM256 million in monsoon aid for rubber smallholders.
Agriculture
RM1.8 billion in subsidies for farmers and fishermen.
RM228 million in aid for padi farmers. This will benefit 240,000 people.
The government will introduce an agriculture protection scheme.
RM1 billion to fund agrofood programmes.
RM56 million to support sustainable farming.
RM315 million for rubber planting programmes.
RM40 million to encourage smallholders to diversify their crops.
RM70 million to support the Malaysian Sustainable Palm Oil (MSPO) certification programme.
The government will support automation initiatives in the plantation sector.
Defence
RM17.4 billion for the defence ministry, including RM4 billion for the purchase of new military assets.
RM485 million for the maintenance of all MMEA ships and boats.
RM330 million for EV infrastructure.
Transport
RM180 million to improve bus services in Melaka, Kedah, Kota Kinabalu and Kuching.
Continuation of My50 RapidKL monthly pass to benefit 180,000 users.
RM16.5 billion for major transport infrastructure projects.
RM50.2 billion for the MRT3 project.
RM1 billion for the maritime and logistics industry.
Housing
Stamp duty discounts of up to 75% for houses worth between RM500,000 to RM1 million.
RM10 stamp duty for properties transferred between family members.
RM367 million to build people’s housing projects (PPRs), to benefit 12,400 new residents.
RM3 billion for housing credit guarantees.
RM40 electric bill subsidy to be extended.
Digital connectivity
Phase 2 of the Jendela project to involve RM8 billion in investments, including from industry players.
RM700 million allocated for Jendela to expand digital connectivity in 47 industrial areas and 3,700 schools.
Digital Nasional Berhad (DNB) to spend RM1.3 billion in infrastructure development to widen 5G internet coverage nationwide.
Youth and sports
RM305 million in loans for youths to start businesses.
The government will introduce a special internet package for youths at RM30 for three months.
RM400 million to continue the e-Pemula scheme, which will benefit two million youths aged 18 to 20.
The government will bear the costs of e-hailing, taxi, and motorcycle licences for youths.
RM145 million to improve sporting infrastructure nationwide.
RM154 million to develop the local sporting ecosystem.
RM20 million to develop a drag race circuit.
RM13 million to develop e-sports.
RM12 million to support disabled athletes.
Rural communities
RM305 million for the Orang Asli community.
RM2.6 billion for Felda, Felcra and Risda.
RM472 million to improve rural electricity infrastructure.
RM54 million to build 85 new bridges in rural areas.
Disaster management
Additional RM400 million in allocation for the National Disaster Management Agency (Nadma) to prepare for year-end floods.
RM100 million allocated for the national disaster relief fund.
RM20 million in grants for community associations to assist in natural disasters.
Others
RM1.5 billion for Islamic development.
RM150 million for the maintenance and repairs for educational facilities under Jakim.
RM364 million for research and development for higher education as well as science, technology and innovation ministry.
RM30 million to improve I-Saraan programme that will benefit 100,000 people.
All self-employed people will be required to contribute to Socso from next year onwards.
The government will introduce e-invoice similar to initiatives in France and Brazil.
The government will table a consumer credit bill in the second quarter of 2023.
Budget 2023 will offer assistance to all segments of society. Here are some of the highlights:
The government will be adopting a holistic approach to improve economic recovery and the rakyat’s wellbeing postpandemic.
Defence/ Home Ministry
Rm17.4bil for Mindef
> Rm4bil for Malaysian armed Forces assets procurement and maintenance.
> rm47mil for two additional field hospitals in Kluang and Kota Kinabalu as early measure for national disasters.
> Rm118mil for rumah Keluarga angkatan tentera (rkat).
> 50% off for 21,000 armed Forces and police veterans card holders on
all Prasarana public transport services in Kuala Lumpur, Selangor,
Pahang and Penang.
Rm18.3bil for Home Ministry
> Rm431mil for procurement and maintenance of police assets.
> Rm42mil for police quarters upgrades and repairs.
> Rm18mil for Prisons department to acquire body scanners and upgrade facilities at five correctional centres.
> Rm485mil for Malaysian Maritime enforcement agency (Mmea) ships and vessels maintenance.
Health
> Rm36.1bil to be allocated to Health Ministry.
> Rm4.9bil to step up capacity of healthcare sector (includes procurement of medicines, reagents and vaccines, among others).
