Minister of Finance Tengku Datuk Seri Zafrul Tengku Abdul Aziz unveiled Malaysia’s Budget 2023 with the theme ‘Strengthening Recovery, Facilitating Reforms Towards Sustainable Socio-Economic Resilience of Keluarga Malaysia’ amounting to RM372.3 billion in Parliament on Oct 7, 2022.
The budget for the previous year was tabled with a total allocation of RM332.1 billion, the largest ever for the country, but it has since expanded to an estimated RM385.3 billion.
The top three recipients of Budget 2023 are the Ministry of Finance (RM67.2 billion), Ministry of Education (RM55.6 billion), and Ministry of Health (RM36.1 billion), constituting 43.3 per cent of total expenditure.
The country’s economy is forecast to grow between 4% to 5 % in 2023.
Here are some key takeaways announced:
Education
RM55.6 billion has been allocated for education, the largest sum for a ministry. RM825 million for the Early School Assistance programme, with students receiving RM150 regardless of the parents’ incomes. Meanwhile, RM777 million has been allocated for the Supplementary Food Plan (RMT) to ensure that students get daily nutritional content, benefiting 800,000 students and 7,300 canteen operators.
RM430 million to construct five new schools in Sabah, Sarawak, Terengganu, Cyberjaya, and Selangor. Additionally, there’s an RM1.2 billion allocation to repair and upgrade dilapidated school buildings and infrastructure, including vernacular and religious schools, especially in Sabah and Sarawak, and RM20 million to improve facilities in special needs schools.
Health
One of the biggest increases in allocations for ministries is the health sector. The Health Ministry will be given RM36.1 billion, an increase from the RM32.4 billion allocated under Budget 2022.
RM4.9 billion has been allocated to ramp up healthcare capacity including through the procurement of medicines, reagents, and vaccines, while RM1.8 billion has been allocated for the construction of new health clinics, hospitals and healthcare facilities. RM240 million has also been set aside for the repair of dilapidated hospitals and public health clinics as well as the replacement of old equipment.
Hospital Kuala Lumpur and Hospital Tunku Azizah in Kuala Lumpur, designated as centres for rare diseases, will receive an allocation of RM25 million. RM34 million will go towards setting up a centre of excellence for mental health under the umbrella MyMYNDA.
To encourage people to quit smoking, the import duty and sales tax on nicotine replacement therapy products will be abolished.
To combat obesity (Malaysia has the highest prevalence of obesity among adults in Southeast Asia, with over 50 per cent of the adult population reported to be overweight or obese), the government will initiate the Healthy Malaysia National Agenda and allocate RM15 million.
Income Tax
Malaysian individual taxpayers will enjoy reduced taxes (by 2%) as part of the government’s efforts to increase disposable incomes. For taxable incomes between RM50,000 and RM70,000 per annum, the tax rate will be lowered from 13% to 11 %, while for taxable income within the RM70,000 to RM100,000 range will be reduced from 21% to 19%.
The tax rate for taxable incomes between RM250,000 and RM400,000 per annum, as well as between RM400,000 and RM600,000 per annum, will be at 25%.
Small and Medium-Sized Enterprises (SMEs)
The government has also reduced income taxes for those in the small and medium enterprises (SMEs) from 17 to 15 per cent for the first RM10,000. This is set to benefit 150,000 taxpayers employed in these firms, said Tengku Zafrul.
He added that the government also plans to extend the stamp duty exemption by up to 100 per cent on loan or financing restructuring or rescheduling agreements until 2024.
A total of RM1.8 billion will be also allocated to farmers and fishermen for subsidies as well as incentives.
Some 320,000 farmers will also see their seasonal aid handout increase from RM600 to RM800 in 2023.
Tourism
RM200 million has been allocated to boost tourism. RM25 million for domestic tourism incentives which include discounts, vouchers and rebates for lodgings, tourism packages, handicrafts, and artwork up to RM100. For tourism activities including chartered flight services, especially from the Middle East and East Asia, RM90 million has been allocated.
As the government is targeting to receive more than 15 million foreign tourists, a total of RM90 million has also been allocated, in the form of matching grants, for programmes such as the Galakan Melancong Malaysia (Gamelan) which involves promotional campaigns and marketing with the industry.
