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FULL text of the 2009 Budget speech by Prime Minister and
Finance Minister Datuk Seri Abdullah Ahmad Badawi.
Mr Speaker Sir,
I beg to move the Bill entitled an “Act to apply a sum
from the Consolidated Fund for the service of the year 2009 and to
appropriate that sum for the service of that year" be read a second time.
INTRODUCTION
In the name of Allah, the Most Gracious and the Most
Merciful.
2. Praise be to Allah, for enabling me to present the
2009 National Budget in this Honourable House.
3. During the past 51 years, the quality of life of
Malaysians has undoubtedly improved. The formula of power sharing and
pragmatism has enabled Malaysia to emerge as a politically stable and
prosperous nation. Despite the trials and tribulations of 1969, 1972, 1986,
and 1997, we have prevailed and grown from strength to strength. Today, as
we face a global environment of higher prices and slower economic growth, I
am confident, if we remain united, we shall overcome this challenge as well.
4. The spirit of solidarity is truly tested during
difficult times. As we move forward, loyalty to the nation and the sense of
unity continue to be indispensable in building a peaceful and prosperous
nation. While democracy allows for the expression of different views, we
must, however, remain united on fundamental issues of national interest.
5. The world economy and the financial markets are facing
numerous challenges and uncertainties. The global economy has been affected
by sharp increases in the price of oil, as well as commodity and food
prices. The instability in the financial sector in the United States has
affected not only its economy but the European economies as well. Although
economic outlook in the Asian region, especially in India and China, remains
favourable, inflationary pressures may, to some extent, affect their
domestic demand. These global developments would also affect Malaysia.
6. Notwithstanding this, the Malaysian economy remains
strong and resilient. A diversified economy and export market, as well as
high international reserves, provide greater flexibility for the economy to
face an increasingly challenging external environment.
7. The Malaysian economy continues to record sustained
growth. Strong economic fundamentals, as well as increased domestic demand,
have resulted in the gross domestic product (GDP) achieving a growth of 7.1%
during the first quarter of this year, and 6.3% for the second quarter of
2008. GDP growth for the first half of this year was, therefore, 6.7%.
Although the nation will be somewhat affected by global developments, the
Government is confident that Malaysia's economy will continue to remain
stable with a GDP growth of 5.7% this year.
THE 2009 BUDGET
8. The 2009 Budget is focused on enhancing the well being
of all Malaysians. For this purpose, it is crucial to further strengthen our
nation's economic resilience to mitigate the adverse impact of an
increasingly challenging external environment.
9. With the theme A Caring Government, and in line with
the five thrusts of the National Mission, the 2009 Budget will focus on
three specific strategies, namely:
First: Ensuring the Well Being of Malaysians;
Second: Developing Quality Human Capital; and
Third: Strengthening the Nation's Resilience.
FIRST STRATEGY: ENSURING THE WELL BEING OF
MALAYSIANS
10. The Government will ensure that all Malaysians
continue to benefit from the country's economic growth. In this regard, the
Government will implement a broad range of measures to reduce the impact of
the higher cost of living, particularly among the lower income group and the
vulnerable.
Social Safety Net
11. The Government empathises with the difficulties faced
by the lower income group, arising from the higher cost of living. In this
regard, the Government has raised the eligibility criteria for welfare
assistance under the Welfare Department, from a monthly household income of
RM400 to RM720 for Peninsular Malaysia, RM830 for Sarawak and RM960 for
Sabah. With this increase, the number of eligible recipients is expected to
double from 54,000 households to 110,000. This includes an increase in the
number of eligible senior citizens from 14,000 to 40,000. For this purpose,
an additional RM500 million is allocated.
12. The Government recognises the contributions of
pensioners towards the development of the country. To assist the lower
income pensioners to cope with the recent price increases, government
pensioners who had served at least 25 years upon retirement, will receive a
pension of not less than RM720 per month, effective 1 January 2009. This
increase will involve an additional allocation of RM140 million for 2009 and
will benefit 75,000 retirees, including those receiving derivative pensions.
13. The Government has always assisted victims of
calamities, such as floods and fire. The Government will now also set up a
special fund of RM25 million to channel timely financial assistance to
families deprived of their sources of income, particularly arising from
accidents to breadwinners.
14. The Government, together with the corporate sector,
has set up several homes under the concept of Rumah Tunas Harapan to provide
upbringing in a family setting for less fortunate children. Under this
initiative, the corporate sector provides the houses, while the Government
bears the operating expenses. Given the heavy responsibility of the
caregivers in these Rumah Tunas Harapan, the Government will increase their
allowance from RM600 to RM1,000 per month, effective 1 September 2008. In
this regard, the Government encourages the private sector to set up more
such homes.
Eradicating Poverty
15. The Government has, through various measures,
successfully reduced the incidence of poverty from 5.7% in 2004 to 3.6% in
2007. The number of hardcore poor households has declined by 43% from 67,300
in 2004 to 38,400 in 2007. The Government is confident that the incidence of
hardcore poverty will be eradicated by 2010.
16. The Government will continue to implement programmes
to enhance income, as well as provide skills and career development training
under the Skim Pembangunan Kesejahteraan Rakyat. In addition, Program
Lonjakan Mega Luar Bandar is being implemented in Pulau Banggi, Sabah and
Tanjung Gahai, in Kuala Lipis, Pahang. For this purpose, a sum of RM220
million is allocated, benefiting 13,300 households.
17. With respect to housing, a total of 3,500 new houses
were built, and 2,000 houses were repaired under the Housing Assistance
Programme during the period 2006 to 2008, to enable hardcore poor to own
decent homes. In 2009, an allocation of RM50 million is provided to build
1,400 new houses and repair 1,000 houses. Priority will be given to senior
citizens, the disabled and single parents with many dependents as well as
victims of natural disasters.
