Prime Minister Datuk Seri Anwar Ibrahim is presenting the revision of the much-anticipated national Budget 2023 under the theme of “Developing Malaysia Madani” in Parliament today (Friday, Feb 24).
Anwar, who is also Minister of Finance took the floor of the Dewan Rakyat today to announce the Government formulated Budget 2023 based on six pillars.
The government will take a more holistic and inclusive approach to improve and evolve Malaysia by emphasising the importance of merging the human component with economic development to ensure a more humane economy in line with the concept of ‘Karamah Insaniah’ and six core values in Madani.
According to the Economic and Fiscal Outlook and Revenue Estimates released today, policies, strategies and programmes for the social economic development of the country will give due focus to upholding sustainability, prosperity, innovation, trust, respect as well as care, and compassion.
Through the Sustainability core, the government continues to provide subsidies and incentives for the agriculture and fisheries industry and implement various initiatives to improve food supply, including high-tech fresh agricultural produce for agro-food operators in Budget 2023.
The earlier Budget 2023 was tabled by the previous government in October last year but could not be passed before Parliament was dissolved.
Meanwhile, under the Prosperity core, the government will continue to explore a more decent minimum wage rate, benchmarked to the current median wage or the poverty line income levels.
At the same time, it will strengthen national security and defence by improving border control through asset maintenance and facility upgrading to ensure the people’s well-being.
Through the Innovation core, the government will accelerate the adoption of digitalisation and technological innovation as well as enhance cyber security measures in line with the 5G rollout as an enabler of growth.
The Respect core value, meanwhile is essential in bringing the people together with a view to contributing to the prosperity of the nation.
This includes improving the standard of living and the socio-economic status of certain communities, especially those living in rural areas and vulnerable groups to promote inclusivity.
As bumiputra achievement and equity participation is still lagging in various aspects, Budget 2023 will focus on increasing the involvement of the group in various socio-economic activities with high value-added and growth potential to create a more resilient and sustainable bumiputra community.
As for the core value of Trust, the government accords utmost importance on strengthening the governance ecosystem at all levels to increase public trust in government institutions.
This will be done by strengthening good governance to enhance transparency, integrity, efficiency, and accountability, particularly in government procurement and the conduct of government-linked companies and parliamentary institutions.
The final core value of Madani, which is Care and Compassion, involves attention to reducing the financial burden of the vulnerable, including the poor, the disabled and the elderly to ensure that standards of living are enhanced further.
They include increasing the supply of affordable housing and facilitating home ownership, improving access to quality healthcare services and education as well as implementing programmes to increase household income.
The Prime Minister said that the budget is a reflection of the principle of accountability and a noble value system that is able to face the current opposition.
The Budget will contain opposing factors to mitigate global economy headwinds rife with uncertainty.
BT Budget 2023 Malaysia Madani Live Highlights
Here are the highlights of the Budget 2023 speech based on sectors as they are delivered:
Budget 2023 Allocation
Budget 2023 is revised upward to RM386.14 billion, making it the largest allocation in Malaysia’s history, as the government continues to provide support to steer the economy, according to the Ministry of Finance (MoF).
The budget allocation is an upward revision from the RM372.3 billion budget tabled by the previous government in October 2022, which could not be passed before Parliament was dissolved.
In its Updates on Economic & Fiscal Outlook and Revenue Estimates 2023 report released today, the ministry said of the amount, 74.8 per cent will be utilised for operating expenditure while the remaining 25.2 per cent is for development expenditure.
A substantial allocation of 23.5 per cent will be provided for emoluments, subsidies and social assistance (15.2 per cent), economic (14.3 per cent), debt service charges (11.9 per cent), supplies and services (8.3 per cent), retirement charges (8.0 per cent), social (6.9 per cent), security (3.0 per cent), grants and transfers to state governments (2.1 per cent), general administration (1.0 per cent) and others (5.8 per cent).
MoF said funding for Budget 2023 will be sourced from income tax totalling 39.9 per cent of the total allocation, borrowings and use of government’s assets (24.5 per cent), non-tax revenue (19 per cent), indirect tax (14 per cent) and other direct tax (2.6 per cent).
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said Budget 2023 will focus on addressing the high cost of living, further strengthening the social safety net and enhancing the micro, small and medium enterprises (MSMEs) eco-system.
He said the government will also examine ways and means to reduce market disruptions as well as streamline business processes through the adoption of high technology and digitalisation.
“The government is committed to protecting the livelihood of the rakyat, upholding integrity, enhancing a caring and compassionate society, as well as improving the effectiveness of public and private sector delivery systems.
“These commitments can be achieved through a methodical approach focused on the aspect of thought, spirituality and infrastructure, which is centred on the framework of Malaysia Madani that focuses on shaping the future of the nation and realising its full potential,” he said.
Malaysia Madani framework is supported by six core values — sustainability, prosperity, innovation, respect, trust, and lastly, care and compassion.
