The highly anticipated Budget 2024 has finally been tabled, and despite the rumors that the sluggish global economy would affect the allocation of funds, this year’s tabling has most certainly subverted expectations.
The Budget was tabled during a live broadcast on 13 October 2023 and was presented by Prime Minister and Finance Minister Anwar bin Ibrahim in parliament.
Continuing the MADANI theme from the previous tabling, Budget 2024 mainly focuses on three main themes:
- Best governance for service agility
- Economy restructuring to boost growth
- Improving living standards
The total funds allocated is even larger than before, with a record shattering RM393.8 billion, divided into operating expenditure (RM 303.8 billion) and development expenditure (RM90 billion). One major point of concern is that Malaysia’s debt and liabilities was valued at RM1.5 trillion (82% of GDP), which is an issue that the government intends to resolve as quickly as possible.
New taxes
There have been several new developments with regards to taxes. F&B and telecommunications can celebrate a minor victory as the tax rate remains at 6%. Unfortunately, everyone else will be seeing an increase in service tax to 8%.
Apart from that, a 10% Capital Gains Tax will be implemented for the disposal of unlisted shares by local companies based on net gains. This is set to take effect on 1 March 2024. The luxury goods industry has taken a blow as a 5% to 10% high value goods tax is set to be implemented for luxury goods such as watches and jewellery.
Finally, a new global minimum tax will likely be coming in 2025 for companies with €750 million (approx. RM3.73 trillion) global income or more.
Subsidies cut
Improving the standard of living is a major theme of Budget 2024. As such, the government is dedicating much effort towards assisting poor and low-income households. One measure that is being taken is an increase to the Sumbangan Tunai Rahmah (STR) subsidy. The SRT is seeing a massive increase to RM10 billion.
There is also a retargeting of electricity subsidies to ensure that the top 10% of electricity users stop benefiting from enjoying 50% of subsidies provided by the government. To that end, there will be an electricity rebate of RM40 for 142,000 hardcore poor households as well as an electricity security deposit exemption for individuals.
The government is also seeking a long term solution over the supply of eggs and chicken meat. The current temporary ceiling price on chicken and eggs will be lifted in two weeks. The move is aimed at ensuring uninterrupted supply by allowing the market to operate freely.
It was also announced that subsidised diesel will continue to be sold to selected users such as transport companies. Unfortunately, the majority of the population will likely see a rise in diesel prices in the coming year.
Finally, up to RM10 million is being allocated to the Ministry of Domestic Trade and Cost of Living (KPDN) and the Malaysia Competition Commission (MYCC) to ensure no price increase.
MSME assistance
Once again, the strengthening of the economy and support for micro, small & medium enterprises (MSMEs) remain high on the government’s agenda. In order to ensure economic growth and foster the development of small and medium enterprises, up to RM44 billion in loans and financing are being set aside for MSMEs.
RM2.4 billion is being made available to micro and small traders under select agencies. Under Bank Simpanan Nasional (BSN), hawkers and small entrepreneurs can receive up to RM1,4 billion in micro loans. RM330 million is being allocated to Tekun financing facilities for small businesses (batik, crafts, orang asli), and Sabah and Sarawak. Finally, RM720 million is being made available to encourage women and youth to venture into business.
In addition to this, up to RM8 billion in loan funds is being made available under BNM to support SMEs. Of that amount, RM600 million is dedicated to micro and low income entrepreneurs, small contractors, sustainability practices, and food security.
The Dana Impak Khazanah Nasional initiative, which is dedicated to assisting rural communities and the underprivileged, will be receiving RM600 million to help bring more opportunities to these demographics.
Finally, up to RM20 billion in loans are being provided for 80% of SMEs in the Green Economy, Technology and Halal industry. An additional RM100 million will be provided through the Revolving Capital Fund for co-operative movements.
Education allocation increase
Education and the development of our youth has always been a top priority for our nation. As such it comes as no surprise that it continues to be one of our most well invested sections. Up to RM58.7 billion is being allocated to the Ministry of Education, while the Ministry of Higher Education will be receiving up to RM16.3 billion.
Up to 1.9 billion is being invested into the improvements and maintenance of schools nationwide and up to 26 new schools are to be built nationwide totalling RM2.5 billion in costs.
The Kumpulan Wang Amanah Pelajar Miskin initiative will now include form 3 students, benefitting 1 million students and totalling up to RM150 million. Additionally, the Biasiswa Kecil Persekutuan scholarship application criteria will follow the poverty income line at RM2,589.
Finally, public university registration fees will not exceed RM1,500 starting in 2024, a massive boon for those seeking tertiary education.
On a related note, payment for PTPTN loans will be given a discount starting from 14 October 2023 to 31 March 2024. The repayment discounts is as follows:
- Full repayment – 10% discount
- Full repayment with 50% remaining – 10% discount
- Payment through salary reduction – 15% discount
Other notable winners
The Ministry of Health will be receiving a massive boon of RM41.2 billion which it will be using to address issues such as overcrowding, fixing dilapidated clinics, replacing old equipment, disease prevention and more.
Furthermore, new excise duties are being placed on products which may be classified as a health risk such as chewing tobacco products (incl. snuff) and sugary drinks.
The people can also benefit from a number of new tax reliefs. These include a RM2,500 tax relief for the cost of installing EV charging equipment. Additionally, there will be a RM1,000 relief for sports (equipment & fees) which will be separate from the already existing lifestyle tax relief. Finally, the RM2,000 tax relief for upskilling and self improvement courses extended to 2026.
To wrap it up, Budget 2024 is much more optimistic than we expected. With the higher allocation for operating expenses and cash assistance programmes, it is shattering records in fund allocations once more.
As expected, business growth and development, as well as education continue to be major pillars that the government stands by. If anything, we can at least say that the government is dedicated to ensuring the continued survival of small businesses and the development of the nation’s youth.