18. Hardcore poverty in Sabah and Sarawak has been
significantly reduced. In Sabah, the number of hardcore poor households has
declined from 32,400 in 2004 to 18,100 in 2007, while in Sarawak, from 5,200
to 3,600 during the same period. Measures will continue to be taken to
increase income and enhance the quality of life of Malaysians in these two
states by improving basic amenities, such as electricity, water and rural
roads. For this, RM580 million and RM420 million are allocated for Sabah and
Sarawak, respectively.
19. As part of the Government's effort to further reduce
the financial burden of the lower income group, households which incur
monthly electricity bills of RM20 or less, will not have to pay for
electricity, for the period from 1 October 2008 to end of 2009. The
Government will bear the cost of such bills, amounting to RM170 million for
the period. A total of 1.1 million households will benefit from this
measure.
Increasing Disposable Income
20. The higher inflation rate has also affected the
purchasing power of the lower middle-income group. To assist this group, the
Government proposes the current tax rebate of RM350 per person be increased
to RM400 for those with taxable income of RM35,000 and below. With this
increase, some 100,000 taxpayers will be out of the tax net.
21. In addition, to reduce the tax burden of individuals,
especially those dependent on interest income from savings, the Government
proposes that all interest income for individuals be tax exempt.
22. To mitigate the impact of rising prices on consumers,
the Government proposes to reduce import duties on various consumer durables
from between 10% and 60% to between 5% and 30%. These include blender, rice
cooker, microwave oven and electric kettle. In addition, the Government
proposes full import duty exemption on several food items, which currently
attract import duties of between 2% and 20%. These include vermicelli,
biscuits, fruit juices and canned sweet corn.
23. Currently, private passenger vehicles with diesel
engines owned by individuals and companies are subject to a higher road tax
compared with those with petrol engines. The Government will reduce the road
tax on private passenger vehicles with diesel engines to be the same as
those with petrol engines, effective 1 September 2008.
Enhancing The Welfare Of Employees
24. The private sector should make their employee welfare
a priority. To support such initiatives, the Government proposes that the
travel allowance for commuting to work provided by employers be given full
tax deduction, while the employees receiving such an allowance be given tax
exemption of up to RM2,400 per year.
25. In addition, the Government proposes tax exemption be
given to employees on the following staff benefits:
First: interest subsidies on housing, motor vehicles and
education loans. The tax exemption will be limited to total loans up to
RM300,000;
Second: mobile phones, as well as telephone and internet
bills paid by the employer;
Third: staff discounts of up to RM1,000 a year on company
traded goods;
Fourth: staff discounts on services rendered by the
company, such as private schools providing free education to children of
their employees; and
Fifth: childcare allowance of up to RM2,400 per year.
26. Tax exemption on medical benefits provided by
employers at present excludes maternity expenses. The Government proposes
that the tax exemption be extended to include expenses on maternity. In
addition, given the growing acceptance of traditional medicine, namely
acupuncture and ayurvedic, the Government also proposes that tax exemption
be extended to cover such medical benefits.
27. To assist civil servants with young children, the
Government currently provides a subsidy of RM180 per month towards TASKA
fees for those with monthly household income of RM2,000. Effective 1 January
2009, the eligibility criteria will be increased to RM3,000.
28. Currently, Government servants are given free return
airfares to their home states, between Peninsular Malaysia, and Sabah and
Sarawak, once every two years. To foster closer family ties, this facility
will be provided every year, effective 1 January 2009.
Improving Public Transportation
29. The Government will continue to encourage greater
utilisation of public transportation, in the context of improving the
productivity and quality of life. I have recently experienced for myself the
condition of the public transportation system in our capital city. I
believe, a more efficient, reliable and integrated public transportation,
which provides seamless travel and greater frequency of services, is
required.
30. RapidKL and RapidPenang were set up to improve public
transportation in the Klang Valley and Pulau Pinang. Currently, RapidKL
provides bus services along 166 routes, covering more than 980 housing
areas. Of this, 14% are unprofitable social routes not plyed by other public
transport companies. This is in line with the Government's aspiration to
provide better public transportation for the benefit of Malaysians,
especially those in the lower income group. On average, 400,000 passengers
use bus services daily, while 350,000 use RapidKL rail services. Overall,
RapidKL provides 44% of total public transport services in the Klang Valley.
31. RapidPenang provides bus services on 33 routes in 106
housing areas with ridership of 46,000 passengers daily, constituting 60% of
total bus services in Pulau Pinang. To widen the service network, 200
additional buses will be provided, bringing the total to 350. With this,
RapidPenang services will be extended to cover 14 new routes and ridership
is estimated to increase to 120,000 passengers daily by end of 2009.
32. To further improve the efficiency of public
transportation, a sum of RM35 billion will be expended during the period
2009 to 2014. This includes projects to enhance the capacity of existing
rail services, build new rail tracks, increase the number of buses, as well
as provide better infrastructure facilities.
33. The existing LRT system in the Klang Valley will be
extended by 30km, that is 15km respectively, for Kelana Jaya and Ampang
lines. Upon completion in 2011, the extensions are expected to benefit 2.6
million residents in the Subang Jaya-USJ and Kinrara-Puchong areas, compared
with 1.9 million currently.
34. At the same time, 35 train carriages for the Kelana
Jaya Line have been procured costing RM1.3 billion and these trains will be
fully operational by early 2010.
35. With these measures, the capacity of the Kelana Jaya
Line will more than double from the current 160,000 passengers daily to
350,000, while for the Ampang Line, it will increase from 150,000 to
280,000.
36. To further expand the urban rail service network in
the Klang Valley, a new LRT line will be built along a 42km route from Kota
Damansara to Cheras. This new line, with a capacity exceeding 300,000
passengers daily, will, upon completion in 2014, provide rail services to
more than one million residents in the housing, industrial and financial
areas in the vicinity.