> Rm420mil to repair dilapidated hospitals, clinics and replacing medical equipment.
> Rm80mil for Pekab40 Health scheme.
> Rm734mil for mysalam.
> Rm1.8bil for the construction of new hospitals, clinics and healthcare facilities.
> Rm34mil to set up mental health centres. Rm25mil to be
allocated for Hospital Kuala Lumpur and Hospital tunku azizah which will
be reference centres for rare diseases.
MALAYSIA’S economy is expected to grow by 4% to 5% in 2023 after posting a growth rate of between 6.5% and 7% this year.
“Despite a softening world economic growth and trade activities, the
economy is projected to grow between 4% and 5% in 2023, supported by
steady domestic demand, a vibrant services sector, implementation of new
and ongoing high multiplier infrastructure projects and sustained
exports.
“The government will continue to monitor global developments as well as
implement appropriate policies and reform initiatives to strengthen the
economy and fiscal position to withstand potential external shocks,
improve people’s livelihoods and enhance business resilience,” said the
Economic Outlook for 2023.
The global economy is projected to grow by 2.9% in 2023, albeit
moderately due to slower-than-expected growth in both advanced economies
as well as emerging markets and developing economies.
For Malaysia, the services sector is forecast to grow by 5% in 2023,
benefitting from the sustained domestic demand in spite of moderate
global economic growth.
Growth will continue to be mainly driven by wholesale and retail trade;
real estate and business services; information and communication;
transportation and storage; and food and beverages and accommodation
subsectors.
The manufacturing sector is forecast to grow by 3.9%, supported by
expansion in all subsectors. Output in export-oriented industries is
anticipated to increase despite a softening global trade, with the
electrical and electronic segment continuing to drive the industries.
In addition, the output of the rubber-based products segment is
projected to rise, mainly attributed to the increase in production of
tyres and tubes following buoyant global demand for motor vehicles.
For 2023, the agriculture sector is forecast to increase by 2.3%,
attributed to an improvement in labour supply within the sector. The oil
palm subsector is expected to expand on account of higher output
following an increase in fresh fruit bunch production and a better oil
extraction rate.
The price of palm oil is forecast to average at RM4,300 per tonne in
2023 compared with RM5,000 per tonne in 2022 and higher than the last
10-year average of RM2,685 per tonne, as supply of global edible oils
and fats is anticipated to remain tight.
The mining sector is expected to expand by 1.1% on account of higher
natural gas output as the completion of new pipeline projects in
Sarawak, namely the Kasawari, Jerun and Timi, is anticipated to boost
production, especially during the second half of the year.
Brent crude oil price is expected to record a lower average of US$90 (RM412) per barrel.
The construction sector is forecast to expand by 4.7% in 2023 following a
better performance in all subsectors. The civil engineering subsector
is anticipated to rebound, buoyed by implementation of new projects such
as the Mass Rapid Transit Line 3 Circle Line and acceleration of
ongoing infrastructure projects which include the Rapid Transit System
(RTS) Link, East Coast Rail Link (ECRL) and Light Rail Transit Line 3
(LRT3).
In addition, the approved investment projects in the manufacturing
sector are anticipated to come onstream and subsequently create greater
demand for industrial buildings.
The economy is expected to remain resilient, with domestic demand
continuing to drive growth amid a softening global environment. Private
sector expenditure is forecast to grow at 5.8% with the share to gross
domestic product (GDP) at 76.2%, while public sector expenditure is
projected to expand by 2% with the share to GDP at 17%. Hence, domestic
demand is envisaged to further expand by 5.1%.
Private consumption, which has been robust despite global
uncertainties, is anticipated to grow by 6.3%. The growth forecast will
be supported by continuous improvement in the labour market as well as
robust economic and social activities particularly the tourism-related
activities.
The special financial assistance in January 2023 to civil servants
and pensioners will support household disposable income and stimulate
private spending.
Private investment is projected to register a growth of 3.7%
attributed to an increase in capital spending in technology-intensive
manufacturing and services sectors, particularly Ict-related machinery
and equipment.
The continuation of large-scale transportrelated projects such as
ECRL, LRT3 and RTS Link will also provide impetus to public investment.
These initiatives are expected to help public investment increase by
2.1% in 2023. Public consumption is also projected to expand by 2% on
account of higher spending on emoluments, mainly due to special
additional annual salary increment for civil servants.
