Budget 2023 Malaysia: Key Points You Should Know
The Budget 2023 tabled on October 7, 2023 has been a highly-anticipated event in the country, with many expectations surrounding it.
Tengku Zafrul, Malaysia’s Minister of Finance presented the Budget 2023 in the Dewan Rakyat, the final budget for the current Parliament before the upcoming 15th Malaysia General Election that will be held soon
Budget 2023 Theme
STRENGTHENING RECOVERY,
FACILITATING REFORMS TOWARDS SUSTAINABLE
SOCIO-ECONOMIC RESILIENCE
OF KELUARGA MALAYSIA
The Budget 2023 aims to focus on economic recovery and resilience for the country and the rakyat, a stronger public health system, a more sustainable fiscal position, and reforms in economic and social aspects of businesses in order to emerge as a more competitive nation in the global sphere.
In short, the Budget 2023 intends to further support the rakyat’s wellbeing, income and social protection, as well as boost the value and competitiveness of Malaysian businesses, while strengthening the nation’s resilience and the government’s fiscal position.
Budget 2022 Highlights
1. Second largest budget in history
Budget 2023 is the country’s second-largest ever at RM372.34 billion, up 12% from last year. Development expenditure is at RM95 billion, its highest ever, followed by the Finance Ministry (RM67.2 billion), Education Ministry (RM55.6 billion) and Health Ministry (RM36.1 billion), constituting 43.3% of total expenditure.
2. Stamp duty exemption rate increased
The rate for stamp duty exemption for homes worth from RM500,000 to RM1 million is increased from 50% to 75%, and 100% stamp duty exemption for purchase of homes worth RM300,000 until Dec 31, 2023.
The Government also plans to extend the stamp duty exemption by up to 100% on loan or financing restructuring or rescheduling agreements until 2024. The stamp duty for transfer of land between family members is set at RM10.
3. Plans for urban housing
RM367 million is allocated for People’s Housing Projects in urban areas, including new projects in Marang, Terengganu, and Arau, Perlis, with some 4,250 housing units worth RM358mil to be built under the Rumah Mesra Rakyat programme to benefit 12,400 people.
RM290 million will be allocated to repair old lifts at low-cost high-rise residential schemes.
Groups under e-Kasih will be expanded to those with a household income of RM1,169 for the RM40 electricity bill subsidy, from the current RM980.
4. Home loan assistance
RM3 billion worth of guarantees will also be provided through the Home Loan Guarantee Programme (SJKP) to assist homebuyers without proof of salary or payslips to apply for home loans.
5. Lowered income tax rate and exemptions
Income tax rate is decreased by 2%.
Annual income:
RM50,001 to RM70,000: From 13% to 11%
RM70,001 to RM100,000: From 21% to 19%
Women returning to work after a career break are entitled to tax exemptions for income received between 2023 to 2028.
Parents are also entitled to a RM3,000 tax exemption for taska and kindergarten enrolment until 2024.
6. Implementation of Tax Identification Number (TIN)
The Tax Identification Number (TIN) will be implemented to increase tax collection starting from 2023.
Malaysians and PR citizens 18 years and up will have a TIN automatically, and the use of TIN will be compulsory in general stamping documents.
7. Bantuan Keluarga Malaysia (BKM) assistance
Families earning less than RM2,500 per month with five or more kids are entitled to Bantuan Keluarga Malaysia (BKM) assistance of up to RM2,500.
Families who earn less than RM2,500 with one to four kids are entitled to RM1,000 – RM2,000.
Female recipients are also entitled to a one-off RM500 cash aid if they have a child in 2023 under Inisiatif CahayaMata Keluarga Malaysia.
Unmarried elderly citizens are entitled to BKM assistance of RM350 and RM600 depending on their income.
Single parents are entitled to RM3,000, up RM500 from RM2,500 in Budget 2022.
8. Up to RM200 E-Wallet credit for youths and M40 individuals
Through the e-Pemula M40 initiative, those who earn an annual income of less than RM100,000 can claim RM100 through their e-wallets.
Youths aged 18 to 20 and full-time students aged 21 and up will receive a one-off RM200 e-wallet credit
9. PTPTN discounts
From Nov 1, 2022 to April 30, 2023, the Government will offer a PTPTN discount according to the following rates:
- 20% for full payment
- 15% for payment of at least 50%
- 15% for payment from salary or auto-debit
Students who graduated with first class will be exempt from repaying their PTPTN loans.
10. Tourism sector recovery
RM200 million will be allocated to promote the recovery of the tourism sector, with RM90 million allocation for the promotion of tourism and tourism programmes, as well as chartered flight services.
Incentives amounting to RM25 million will be allocated in the form of discounts, vouchers and travel packages and accommodation worth up to RM100.
11. DE Rantau digital nomad hubs
2,000 short-term rental accommodations in 6 new locations certified as digital nomad hubs will be provided through the De Rantau Programme.
12. EPF & Socso contribution and ASB investment ceiling
The maximum EPF contribution is now raised to RM100,000 a year, from RM60,000 currently.
The limit for investments made through ASB will be increased to RM300,000 in line with the bumi enhancement agenda.
Gig workers will receive 80% subsidy by the government for their Socso contributions.
Budget 2023 Focuses
1. Boosting income
As consumer confidence and the demand for labour rises, economic activity is anticipated to return to normal. Along with improved income prospects and a more manageable inflation outlook, the market is anticipated to offer additional job opportunities.
Main initiatives will include, among other things, maintaining upskilling and reskilling programmes, boosting productivity through the digitalization of economic operations, and guaranteeing citizens a good pay, including a revision to the minimum wage.
In order to promote the creation of additional well-paying employment, initiatives for accelerating automation and high-value-added production activities will also be strengthened.
2. Social safety net
Following the pandemic, direct monetary support will be provided to vulnerable groups in a greater and more focused manner, with a focus on the elderly, schoolchildren, persons with disabilities (PWD), indigenous people, and single mothers. Additionally, efforts to control the rising expense of living and lessen its impact on the populace will continue.
Programs for social protection and the social protection system are also designed to protect the people from various vulnerabilities, particularly for workers in informal sectors and the self-employed.
3. SME development
It is critical to develop SMEs’ resilience. Strategies to boost industry competitiveness and restore business capabilities will be the main topics of the Budget 2023.
There will be a concerted push to improve the expertise, digital capabilities, and managerial practises of SMEs. In order to ensure its prompt execution, the Government will concentrate on improving programme coordination across ministries.
Particular initiatives to stimulate and reward the adoption of innovative processes by SMEs to foster ties between MNCs and academics and the innovator community will also be prioritised.
4. Tourism industry recovery
The Government has launched the Tourism Recovery Plan (TRP) 2022 involving two clusters: the Land Transport Cluster and the Tourism Association Cluster, which aims to boost Malaysians’ ability to travel and spend by providing discounts, coupons, and rebates.
In 2023, the scope of this programme will gradually be expanded to include air transport clusters and accommodation clusters. The TRP also seeks to revitalise the travel and tourism sector and boost tourist confidence in a particular location. The needs of tourists, including their increased demand for greater safety and hygienic measures, will be the focus of recovery efforts.
These include improving the quality of the goods and services offered, making tourism products more sustainable, boosting brand positioning and promotion, implementing governance reforms, and stepping up domestic travel.
Following the reopening of most economic sectors since the end of 2021, the Budget 2023 will be prepared to support Malaysia’s recovery in terms of returning economic performance and the rakyat’s way of life to pre-pandemic norms.
However, we still need to wait for result of 15th Malaysian General Election 2023