37. The Government also took over the assets and
operations of KL Monorail, from a private operator in 2007. Several measures
were taken to improve the operational efficiency and maintenance. Following
this, the twelve trains acquired are now fully operational. Since the
takeover, total ridership has increased by more than 10% from an average of
51,000 passengers daily to 57,000 currently. This takeover will contribute
towards establishing a more integrated urban rail service in the Klang
Valley.
38. The commuter rail services of Keretapi Tanah Melayu
Berhad (KTMB) will be upgraded. Towards this end, rehabilitation works are
being undertaken on the existing 20 Electric Multiple Units (EMUs) and are
expected to be completed in 2009. An additional 13 new units of EMUs will be
acquired and be operational by 2011. With this, the capacity of the KTM
Commuter is expected to increase from the current 350,000 to 500,000
passengers daily. To expand the commuter rail services network, a 7.5km
Sentul-Batu Caves line is under construction and is expected to be completed
by 2010.
39. In addition, the two major projects being implemented
to improve KTMB services are the Double-tracking Electric Rail for
Seremban-Gemas and Ipoh-Padang Besar, which are expected to be completed in
2012 and 2013, respectively.
40. An integrated transport terminal is being built in
Bandar Tasik Selatan, to provide facilities for inter-urban taxis and buses,
especially from the southern region in the Peninsular. The modern five-floor
terminal can accommodate more than 130 taxis and 100 buses, complete with
parking facilities and commercial lots, and will provide connectivity to the
Ampang Line, ERL and KTM Commuter as well as urban taxis and buses in the
Klang Valley. This terminal is expected to be operational in 2011.
41. To provide facilities for inter-urban taxis and buses
from the northern region, a new integrated transport terminal will be built.
This terminal will contribute towards further reducing traffic congestion in
the heart of Kuala Lumpur.
42. Public transport operators play an important role in
ensuring a comprehensive network of services, as well as providing more
efficient, safe and high quality services, both in urban and rural areas. To
reduce their operating costs, the Government has recently increased the
quota for diesel subsidy for public transportation. In addition, the
Government will undertake the following measures:
First: provide a soft loan facility of RM3 billion under
the Public Transportation Fund, administered by Bank Pembangunan Malaysia
Berhad (BPMB), to finance the acquisition of buses and rail assets; and
Second: reduce toll charges by 50% for all buses, except
at border entry points, namely Johor Causeway, Second Link and Bukit Kayu
Hitam, for a period of two years, effective 15 September 2008. The
Government will provide compensation to toll operators for their loss of
revenue, estimated at RM45 million per year.
43. In addition, bus operators will be given sales tax
exemption on the purchase of locally assembled new buses and Accelerated
Capital Allowance on the expenditure incurred. Further, the road tax will be
reduced to RM20 a year for all bus and taxi operators, including rent-a-car
and limousine operators.
44. The Public Land Transportation Commission will be
established under the Prime Minister's Department, to plan, integrate,
regulate and improve the overall public transportation services. This single
authority is important to facilitate planning and coordination, as well as
improve enforcement. The Commission is expected to commence operations by
mid 2009.
Food Security
45. The Government will implement several agriculture
programmes to ensure adequate food supply. For this, a sum of RM5.6 billion
is provided under the National Food Security Policy, for the period 2008 to
2010. This allocation, among others, is to provide incentives to agriculture
entrepreneurs to reduce production costs and encourage higher agriculture
output. About 350,000 vegetable and fruit growers, as well as aquaculture
and livestock breeders, will benefit from these incentives.
46. In an effort to increase fish landings, an amount of
RM300 million is allocated. Of this, RM180 million is in the form of cost of
living allowance to fishermen and fishing boat owners, as well as RM120
million as incentive for fish landings. This will benefit about 100,000
fishermen, including boat owners.
47. In addition, to increase poultry output, the
Government proposes that the expansion of chicken and duck farms be given
Reinvestment Allowance of 60% for a period of 15 years.
48. The Government will provide 220,000 padi farmers
throughout the country with incentives to increase padi production, which
involves an allocation of RM1 billion. In this regard, more than 1,300
hectares of abandoned land have been identified for padi and other food
production, such as fruits, vegetables and livestock.
49. An allocation of RM475 million is provided in the
form of agricultural inputs, fertilizers and pesticides to assist padi
farmers. To further assist farmers, the Government proposes that import duty
on fertilizers and pesticides be abolished.
Generating Income Through Micro Credit
50. Amanah Ikhtiar Malaysia (AIM) was established to
assist poor rural households to augment their income through micro credit
financing. Since its inception in 1987, AIM has disbursed loans totalling
RM2.5 billion to more than 180,000 poor households throughout Malaysia.
Commencing this year, the scope and operations of AIM have been expanded to
urban poor. For this purpose, the Government has set up the Urban
Microcredit Financing programme, with a revolving fund of RM100 million.
Initially, AIM has started its operations in Kuala Lumpur to assist
households with monthly earnings of up to RM2,000. The programme will be
extended to other urban areas nationwide, beginning 2009.
Enhancing Quality Of Life Of Orang Asli
51. The socio-economic status of the Orang Asli community
will continue to be elevated to ensure they benefit from the nation's
prosperity. In line with this, RM160 million is allocated to provide better
education opportunities as well as improve health and basic amenities for
the Orang Asli. Major programmes include the establishment of a transit
centre of the Department of Orang Asli Affairs in Sungai Siput, Perak, to
provide accommodation and medical facilities. In addition, priority will be
given to social infrastructure development programmes, including housing
assistance, planned resettlement, income generating programmes, as well as
training. These programmes will benefit more than 32,000 Orang Asli.