After Anwar was sworn in, the Dewan Rakyat had, on Dec 20, 2022, passed a RM163.7 billion temporary operating budget to allow the government to spend a portion of the total estimated expenses during the months prior to the retabling and passing of the Supply Bill for 2023.
The amount includes RM107.7 billion, which is from the Consolidated Fund, to pay for emoluments and aid for the first six months of 2023, and RM55.96 billion from the Development Fund to fund the ongoing development projects.
Moderate 2023 GDP Growth
Anwar said Malaysia’s gross domestic product (GDP) is poised to record a growth of approximately 4.5 per cent in 2023, backed by the nation’s sound macroeconomic fundamentals, robust domestic demand coupled with the effective implementation of the 12th Malaysia Plan (12MP).
With the transition to the endemic phase and the reopening of international borders, Malaysia has seen an increase in tourist arrivals as well as trade and business activities, contributing towards a steady recovery, especially in the services sector, he said.
“2023 is expected to be a challenging year. The government will continue to be vigilant of economic headwinds as well as any potential geopolitical conflict in order to devise the appropriate strategies and actions,” the Prime Minister said.
The report indicated that the services sector will continue to steer growth in 2023, expanding by 5.3 per cent on the back of better domestic demand buoyed by wholesale and retail trade, transportation and storage, information and communication, food and beverages and accommodation, and finance and insurance subsectors.
Anwar also said the government remains steadfast in balancing the need to safeguard the well-being of the rakyat and the nation while ensuring a sound and sustainable fiscal position.
This is crucial in maintaining the high standing of the country’s sovereign ratings and to ensure the country’s premier position as an investor- and business-friendly country, especially in creating and attracting high value-added investments to achieve quality and inclusive growth, he said.
MoF said the acceleration of infrastructure projects with high multiplier effects, robust growth in private investment and continuous external demand particularly among major trading partners will further support the economy.
It also said the contribution of the tourism-related sector is expected to improve following an increase in tourist arrivals.
“Looking ahead, efforts will be intensified to position Malaysia as a major investment destination. Various measures will be implemented to uplift and enhance the economic potential for Malaysia to become more competitive, sustainable and inclusive,” it said.
It added that the government will continue to provide counter-cyclical policy support as well as expedite structural reforms to strengthen the country’s growth prospects and resilience.
As for trade, the total trade is expected to expand further to RM2.887 trillion in 2023, with an estimated surplus of RM264.33 billion.
Strict Fiscal Discipline
Anwar said the government will prioritise strengthening the governance ecosystem at all levels to increase public trust in government institutions.
This initiative will focus on transparency, integrity and efficiency, particularly in government procurement, good governance, and the developmental role of government-linked companies (GLCs) and parliamentary institutions, he said.
He also said various initiatives have been identified to address issues related to public finances, including exploring new sources of sustainable revenue and minimising leakages.
“In achieving these initiatives, the government will prioritise on public expenditure review while ensuring debt sustainability and enhancing public spending efficiency in the long run.
“These measures will improve the nation’s fiscal flexibility, allowing the government to implement counter-cyclical measures and maintain our economic resilience,” he said.
According to MoF, the fiscal deficit is expected to consolidate further to 5.0 per cent of GDP, to -RM93.94 billion from -RM99.48 billion in 2022.
Stellar 2022 Performance
Despite the softened global growth and escalating inflationary pressure, the Malaysian economy has performed better-than-expected in 2022, spearheaded by strong domestic demand and higher export performance in the aftermath of the COVID-19 pandemic.
Anwar said the country’s economic growth outperformed regional and global trends, rebounding to the pre-crisis level of 8.7 per cent, thanks to the swift policy responses and strong economic fundamentals.
MoF said in the report that growth in 2022 was anchored by the services sector, which grew by 10.9 per cent and contributed 58.2 per cent share to the GDP, mainly supported by the wholesale and retail trade, transportation and storage, as well as real estate and business services sub-sectors.
It said the manufacturing sector grew by 8.1 per cent with 24.2 per cent contribution to the GDP, while agriculture (0.1 per cent/6.6 per cent), mining (3.4 per cent/6.4 per cent), and construction (5.0 per cent/3.5 per cent).
The growth was also attributed to robust external demand, especially among Malaysia’s major trading partners, which resulted in a 27.8 per cent increment to RM2.848 trillion total trade last year. Similarly, the trade surplus expanded by 0.6 per cent to RM255.1 billion.
Luxury Goods Tax
The government plans to introduce a Luxury Goods Tax from this year with a certain value limit according to the type of luxury goods. – Among them are luxury watches and luxury fashion items.
Electricity Tariffs Maintained
Electricity tariffs have been maintained for all domestic consumers and SME businesses
ASB Aid
More ASB dividend distribution to the people in need
Flood Mitigation
In order to ensure that flood mitigation projects reach their goals, high-impact and public budget projects must be implemented through tendering
Capital Gains Tax of Share Disposal
In line with international best practice, the Government will study to introduce Capital Gains Tax for the disposal of unlisted shares by companies from 2024 at a low rate. The government will hold an engagement session with relevant parties to examine the details of this proposal.