To promote Malaysia as a premier healthcare travel destination, RM20 million has been allocated.
Together with Malaysia Airport Holdings Berhad and international airlines, the government will work on new international direct flight routes such as from West Asia and the Middle East to Malaysia, including to Kota Kinabalu International Airport and Penang International Airport.
For the Fairer sex
Women who return to the workforce after taking a career break will be entitled to income tax exemptions for five years from 2023 to 2028.
RM235 million will be set aside to help women build, upgrade, and market their businesses, while the Securities Commission (SC) will introduce special training programmes to increase the number of women in leadership roles in the industry.
The government will also identify and subsequently increase the number of women who are qualified to be appointed as Board of Directors (BOD) members. As of October 2022, women constituted 29 per cent of the composition of the BOD for 100 major public-listed companies. All 100 companies have at least one woman as a member of their BOD.
Tengku Zafrul said a ‘Gender Focal Team’ will be set up in all ministries and government agencies to address gender gaps and involve women in the planning and implementation of policies.
RM8 million has been allocated for social support centres to help victims of domestic violence and those with mental health disorders, and RM11 million for subsidies to undergo breast and cervical cancer screenings through mammograms and pap smears.
Connectivity
With an investment of RM1.3 billion, Malaysians will enjoy faster internet speeds and cheaper 5G internet access when Digital Nasional Berhad (DNB) expands the network to cover 70 per cent of highly populated areas next year. The government also plans to provide 100 per cent internet coverage in populated areas and fibre optic coverage to nine million premises nationwide by 2025, with an investment of RM8 billion (including industry contributions).
Through the National Digital Infrastructure Plan (JENDELA) initiative, RM700 million has been allocated to implement digital connectivity in 47 industrial areas and nearly 3,700 schools.
To deal with the increasingly serious issues of online scams and frauds in the country, a National Scam Response Centre (NSRC) is being set up. The NSRC will be jointly managed by the Royal Malaysia Police (PDRM), Bank Negara Malaysia (BNM), Malaysian Communications and Multimedia Commission (MCMC), and the National Anti-Financial Crime Centre (NFCC) in cooperation with various financial institutions. Slated to begin operations this month, the centre will act against any reports lodged to block bank accounts, take enforcement actions against criminals, and intensify financial and digital literacy awareness among users.
Meanwhile, RM73 million has been allocated to strengthen cyber threat monitoring, tracking and reporting, including building cyber forensic systems.
Sustainability and Environment
To tackle floods and natural disasters, the government has set aside RM15 billion until 2030 for the Flood Mitigation Plan, a long-term strategy to adapt to climate change.
Among the projects in the pipeline are the RM500 million Sado Dam project in 46 locations across the country to reduce the risk of debris floods and mud floods, retentions ponds worth RM2 billion as a source of raw water supply storage and to overcome flooding, RM216 million to clean rivers nationwide, and upgrading the weather forecast system.
For 2023, the National Disaster Management Agency (NADMA) will be allocated a total of RM174 million.
The Ministry of Finance will also channel an additional R400 million to NADMA to ensure a state of preparedness in the event of floods towards the end of this year. An additional allocation of RM100 million under the National Disaster Relief Fund has also been prepared.
Two additional field hospitals involving a cost of RM47 million will be completed by the end of this year in Kluang, Johor, and Kota Kinabalu, Sabah, and as many as 50 units of ambulances will be stationed at military camps, ready for deployment to help in the event of a disaster.
Meanwhile, import duty and excise exemption on imported complete built-up (CBU) type electric vehicles (EVs) will be extended until December 31, 2024, and an exemption for approved permit (AP) fee will also be given for the import of EVs until December 31, 2023.
For manufacturers of EV charging equipment, a 100 per cent income tax exemption on statutory income from assessment year 2023 to assessment year 2032 will be given, and a 100 per cent investment tax allowance.
RM165 million has been allocated for Tenaga Nasional Berhad (TNB) to set up solar rooftops and EV charging stations. The government is also mulling a carbon tax in line with Malaysia’s plan to achieve carbon neutrality by 2050.
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