Assisting The Less Fortunate
52. At present, the Government provides a monthly
allowance of RM300 to the disabled who are working. The purpose is to
encourage the disabled to be gainfully employed. Recognising that some
disabled are unable to work, the Government will now extend a monthly
allowance of RM150 to them. In addition, the monthly allowance for disabled
students in special education schools, will also be increased from RM50 to
RM150, while teaching assistants in these schools will be provided incentive
payments of RM200 per month.
Providing Low Cost Housing
53. During the period 2004 to 2008, more than 100,000
units of low cost houses have been built by various agencies nationwide. In
2009, an allocation of RM330 million is provided to Jabatan Perumahan Negara
to complete 4,400 units of Program Perumahan Rakyat (PPR) Disewa, 1,500
units of PPR Bersepadu and 600 units of PPR Dimiliki. In addition, Syarikat
Perumahan Negara Berhad will build 33,000 low cost houses.
Improving Government Housing Loan
54. To encourage home ownership among civil servants, the
Government will improve the terms for staff housing loans, as follows:
First: extend the tenure of new housing loans from 25
years to 30 years;
Second: provide housing loan facility for renovation
works on houses not purchased through Government housing loan; and
Third: extend the housing loan insurance panel to all
eligible insurance companies.
At present, the panel is limited to five insurance
companies.
Reducing Cost Of Home Ownership
55. At present, buyers of low cost houses are given full
stamp duty exemption on all instruments, including loan agreements. For the
purchase of medium cost houses of up to RM250,000, a 50% stamp duty
exemption is given only on the instrument of transfer. To further reduce the
cost of buying medium cost houses, the Government proposes the 50% stamp
duty exemption be extended to loan agreements.
Extending The Housing Credit Guarantee Scheme
56. In the 2008 Budget, I had announced the Housing
Credit Guarantee Scheme (SJKP) to assist those without fixed income to own
affordable houses. Under the Scheme, borrowers can obtain housing loans from
Bank Simpanan Nasional and Bank Islam Malaysia Berhad to purchase low and
medium cost houses. A fund of RM50 million was set up for this purpose. To
date, nearly 500 applications valued at RM20 million have been approved.
Beginning July 2008, the Government has rolled out the scheme to all local
financial institutions. The fund size will be increased to RM100 million,
enabling SJKP to guarantee loans amounting to RM2 billion. About 40,000
borrowers will benefit from this facility.
Promoting Corporate Social Responsibility
57. In the 2008 Budget, the Government had announced the
implementation of Program Amal Jariah with a fund of RM50 million to repair
dilapidated houses of hardcore poor nationwide. To date, a total of 4,600
houses, with an estimated cost of RM24 million, have been repaired. For
2008, a total of 8,400 houses will be repaired.
58. The Government calls upon the private sector to
contribute to the fund as part of its corporate social responsibility (CSR),
to enable the poor to benefit from Program Amal Jariah. In this regard, the
Government will provide a matching grant to the private sector for this
programme. Initially, RM100 million is allocated for this purpose. About
30,000 dilapidated houses will be repaired.
59. Currently, tax deduction is given on contributions
made by companies for community projects related to education, health,
housing, infrastructure and ICT. To further enhance a culture of CSR, the
Government proposes that the scope of community projects eligible for tax
deduction be extended to include projects to enhance income of the poor, as
well as conservation and preservation of environment. In addition, for
companies contributing to charitable institutions, the Government proposes
that the limit of deduction be increased from 7% to 10% of aggregate income.
60. Malaysia is one of the largest palm oil producers in
the world. To enhance global acceptance of palm oil, there is a need to
demonstrate strong social and environmental responsibility in our business
practices. In this regard, the Government fully supports the initiative by
palm oil plantations to obtain Roundtable For Sustainable Palm Oil (RSPO)
certification. The Government will allocate RM50 million to provide a RSPO
Fund to support community programmes, such as upgrading of schools in
plantations, as well as implementing conservation programmes, such as
enhancing biodiversity in plantations.
Enhancing Health Services
61. The Government will continue to provide free health
services for Malaysians. A sum of RM13.7 billion is allocated in 2009 to
enhance health facilities and provide equipments, increase supply of
medicines, develop human resources, intensify research and enforcement
activities, as well as build more hospitals, clinics and quarters.
62. In line with the Government's effort to encourage
healthy lifestyle and curb social problems due to smoking, especially among
youngsters and students, the Government proposes that excise duty specific
on cigarettes be increased by three sen from 15 sen per stick to 18 sen per
stick. With this, the duty for a 20-stick pack of cigarettes is now
increased by 60 sen.
63. To retain the services of medical specialists in the
public sector, the incentive allowance for medical specialists will be
increased. This will involve 3,800 specialists, with an additional
expenditure of RM26 million.
64. The Government will increase incentive payments for
the flying medical teams in Sabah and Sarawak. For medical assistants, the
increase is from RM20 to RM30 per return trip and for nurses from RM15 to
RM30.
Improving Public Amenities
65. Infrastructure facilities will enhance the quality of
life of the rural community. In the 2009 Budget, a sum of RM1.8 billion is
provided to increase basic amenities and infrastructure in rural areas. Of
this, more than RM1 billion is for projects involving 480 km of rural roads
and 1,300 km of village roads. A sum of RM280 million is provided for rural
water supply, targeting 30,000 households and RM350 million for rural
electricity supply, covering 3,600 households. In addition, RM65 million is
allocated for 11,700 public amenities projects in the rural areas.
66. The Government will intensify efforts to further
develop Sabah and Sarawak. For Sabah, an allocation of RM3 billion is given
for various infrastructure projects, including 266 km of federal and rural
roads, benefiting more than 550,000 residents. The major projects include
the construction of Phase II of Jeroco–Lahad Datu road, upgrading and repair
works of Jalan Sandakan to Telupid, upgrading Phase II of Jalan Ranau to
Tambunan, building the Semporna–Bum-Bum Island Bridge, replacing dilapidated
bridges in the interior of Sabah, implementing tourism and ecotourism
projects, providing hospital and rural health facilities as well as PPR
Disewa.