Excise duty liquid or gel products containing nicotine
The government is proposing to impose an excise duty on liquid or gel products containing nicotine that is used for electronic cigarettes and vaping
No GST
The government is not planning to implement the Goods and Services Tax (GST) as food inflation is more than five per cent and wages are still at low levels.
The government supports Generational Endgame (GEG) and agrees that half of the excise duty will be reallocated to the Health Ministry to improve healthcare services.
Income Tax Reduced for SMEs
Income tax for micro SMEs reduced from 17% to 15% for the first RM150,000.
All Encompassing Capital Gains Tax Implementation in 2024
The government will study the possibility of introducing a capital gains tax from 2024.
Driving Licenses Borne
Government to bear driving license fees for motorcycles (B2), taxi, buses and e-hailing driving
RM50 Million to upgrade small holders
Govt is allocating RM50mln for building and upgrading 3,000 stalls, and kiosks for small traders
There are leakages in diesel subsidy with diesel worth RM10 billion misappropriated in 2022
TRX International Finance Hub
The government mandated the Tun Razak Exchange (TRX) as Malaysia’s international financial hub.
RM2 Billion for BNM for sustainable technology start-ups
BNM provides loans of up to RM2 billion to support sustainable technology start-ups and help SME companies implement low carbon practices.
RM150 Million for environmentally-friendly project development
Khazanah is providing RM150 million to boost environmentally-friendly project development. This includes supporting the market carbon and reforestation.
MADANI Endowment
The government has accepted the commitment of the private sector to create a MADANI Endowment with assets worth over RM 1 billion.
RM1.2 Billion for repairs to dilapidated clinics, schools
The government aims to complete repairs for 400 dilapidated clinics and 380 dilapidated schools with an allocation of RM 1.2 billion.
Waqf expansion
The government will establish a National Land Committee Waqf with the objective of contributing 20 percent of the expansion Islamic social finance sector by 2030. Anwar himself will chair this committee.
Child Development Department
The Ministry of Women, Family and Community Development will create a Child Development Department under the Social Welfare Department.
BNM “kill switch” policy
Bank Negara will also enforce the “kill switch” policy to all banking institutions to enable users themselves to take immediate action to freeze their accounts, ATM cards from being used in case of suspicious activity.
Insolvency Act Amendment
The government will amend the Insolvency Act 1967 so that bankruptcy cases can be automatically discharged at short notice.
Whistleblower Act
The Whistleblower Act to be amended to provide greater protection for those who provide information in the fight against graft and other wrongdoings.
Preserve biodiversity
The government is determined to protect the country’s nature, preserve biodiversity and reduce the state governments’ dependence on timber revenues.
RM50 million for Armed Forces, Bomba and RELA
Malaysian Armed Forces, Bomba and RELA allocated RM50 million for the procurement of equipment and assets needed during disasters
Palm industry sustainability
RM80 million will be provided to improve the sustainability of the palm industry and intensify the Anti-Palm Oil Campaign
Grants Matching
The government will provide RM50 million in matching grants to encourage the automation of the plantation sector through the use of robotics and artificial intelligence
RM150 Billion GLC Investment
The cumulative investment value of Government Related Companies is estimated to reach RM50 billion this year
Empower Digital Economy Centre (PEDi)
The govt will empower Digital Economy Centre (PEDi) to assist small traders in gaining ICT and e-commerce knowledge
RM100 mln Digitalisation Grant Scheme
RM100 mln provided under Digitalisation Grant Scheme for SMEs and small traders
RM200 e-cash for youths
2 million youth will receive RM200 e-cash
Childcare subsidy
Childcare subsidy of RM180 per month for civil servants
Socso incentives
Socso will give incentives worth RM45 million for employers to hire 17,000 TVET graduates
RM250 million to promote tourism
The government will allocate RM250 million to promote tourism
Bankruptcy Release
Bankrupts with debts of less than RM50,000 who fulfil certain requirements will be released from bankruptcy starting March 1
2% Increase in Income Tax on those eraning RM100k to RM1 Mil
Income tax for those earning between RM100,000 to RM1 million a year increased by 0.5% to 2%
Personal income tax reduced by 2% for those earning between RM35,000 to RM100,000
RM2.7 Billion Fed Roads maintenance and upgrading
RM2.7 billion will be provided for the maintenance and upgrading of federal roads to deal with the issue of road accidents
RM1.5 billion will be provided for the upgrading and construction of rural roads and rural roads
My50 monthly public transport pass continues
Government will continue the My50 monthly public transport pass
Travel Subsidised
RM209 million to subsidise air travel for rural folk in Sabah and Sarawak
The government has set a target to complete immediately the repairs on 400 clinics and 380 schools in shabby condition with a RM1.2 billion allocation
20% discount on PTPTN loan repayments for three months from March
Govt to put RM500 into EPF accounts below RM10,000
Full stamp duty exemption for houses worth RM500,000 and below and 75 percent stamp duty exemption for houses worth more than RM500,000 to RM1 million