The share of CE (Employee Compensation) of GDP is projected to rise to 35.2% in 2023.
However, the share is still relatively lower than comparable peers
and advanced economies. Thus, in ensuring a more equitable sharing of
the growth benefit between employees and capital owners, there is a need
for a paradigm shift from the low-wage labour market structure towards a
more decent wage standard. Otherwise, insufficient wage increase from
the current level may deter the attainment of the long-term CE target of
40% of GDP in 2025 under the 12th Malaysia Plan.
In line with strong economic growth expectation supported by
continued efforts to prevent revenue leakages and strategies to
implement a wider tax base, income from indirect tax and non-tax revenue
on production and imports is projected to expand by 7.5%.
Meanwhile, with the expiration of the Covid19 Fund assistance,
subsidy expenditure is expected to decrease significantly by 50.2%.
Thus, income from taxes less subsidies on production and imports is expected to record a larger increase in 2023.
Gross exports are expected to moderate by 2.2% across all sectors,
supported by modest external demand due to lacklustre growth following
global uncertainties arising from prolonged geopolitical tensions,
supply chain disruptions and volatility in global commodity prices.
Gross imports are expected to increase marginally by 0.2% on
account of high demand for capital, intermediate and consumption goods
indicating sustained domestic demand and improvement in investment
activities.
Fiscal deficit at 5.5% to GDP
The Federal Government’s revenue collection in 2023 is projected to be
lower at Rm272.6bil or 15% of gross domestic product (GDP) due to lower,
anticipated non-tax revenue collection.
In the Fiscal Outlook 2023, it said the nontax revenue is expected at
Rm67bil, declining 23% from 2022 due to lower dividends from government
entities.
However, tax revenue remains the major contributor and is anticipated to
grow moderately by 3.7% to Rm205.6bil, in line with the projected
slower economic recovery.
In line with the targeted spending approach, total expenditure in 2023
is projected to be slightly lower at Rm372.3bil or 20.5% of GDP, mainly
due to the expiry of the Covid-19 Fund.
The allocation for operating expenditure is reduced to Rm272.3bil,
primarily due to lower allocation for subsidies following the expected
moderation in commodity prices and gradual move towards a targeted
subsidy approach.
Meanwhile, the development expenditure allocation is projected to
increase significantly to Rm95bil on account of higher allocation for
the 12th Malaysia Plan programmes and projects such as construction of
highways and railways, medical facilities as well as educational
institutions.
In addition, a sum of Us$3bil (Rm14bil) is provided for the redemption of 1Malaysia Development Bhd bond.
Moreover, a sum of Rm5bil is for outstanding payments of the Covid-19 fund commitments made in 2022.
Overall, the fiscal deficit is expected to reduce to 5.5% of GDP in line
with the government’s commitment towards consolidating the fiscal
position for a more sustainable public finance in the medium term.
Similarly, the primary deficit is estimated to reduce to 2.9% of GDP.
Guided by the medium-term fiscal framework (MTFF), the fiscal
consolidation will be accelerated once the inflationary pressure
dissipates and the economy fully recovers.
The MTFF 2023-2025 has been revised with underlying assumptions of
real GDP growth averaging 6%, crude oil prices at US$90 (RM417) per
barrel and stable crude oil production of 530,000 barrels per day.
These assumptions offer conservative estimates of revenue and prudent expenditure allocation during the MTFF period.
Total revenue in the medium-term is projected at Rm854.3bil or
14.7% of GDP, mainly contributed by non-petroleum revenue which is
estimated at Rm699.5bil or 12% of GDP.
Petroleum-related revenue is forecast at Rm154.8bil or 2.7% of GDP.
On the expenditure side, the total indicative ceiling for the
three years is estimated at RM1.1 trillion or 19.1% of GDP with OE
allocation projected at Rm842.8bil or 14.5% of GDP, and DE at Rm263.9bil
or 4.5% of GDP.
Overall, the fiscal deficit is expected to consolidate at a
gradual pace with the overall balance averaging at 4.4% of GDP for the
MTFF period.
Moving forward, the government is committed to improving the
credibility of the fiscal policy conduct and framework through holistic
reforms. The experience of other countries in reforming their fiscal
framework provides a valuable reference for the government in adopting
fiscal reform initiatives based on international best practices.