67. An allocation of RM3.3 billion is provided for
Sarawak to implement various projects, including the construction of 230 km
of federal and rural roads, benefiting more than 350,000 residents. Among
the major projects are the construction of Jalan Penghubung to the Sarawak
New Federal Administrative Centre, Jalan Nangga Buai to Ulu Sepak, Betong,
Jalan Awat-Awat to Kuala Lawas, Jalan Tanjong Assam to Saribas, Bengoh Dam
in Kuching, an integrated Waste Water Management System in Kuching, PPR
Disewa, tourism and ecotourism projects, as well as hospital and rural
health facilities.
SECOND STRATEGY: DEVELOPING QUALITY HUMAN CAPITAL
Mr Speaker Sir,
68. The Government will continue to implement various
programmes towards creating a pool of trained and competitive work force. To
achieve this objective, a sum of RM47.7 billion is allocated for education
and training, accounting for 23% of the total 2009 Budget allocation.
Enhancing Training and Skills Programmes
69. A sum of RM2.4 billion is allocated to enhance
facilities as well as undertake training and skills programmes. Of this, a
sum of RM150 million is to upgrade 13 existing polytechnics as well as 15
community colleges and their branches. With this, the total enrolment is
expected to reach 120,000 students, compared to 112,000 currently.
70. A sum of RM200 million is provided to existing
Institut Latihan Perindustrian (ILP) and Advanced Technology Training Centre
(ADTEC), as well as for the construction of a new ILP in Marang, Terengganu
and an ADTEC in Taiping, Perak. An amount of RM360 million is allocated for
Institut Kemahiran MARA (IKM) and Institut Kemahiran Tinggi MARA (IKTM),
Kolej Pelajaran MARA (KPM) and Giat MARA projects. The monthly allowance for
Giat MARA trainees will be increased from RM100 to RM200.
71. The Government will increase the number of nurses in
public hospitals. A sum of RM70 million is allocated in 2009 to train 5,600
nurses in training colleges under the Ministry of Health, with 2,000 in
recognised private training colleges. Furthermore, to cater for the
increasing demand for nurses, graduates in related science courses will be
allowed to pursue a career in nursing by undergoing a one and a half years
diploma in nursing instead of the normal three years. In addition, to
improve the skills and quality of nurses, the post of assistant nurses will
be upgraded to community nurses, upon completion of a six-month nursing
course.
72. To support the development of regional health tourism
in the Northern Corridor Economic Region (NCER), the Government will provide
a launching grant of RM30 million towards the establishment of an
industry-based not-for-profit training centre. The objective of the centre
is to upgrade the skills of existing nurses to meet increasing market demand
for specialists in nursing.
73. The Construction Industry Development Board (CIDB)
should take measures to train more workers in the construction industry. For
this purpose, I have directed CIDB to provide at least 100,000 industrial
training opportunities in technical fields such as welding, management and
safety in 2009. Construction workers are encouraged to obtain skills
certification through accreditation and skills training conducted by CIDB.
The costs of accreditation and skills training for local workers will be
borne by CIDB.
Improving Quality Of Education
74. The Ministry of Education is allocated a sum of RM31
billion for the benefit of 5.8 million students. Of this amount, RM1.6
billion is to finance the additional posts created following the opening of
26 primary and 41 secondary schools and the additional expenditure for
maintenance, food assistance, scholarship, per capita grant and new
equipment.
75. To meet the need for new schools and replace
dilapidated schools, 110 primary and 181 secondary schools will be built. In
addition, to ensure that existing schools are well maintained, an allocation
of RM615 million is provided. This allocation for maintenance cannot be
vired for other purposes.
76. To improve the quality of learning at institutions of
higher learning, an allocation of RM14.1 billion is provided to the Ministry
of Higher Education. Of this, RM8 billion is for Operating Expenditure for
public institutions of higher learning, RM627 million for polytechnics and
community colleges as well as RM37 million for the Malaysian Qualification
Agency. A sum of RM4.4 billion represents Development Expenditure, including
for the construction of clinical facilities and medical faculties as well as
for research training.
Expanding the PINTAR Programme
77. The Government welcomes the private sector's
contribution to complement efforts towards enhancing the quality of
education. In this regard, the PINTAR Programme, which involves adopting
schools, by GLCs, was launched in 2006. As one of the initiatives under the
GLC Transformation Programme, it has successfully involved the participation
of 23 GLCs and their subsidiaries, benefiting 152 schools throughout the
country, including Chinese and Tamil National Type Primary Schools. Among
the achievements are improvements in the average passing rate of students as
well as an increase in the number of students achieving excellent
examination results.
78. The PINTAR Programme, which will be expanded to
include participation by non-GLCs, will adopt 480 schools nationwide by
2012, with priority given to schools in Sabah and Sarawak. The Government
will set up the PINTAR Foundation, with a launching grant of RM20 million to
ensure that the implementation is coordinated as the Programme is expanded.
Culture of Excellence
79. To improve the country's resilience and
competitiveness, it is important to instil a culture of excellence and high
performance at all levels of the work force, both in the private and public
sectors. Towards this end, the implementation of Key Performance Indicators
was introduced in the civil service and under the GLC Transformation
Programme, with emphasis on performance-based wages at all levels of the
workforce.
80. To support the Government's objective to create a
knowledge based economy, it is important to increase the number of
professionals serving in Malaysia and to minimise the brain drain. In this
regard, the individual income tax rates have to be competitive and
attractive. The Government, therefore, proposes that the highest marginal
tax rate for individuals be reduced from 28% to 27%, effective the year of
assessment 2009. In addition, the marginal tax rate of 13% will also be
reduced to 12%, which will benefit the middle income group. These
reductions, together with the increase in rebate, which I announced earlier,
will benefit all taxpayers.
