What are we hoping for in the Malaysian budget 2015?
WHEN I MENTIONED THE budget topic to my friends last night, one of them seemed mildly interested, while the other said “Budget?….Boringlah.”
Truth be told, if you asked me about the Malaysian budget maybe six to eight years ago, I would have known nothing about it and I may have also had little to zero interest in it.
But as you grow older and leave school, you start to think more about what to do with your life and how to manage it and most stuff (as hard as it is to admit) involves money and budgeting. As time passes, it is hard to ignore this kind of stuff and – let’s just face it – it does affect everybody. In short, growing up sucks.
As many are probably aware, today marks the day when the Malaysian budget for the year 2015 will be announced by Prime Minister Datuk Seri Najib Tun Razak, but before we get there, here’s a little rundown on what has been going on with this year’s budget.
What is it to you?
Typically, the Malaysian budget covers development, healthcare, education, defence and so much more. Of these items in the budget that directly affect us in our daily lives are cash handouts and vouchers, taxes and subsidies.
The major highlights in the Malaysian budget for 2014 included:
Cash handouts and vouchers
BR1M- Given to those with a household monthly income of below RM4000.
BB1M- 1Malaysia Book Voucher Programme of RM250 given to pre university and tertiary students.
School assistance- RM100 for primary and secondary school students.
Pensioners- Financial assistance of RM250 given to pensioners.
Civil servants bonus- A half month bonus, with minimum of RM500 was given in January 2014.
Increased Internet access
Implementation of the second phase of High Speed Broadband (HSBB) with investment of RM1.8 billion which covers urban areas (over 2.8 million household nationwide) with increments of internet speed up to 10Mbps.
MyHome- A RM30,000 subsidy to private developers for each unit built.
PR1MA- The housing scheme was provided RM1 billion towards building 80, 000 housing units at costs that are 20% lower than market price.
Healthcare and Welfare
– Removal of sugar subsidy, resulting in increments of 34 sen per kg.
– RM30 million to open 60 Kedai Rakyat 1Malaysia (KR1M) to help reduce prices of daily necessities.
– 50 new 1Malaysia Clinics in 2014, 6,000 new nurses to be trained and RM3.3 billion allocated to provide medical supplies to public healthcare institutions.
Implementation of Good and Sales Tax (GST) at a rate of 6% by April 2015.
What’s the big deal about GST?
It has been a long-standing topic discussed among many Malaysians. We have all heard about it online and talked about in coffeeshops but do we really know anything about it?
GST or Goods and Sales Tax is a consumption tax based on the value-add concept and is actually meant to replace the current Sales Tax and Services Tax (at 10% and 6% respectively).
Sales tax (10%) is usually collected from the manufacturer or importer while Services tax (6%) is applied to professional bodies or peoples such as accountants, lawyers, engineers and insurance companies.
The GST will be implemented next year on April 1st at a rate of 6%. When it does get implemented, it will be the lowest among ASEAN countries with Indonesia, Vietnam, Cambodia, the Philippines and Laos paying GST at a rate of 10% while Singapore and Thailand pay GST at a rate of 7%.
As of now, both sales and service tax are only collected by one party – the seller – and the tax is passed on to the tax authorities.
But for GST, both manufacturer and seller will have to pass the 6% tax to authorities. In this situation, the manufacturer will pass on a 6% from the seller to the tax authorities.
All companies with yearly revenue of RM 500,000 or more are required to register for GST which will enable them to charge a GST tax which will in turn to be passed to consumer.
Suppliers who sell the product at a higher price than was paid to the manufacturer (value-add), will also have pass on the 6% tax from the value add to tax authorities.
What are the people hoping for Budget 2015?
According to a poll conducted on the Prime Minister’s website, www.najibrazak.com, that was aimed to garner public feedback on issues concerning the upcoming Budget 2015, the cost of living was voted as the most vital issue among Malaysians with 36,921 votes.
Other categories in the top five included Employment (22,459 votes), Housing and Urban Life (20,478 votes), Education (13.762 votes) and Social Welfare: OKU & Other Disadvantaged Groups (13,738 votes).
As for 2015, The Borneo Post SEEDS managed to ask young Sarawakians what they were hoping from the Malaysian Budget 2015.
“More items exempted from the GST and of course no more stamp duty for first-time house buyers.” – Hilda Lydwina, 30, consultant
(As of now, basic food items, transportation services, highway tolls, water and first 200 units of electricity for domestic users per month, sale, purchase and rental of residential properties are not subject to GST. A stamp duty is a tax imposed on documentation.)
Continue supporting smallholder and improve road systems in East Malaysia
“Having the privilege to serve as a Perdana Fellow in the Ministry of Plantation Industries and Commodities, I find that the ministry is doing a great job at distributing allocated subsidies to the smallholders throughout Malaysia – which has improved the lives of many smallholders (i.e. in rubber, pepper, cocoa, palm oil and kenaf). Therefore it is important that the government in Budget 2015 to show their continuous support for smallholders, especially in the plantation industries. In Sabah and Sarawak, although many are enjoying the benefit of these subsidies – it is a challenge and struggle to distribute these subsidies efficiently, due to accessibility issues. Therefore my hope is to see that Budget 2015 will address the issue of accessibility in Sabah and Sarawak, to improve especially our road and infrastructures in East Malaysia.”
Administer subsidy initiatives and provide alternative routes
“The government subsidy rationalisation initiative is a good move; however, I hope that the revenue made from the initiative could be channelled to target groups. There is a constant struggle and need for efficient delivery of allocated funds (through the budget) to the rakyat.
• I hope that in Budget 2015, the government will focus on governing policies in a transparent and structured manner to minimise leakages and corruption – so that the rakyat can enjoy the full benefit of any subsidy programme suggested by respective ministries.
• After removing subsidies, Budget 2015 should look into alternative routes to improve the lives of the rakyat. For example, by removing fuel subsidies, the government should also improve and provide affordable transportation services.
But most important points and wishes are:
• Government continuous support for smallholders
• Improve roads and infrastructure in East Malaysia
• Efficient delivery of allocated funds (through the budget) to the rakyat
• Focus on governing policies in a transparent and structured manner to minimize leakages and corruption – so that the rakyat can enjoy the full benefit of any subsidy program suggested by respective ministries.” – Davin Marcus Raja, 26, Perdana Fellow
“I hope that the 2015 budget will focus more on the development of public transportation as I think it would make it easier for people to travel from home to work and vice versa. Unlike other countries which experience increments in fuel prices, their transportation systems are a lot cheaper and better established because their infrastructures are more developed. The cost for going to work and back home can cost as cheap as RM1 with train.”- Amirul Hafiz, 26, entrepreneur
“My hope for budget 2015 is the government will build more affordable homes, especially in urban areas so that the young working adults in urban areas can also get on the home ownership ladder from young age. And I also hope the budget will include easy payment schemes for the first time house buyers which do not require high down payment and also schemes that allowed new borrowers to start off with lower installments.” – Jeffrey Jack, 30, producer and radio announcer
“No increase in price of goods. Salary revision parallel to the reduction of fuel subsidy. Improvement of public transport and reduction in income tax as well as imported car price.” – Louella Octrice, 26, electrical engineer
The Prime Minister is expected to announce the Malaysian budget for 2015 in Parliament today at 4pm.