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Budget 2019 economic highlights

 Main economic points from the Budget 2019

Federal Government debt

* Federal Government’s debt and liabilities up to end June 2018 stood at RM1.065 trillion, which is about RM350bil higher than the amount officially disclosed by the previous government.

* Breakdown constitutes RM725.2bil in direct federal government debt, RM155.8 bil in committed contingent liabilities and RM184.9bil in other liabilities including leased payments for Public Private Partnership (PPP) projects.

*For the next three years, emphasis on fiscal consolidation to achieve a deficit of 3.4% in 2019; 3.0% in 2020 and 2.8% in 2021.

*Over medium term, deficit to be reduced further to region of 2%.

* Govt’s official debt as a percentage of GDP is expected to register 51.8% while total liabilities reduced to 73.5% in 2019.

*Debt Management Office to review, manage government and its agencies’ current and future debt and liabilities.

*Govt to use accrual basis of accounting to replace the cash basis of accounting.

*Govt to table Fiscal Responsibility Act by 2012 to avoid uncontrolled spending.

*To track and publish not only the direct Federal Government debt ratios, but also provide the necessary transparency to disclose  total debt and liabilities.

*Direct govt debt of RM687bil stood as 50.7% of the GDP as at Dec 31, 2017.

*Debt rose to RM725bil as at 30 June 2018, but maintained at 50.7% of the GDP.

*For 2019, to reduce direct govt debt to GDP ratio to 51.8%, total liabilities to reduce to 73.5%.

Others

* Ringgit has appreciated 12.3% against the Indian Rupee, 8.1% against the Indonesian Rupiah, 3% against Philippine Pesos, 3.2% against Chinese Renminbi and 0.6% against Singapore Dollar.

* The RM5.2bil KVDT Project will be re-tendered through open tender and is expected to provide substantial cost savings.

*The government will establish an airport Real Estate Investment Trust (REIT). The Govt hopes to raise RM4bil from selling 30% stake in the equity REIT.

* Under the GST, only 545 items were zero rated while under SST, almost 10 times the items were exempt from Sales Tax.

* Imposed departure levy for all passengers travelling abroad via air starting June 1, 2019.

* The Govt will launch a Special Programme, giving taxpayers an opportunity to voluntarily declare any unreported income.

* For online services imported by consumers, foreign service providers will be required to register with the Customs Department, imposing and remitting related service tax with effect from Jan 1, 2020.

* RM80mil for electricity subsidy. The subsidy will only be available for those registered with e-Kasih program and the rate will be increased to RM40 per month.

* Reducing mandatory contribution from employers to 4% from 6% to Malaysians aged over 60.

* Government to collect revenue of RM261.8bil, incuding special dividend of RM30bil from Petronas.

* Price of Ron 95 will be floated after subsidy is put in place.

* Fuel subsidy will be 30 sen per litre and capped at 100 litres a month for cars and 40 litres a month for motorcycle.

* Gaming machine licence will increase from RM10,000 to RM50,000 per annum; gambling duty will increase from 20% to 30% based on gross earnings.

* To  introduce excise duty from  April 1, 2019 at 40 sen per litrr on two categories of sugary drinks manufactured in the form of ready-to-drink beverages.

*  Freeze on toll charges on all highways in the city in 2019 with an estimated budget RM700mil.

* The government will also abolish toll for motorcycle on the First and Second Bridge in Penang, as well as the Second Link Expressway in Johor with an estimated cost of RM20mil a year from Jan 1, 2019.

* SST exemption on construction services and building materials. In return, REHDA has agreed to reduce by 10% the house price which is not subject to price control for new projects.

* Securities Commission has approved the framework for the equity-generation fund platform and P2P lending. To date, RM170mil has been raised by 450 companies from various sectors through these platforms.

* Khazanah Nasional will develop 80 acres of land in Subang as a world class aerospace hub. Khazanah will work MARA in producing high-skilled manpower to meet industry needs.

* Govt to pilot national B40 Health Protection Fund to provide free protection against top four critical illness for up to RM8,000 for Jan 1.

* Great Eastern Life Insurance to contribute the initial seed funding of RM2bil to this Fund to be managed by Bank Negara Malaysia.

  • The Star