81. The Government welcomes initiatives undertaken by
private sector employers to recognise the contributions of their workers.
For this, the Government proposes that tax exemption on excellent service
awards be extended to all awards relating to innovation and productivity.
82. As human capital is key towards increasing a
company's competitiveness, employers should endeavour to recruit the best.
In this regard, the Government proposes that recruitment costs, such as
payments to employment agencies and participation in job fairs, be tax
deductible.
THIRD STRATEGY: STRENGTHENING THE NATION'S
RESILIENCE
83. Despite the expected moderation in global economies,
growth remains resilient in this region, particularly in China and India.
This resilience provides significant opportunities for growth in selected
sectors of the Malaysian economy, as follows:
First: regional services, such as Islamic finance,
business process outsourcing, tourism, healthcare and aircraft maintenance,
repair and overhaul (MRO);
Second: resource based industries, particularly petroleum
and palm oil; and
Third: higher value added manufacturing, such as
electronics and biotechnology.
84. Malaysia has demonstrated competitiveness in these
sectors, underpinned by the strength of our professionals, who have excelled
and are recognised globally. To further strengthen Malaysia's
competitiveness, we need to train larger numbers and upskill existing
professionals in growth sectors. Towards this end, the Government has
allowed double deduction for courses conducted by INCEIF in Islamic finance.
The Government proposes to extend the double deduction to employers for
sponsoring their employees to pursue postgraduate studies in areas, such as
in ICT, electronics and life sciences. In addition, withholding tax
exemption will be given to non-resident experts providing technical training
services in these areas.
Conducive Environment For Private Investment
85. The Government will continue to provide a conducive
environment to encourage private sector activities. This includes measures
to ensure Malaysia remains the preferred destination for foreign
investments. In 2007, FDI inflow was 5.2% of GDP compared to 2% in China and
1.3% in India. Malaysia continues to attract foreign investments in a wide
range of industries, especially in oil and gas as well as manufacturing. To
further promote private sector investment, the Government proposes that the
tax treatment on group relief be enhanced by allowing losses for the purpose
of offsetting be increased from 50% to 70%.
86. The greater utilisation of ICT is essential for
businesses to remain competitive. However, the use of ICT requires
companies, especially SMEs, to incur large expenses to replace and upgrade
ICT assets. To assist the private sector in this regard, the Government
proposes that Accelerated Capital Allowance on expenses incurred on ICT
equipment, which is currently claimed over two years be accelerated to one
year.
87. To ensure Malaysia remains an attractive investment
destination in the region, particularly among multinational companies, the
tax framework has to be transparent and business friendly. To enhance
certainty on pricing issues for inter-company trades within a group, the
Government proposes to introduce an Advanced Pricing Arrangement mechanism.
This mechanism is widely practiced in developed countries and has succeeded
in resolving issues relating to transfer pricing.
88. Improving operating efficiency in ports is key to
facilitating the growth in the nation's international trade. In this regard,
the Government proposes to abolish the import prohibition on cranes used at
ports, as well as reduce the import duty from 20% to 5%.
Development Of Growth Corridors
89. The Government remains committed towards corridor
development initiatives to ensure more regionally balanced socio-economic
development of the nation. The intention is to provide more investment,
employment and entrepreneurial opportunities in the various regions. Thus
far, all the five economic corridors have been launched and initiatives, as
outlined in the respective Development Masterplans, are beginning to be
implemented. The five economic corridors are Iskandar Malaysia, NCER, East
Coast Economic Region (ECER), Sarawak Corridor of Renewable Energy (SCORE)
and Sabah Development Corridor (SDC). In the Midterm Review of the 9MP, an
additional ceiling of RM10 billion has been allocated for the development
expenditure of the corridors, of which RM6 billion is provided in the 2009
Budget.
90. To further strengthen private investment in Iskandar
Malaysia, an additional allocation of RM300 million is provided under the
Strategic Investment Fund. The Fund is to finance the implementation of
private-public partnership projects, in the areas of public transportation,
healthcare services, education and creative industries. These are priority
socio-economic areas, where Government will support the project viability,
but with the private sector bearing the project risks. In healthcare, for
example, instead of the Government constructing and operating hospitals, the
provision of such public services can be partly met through the Government
procuring such services from private sector providers.
91. Iskandar Malaysia will develop an integrated public
transportation system, initially focusing on enhancing bus services by
working together with existing bus operators. In the area of healthcare, a
centre of excellence for postgraduate teaching and research will be
established in partnership with private sector hospitals. Iskandar Malaysia
will also set up and operate not-for-profit schools, initially on a pilot
basis. These schools will have a mixed intake of Government and privately
funded students. In addition, a creative cluster will be developed in
Iskandar Malaysia, with funds channelled towards enhancing the capabilities
of local creative talent.
92. Among the major projects being implemented in the
ECER are Agropolitan in south Kelantan, Besut-Setiu and Pekan, including
developing kenaf products. In the context of optimising the natural
resources of the state, the Kertih Plastics Industry Cluster will be
developed as a downstream industry, to enable the local residents to benefit
from the petroleum resources in Terengganu. Similarly, the SCORE will focus
on the development of hydroelectric power and coal, petroleum and gas
downstream industries, as well as large-scale agriculture.
93. Towards realising the potential of agriculture in
NCER, a number of projects are being implemented, including cattle breeding
using the feedlot system in Tobiar, Laka Temin and Cuping, as well as the
conversion of about 3,000 hectares of idle land for padi cultivation. In the
SDC, a palm oil industry cluster in Lahad Datu and an integrated livestock
centre in Keningau are being implemented.
Promoting Tourism
94. In the context of the corridor development in Sabah
and Sarawak, the Government proposes that new investments by 4-star and
5-star hotel operators in Sabah and Sarawak be given Pioneer Status with
100% income tax exemption or Investment Tax Allowance of 100% for 5 years.
