Budget 2023 Is Coming. Here’s How Budget 2022 Has Turned Out So Far
Budget 2023 is set to be tabled three weeks earlier than originally planned; which means that it is just around the corner.
But before we can have a look at what Budget 2023 might bring, let’s have a recap at what Budget 2022 brought us.
Budget 2022 was tabled on 28 October, 2021, and its theme was ‘Keluarga Malaysia, Makmur Sejahtera’. This theme was reflected in the objectives of Budget 2022, with the three main objectives being ‘Rakyat’s Wellbeing’, ‘Resilient Businesses’, and ‘Prosperous and Sustainable Economy’.
The total budget for Budget 2022 is RM332.1 billion, which makes it the biggest budget for Malaysia ever. The previous largest budget for Malaysia was the year prior, in 2021 where the total budget was RM322.5 billion.
Here’s a 1-minute recap of last year’s budget if you missed it last year.
So, did Budget 2022 deliver? Here’s what we know so far.
True to the spirit of the goverment’s ‘Keluarga Malaysia’ focus, the people of Malaysia were one of the biggest winners from Budget 2022.
In Budget 2022, the people of Malaysia received RM8.2 billion in financial aid. This came in the form of several cash handouts being delivered to a wide array of Malaysians, from households, single parents, senior citizens, and even for single unmarried people.
The employment sector also got a much needed boost as Budget 2022 also announced the JaminKerja scheme. This programme aims to provide salary incentive for employers to hire new people and create jobs for Malaysians.
Female empowerment was also blessed by Budget 2022, with several initiatives aiming at increasing the number of female leaders in the boardroom.
But just how well did all these policies work? Well all in all, inflation rose by 3.4% by June 2022, which is a 2.8% incline compared to the same quarter from the previous year. The biggest culprit was food inflation which increased 6.1% in the consumer price index, a massive increase from July 2021 where it stood at 1.3%.
This calls for better policies in Budget 2023 to help stymie the effects of inflation. Efforts such as targeted subsidies to replace the current subsidies system that we have right now, or even more handouts to help the people deal with the effects of inflation.
However, the policies drawn by the government in Budget 2022 for the employment sector did provide them with a boost. Unemployment dipped from 4.61% at the end of 2021 to 3.7% in July 2022.
The female empowerment policies also brought some good results. Malaysia now has the highest number of women board members in Asia at 26%, well ahead of the global average of 19.7 percent, according to Deloitte’s Women In The Boardroom Report.
Another big winner from Budget 2022 was the education sector, as Budget 2022 announced plenty of boons for them. In fact, the education sector was the biggest recipient of Budget 2022, with RM52.6 billion allocated for the Ministry of Education and RM14.5 billion for the Ministry of Higher Education.
Some of the highlights for the education sector included a RM150 early school preparation fund for parents, RM1 billion for renovation and repairs of schools and RM400 million for the Supplementary Food Programme (RMT). Another RM6.6 billion was also allocated for initiatives and programmes related to TVET (Technical and Vocational Education and Training).
However, even with all these policies introduced, perhaps the education sector needs more allocation to be made available for them in Budget 2023. Reports have come out saying that some public universities in Malaysia are facing shortage of accommodation for their students.
In recognition of the fact that Malaysia was still reeling from the effects of the Covid-19 pandemic, the healthcare sector also got a substantial amount of the budget, with RM32.4 billion allocated to them.
RM2 billion went to the Covid-19 vaccination programme, as part of the efforts to ensure that everyone has access to the vaccine. Another RM2 billion was also allocated to help procurement of PPEs, health kits and other equipment.
Health Minister Khairy Jamaluddin has also highlighted earlier that Malaysia’s public health spending is only 2.59% of the country’s GDP (gross domestic product) despite the added allocations for fighting the Covid-19 pandemic in recent years. He added that the World Health Organisation’s recommended benchmark is between 4% to 5%.
Tax relief and expanding the tax base
Reflecting the Budget’s objective of building a prosperous and sustainable economy, Budget 2022 also announced a host of tax reliefs while also expanding the tax base to ensure that the economy is as sustainable as ever.
Adding to some of the already existing tax relief such as the SOCSO tax relief, EPF contributions, upskilling courses, electronics, and domestic travel among others. The Malaysian government tried to expand the tax base by introducing new taxes such as the expansion of excise duties to cover premixes and e-cigarettes / vape products.
Meanwhile, the tax base was expanded by implementing a new tax on low value goods entering Malaysia via air courier which was set at 10% and service tax on delivery services, including for e-commerce.
However, it seems like more needs to be done. According to a report from the CEIC, 11.4% of the Malaysian GDP was from tax revenue in March 2022, which is a sharp decrease from December 2021, where it was recorded at 16.3%.
SME & entrepreneurs
And last but not least, Budget 2022 also pressed the need to build towards resilient businesses; which can be seen with the initiatives for small and medium enterprises (SME) and entrepreneurs.
In Budget 2022, the government allocated RM40 billion for the SemarakNiaga Programme, a funding initiative to help new businesses. Budget 2022 also allocated RM14.2 billion to support the growth of SMEs, and RM10 billion for additional warranty limits for Syarikat Jaminan Pembiayaan Perniagaan. Another RM2 billion was to attract foreign investment.
The government also introduced a micro credit scheme in Budget 2022. This initiative aimed to help micro enterprises to sustain their business operations and gradually enhance their productivity. This includes informal and micro financial scheme which allows small businesses to make small loans up to RM10,000 from Tekun Nasional, or up to RM75,000 with 0% interest from AgroBank and Bank Simpanan Nasional (BSN).
What’s next for Budget 2023?
All in all, although Budget 2022 did not see major announcements, it did signify the government’s efforts and willingness to address the problems that were plaguing the Malaysian economy.
Hopefully, that level of willingness can be seen in Budget 2023 as well, as the Malaysian government works to improve the Malaysian economy.
According to the Pre-Budget statement released from the Ministry of Finance, the themes of Budget 2023 will be Strengthening Recovery, Facilitating Reforms Towards Sustainable Socio-Economic Resilience of Keluarga Malaysia.
What will that entail? Some key talking points that have emerged from the Finance Ministry in recent months include widening the tax base, providing sustainable subsidies especially to address the rising commodity and food prices, strengthening automation and digitalisation initiatives as well as looking towards environmental sustainability.
Well, we’ll just have to wait and see how these expectations pan out on Budget Day.