95. In July 2008, Unesco listed Malacca and Georgetown as
World Heritage Sites for the living culture, history, architecture and
diversified culture. This reflects a global recognition of our rich and
diversified cultural heritage. To support preservation initiatives, the
Government will provide an allocation of RM50 million for conservation works
of heritage sites in Malacca and Penang, to support activities undertaken by
non-governmental organisations (NGOs) and private sector.
Promoting Venture Capital Companies
96. Many innovative but high risk projects often have
difficulty in securing financing. Conventional sources of funding, namely
bank borrowings and private debt securities, may not be appropriate for
these projects. To facilitate greater investment by venture capital and
private equity funds, the Government proposes that venture capital companies
that invest at least 30% of their funds in start-up, early stage financing
or seed capital be eligible for a 5-year tax exemption.
Developing Maritime Sector
97. As a major trading nation, the local shipping
industry will be promoted to encourage the participation of more local
shipping companies in freight shipment. Two funds, totalling RM2.3 billion,
were set up under BPMB, namely the Malaysian Shipping Finance Fund and New
Shipping Finance Facility to finance purchase of ships. These funds have
been fully utilised by 68 shipping and eight shipyard companies. As such, a
new RM2 billion fund will be set up to finance the purchase of ships and
upgrade shipyards.
Promoting Small and Medium Enterprises
98. Small and Medium Enterprises (SMEs) play an important
role in the economic development of the nation. In order to further enhance
the role of SMEs in the economy, the Government recently announced two new
funds totalling RM1.2 billion, funded by Bank Negara Malaysia, to assist the
modernisation of SME operations, especially for purchase or upgrading of
machines and equipment, as well as reducing the impact of price increases.
To further support SMEs, the Government proposes all assets in the form of
plant and machinery acquired in the years of assessment 2009 and 2010 be
given Accelerated Capital Allowance to be claimed within one year. In
addition, SMEs are allowed to claim full Capital Allowance on all small
value assets within one year.
National Energy Plan
99. The success of the nation's oil and gas industry has
contributed significantly to the country's socio-economic development.
Petronas has contributed significantly in the form of royalties, taxes,
duties and dividend payments to the Government. This contribution has
enabled the Government to build infrastructure, and provide better education
and health facilities.
100. While Malaysia has achieved remarkable success in
its oil and gas industry, oil and gas remain a finite and depleting
resource. Our oil and gas reserves are modest in size and are gradually
depleting. While efforts to discover and exploit new reserves are ongoing
and have yielded encouraging success, we must accept that domestic reserves
may be fully depleted, and when that happens, it will have significant
consequences on our economy.
101. In order to ensure long-term energy security for the
nation, we must look for new, long-term solutions for our energy needs. This
includes intensifying energy efficiency initiatives to ensure more
productive and prudent use of our remaining reserves, while enhancing our
efforts on developing viable alternative energy sources, such as solar,
wind, and biofuels, apart from exploring nuclear energy. To this end, the
Government is currently formulating a comprehensive National Energy Plan
that will address these challenges to ensure sustainability and
self-sufficiency in energy supply.
102. To address the price volatility of fossil fuels,
various measures have been undertaken to diversify sources of energy and
conserve energy. Currently, various incentives are provided for the greater
use of renewable energy and energy efficiency. Towards this end, the
Government proposes the exemption of:
First: import duty and sales tax on solar photovoltaic
system equipment;
Second: import duty and sales tax on intermediate goods
such as High Efficiency Motors and insulation materials;
Third: sales tax on locally manufactured solar heating
system equipment;
Fourth: sales tax on locally manufactured energy
efficient consumers goods such as refrigerators, air-conditioners,
lightings, fans and televisions; and
Fifth: 100% import duty and 50% excise duty on new hybrid
CBU cars, with engine capacity below 2,000 cc, be given to franchise
importers. This exemption is given for a period of two years to prepare for
the local assembly of such cars.
Towards A Vibrant Capital Market
103. Malaysia's capital market has achieved remarkable
growth over the years and is currently among the largest in the region. Not
only has the market grown substantially in size, new innovative products
have been introduced on an ongoing basis to meet the demands of domestic and
foreign investors.
104. To further strengthen the Malaysian capital market
and to facilitate domestic intermediaries, such as principal corporate
advisors, to expand their international business, the Government proposes
that tax exemption be given on fees received by domestic intermediaries,
which successfully list foreign companies and foreign investment products in
Bursa Malaysia. This measure will also enable domestic investors to acquire
shares of foreign companies listed in the local exchange.
105. In order to enhance Malaysia's position as a hub for
Islamic capital markets, the Government proposes that tax exemption be given
for a period of three years for fees and profits earned by institutions
undertaking activities relating to the arranging, underwriting, distributing
and trading of non-ringgit sukuk issued in Malaysia and distributed outside
Malaysia.
106. Apart from this, in order to promote efforts to
further diversify and attract more foreign investors to the domestic capital
markets, the Government proposes that the current tax rate on dividends
received by foreign institutional investors from Real Estate Investment
Trusts (REIT) be reduced from 20% to 10%. Recognising that REITs is an
attractive investment product for individuals as well, the Government also
proposes a reduction in tax rate from 15% to 10%.
Ensuring Public Safety
107. The Government's objective is to ensure that
Malaysians are able to undertake their daily activities in a safe
environment. Ensuring such an environment will be a key focus of the
Government. For this purpose, a sum of RM5.4 billion is allocated in the
2009 Budget to enhance the capacity of the Royal Malaysian Police (PDRM). Of
this, RM4.8 billion is for Operating Expenditure and RM600 million for
Development Expenditure.
108. In 2008, a total of 162 police stations and police
bases were set up in crime prone areas in Selangor, Johor, Penang and the
Federal Territory of Kuala Lumpur. To enhance security, a sum of RM220
million is allocated in 2009 for the construction of police headquarters and
stations nationwide.
109. For the period 2008 to 2010, a total of 22,800
constables and 3,000 inspectors will be recruited. In addition, the special
incentive allowance for PDRM personnel will be increased from RM100 to RM200
monthly, effective 1 January 2009.
110. The Government had provided tax incentives on
security control equipment installed in factory premises and vehicle
tracking systems to enhance safety of goods. In addition, the Government
proposes that all business premises installed with security control
equipment be given Accelerated Capital Allowance, which is fully claimable
within one year.
Civil Service
111. The Government appreciates the increased
productivity and contribution of civil servants towards national
development. The Government will provide a bonus of one-month salary,
subject to a minimum of RM1,000 for 2008. The bonus will be paid in two
instalments, namely in September and December 2008.
2009 BUDGET ALLOCATION
112. The fiscal position of the Federal Government has
strengthened over the past seven years, with the overall deficit reduced
from 5.5% of GDP in 2000 to 3.2% in 2007. This reduction has provided
greater flexibility for Government fiscal policy, especially in an
environment of greater uncertainties in the global economy as well as
increasing prices of goods.
113. The reduction in fiscal deficit over the last seven
years has enabled the Government to implement additional measures to reduce
the impact of increasing prices on Malaysians. This involves an additional
allocation of RM22.1 billion this year, including RM17.0 billion for fuel
subsidy and RM3.6 billion for food subsidy. Apart from these, several major
sectors such as education, health, welfare and internal security are also
given additional allocation totalling RM1.5 billion.
114. Taking into account the overall Federal Government
revenue of RM161.6 billion and expenditure of RM196.9 billion, the fiscal
deficit for 2008 is estimated to increase to 4.8%. However, the Government
believes that the high fiscal deficit is a one-off necessity and is
committed to reducing the fiscal deficit to 3.6% in 2009.
115. Given the strategies and programmes that I have
tabled, I propose an allocation of RM207.9 billion for the 2009 Budget,
which is 5.1% higher than the revised allocation for 2008. Of this, RM154.2
billion is for Operating Expenditure, while RM53.7 billion is for
Development Expenditure.
116. Under Operating Expenditure, RM86.3 billion or 56.6%
is allocated for Fixed Charges and Grants, RM38 billion for Emoluments,
RM26.5 billion for Supplies and Services, RM2.4 billion for Purchase of
Assets and RM1 billion for other expenditures.
117. As for Development Expenditure, the largest
allocation of RM27.8 billion is for the economic sector, comprising
agriculture, industry and infrastructure. A sum of RM17.8 billion is
allocated to the social sector encompassing education, health and housing.
The security sector receives RM4.1 billion while administration, RM2.1
billion, with the balance RM2 billion as Contigencies.
2009 ECONOMIC PROSPECTS
118. The Malaysian economy is projected to grow by 5.4%
in 2009, driven by domestic demand, with consumption and private investment
increasing by 6.5% and 5.8%, respectively. Growth is expected to be
broad-based with positive contributions from all economic sectors and
spearheaded by the services sector, which is projected to grow by 6.9%. This
is driven by robust growth in tourism, transportation, finance and banking
as well as ICT related industries. External trade will remain buoyant with
exports growing at 4.6%.
119. Per capita income is estimated to increase by 8.1%
to RM27,900 or in purchasing power parity terms, equivalent to USD17,600.
Inflation in 2009 is expected to moderate, following various Government
measures to curb price increases.
CONCLUSION
Mr Speaker Sir,
120. The tabling of the 2009 Budget demonstrates yet
again that the Barisan Nasional Government is responsive to the concerns of
the rakyat and has taken measures to lighten the burden of all Malaysians,
particularly the lower income group. The approach taken is focused towards
support and assistance, which not only improves the quality of life but also
enables all Malaysians to enhance their productivity. This Budget is in line
with the medium term plan as articulated in the National Mission and the
Ninth Malaysia Plan to further develop the nation towards Vision 2020.
121. The Barisan Nasional Government will continue to
manage the economy responsibly. The Opposition, on the other hand, continues
to make populist claims, which, if implemented, would undermine the
Government's financial position and bequeath a bankrupt nation to the next
generation.
122. Indeed, it is our collective responsibility to
safeguard our political stability. Political parties, NGOs, the private
sector and the media must all play their role in creating a nation that is
peaceful, strong and united. Political rhetoric cannot contribute to the
well being of Malaysians, nor to the economic progress of the nation.
Instead, the political culture of extremism will destroy the very fabric of
the nation's coherence and prosperity.
123. I wish to reiterate that the Barisan Nasional
Government, which has been given the mandate by the people in March this
year, will continue to safeguard political stability and enhance economic
prosperity of the nation. Efforts by certain parties to destabilise the
country by attempting to seize power through illegitimate means, and without
the mandate of the people, must be rejected. We cannot allow uncertainties
to continue, as this will adversely affect foreign investment, economic
sentiment and the capital markets. I will not allow these disturbances to
continue. I will not permit the mandate given by the people to be seized
from Barisan Nasional, which had won the last election with a majority of
the seats, based on democratic principles. I am confident the people will
continue to support the Barisan Nasional Government to govern the nation. We
need to get on with the business of governing and not waste any more time
with opportunistic threats to seize the people's mandate through
undemocratic means.
124. Since peace and prosperity of the nation is a
collective responsibility, the Government requires the understanding and
participation of all Malaysians, including those with different political
ideologies. Let us together defend the sovereignty and independence of this
country of ours. Let us move forward together towards excellence.
125. And as we move forward, let us pray to God for
guidance and blessing. We believe that, ultimately, truth will prevail over
falsehood. I pray to God that our future generation will inherit a nation
that is peaceful, united and prosperous.
Mr Speaker Sir,
I beg to propose.
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