Budget 2009 Highlights

Budget 2009 was presented on 29 Aug 08 by the Prime Minister and (then) Finance Minister YAB Dato’ Seri Abdullah Ahmad Badawi in Parliament. Themed “A Caring Government,” Budget 2009’s three specific strategies focus on enhancing the wellbeing of all Malaysians, developing quality human capital and further strengthening our nation’s economic resilience to mitigate the adverse impact of an increasing challenging external environment. A broad range of measures will be implemented in this Budget to reduce the impact of higher cost of living, particularly for the lower income group and the vulnerable.
Budget Allocation
The overall federal government revenue for year 2008 is RM 161.6bn and expenditure is RM196.9bn. The deficit for 2008 is estimated to increase to 4.8% due to an additional allocation of RM22.1bn this year for food and fuel subsidies. Committed to reducing the fiscal deficit to 3.6% in 2009, the government believes that the high fiscal deficit is a one-off necessity.
For Budget 2009, RM207.9bn will be allocated for government expenditure, which is 5.1% higher than the allocation for 2008. Of the total allocation, RM154.2bn will be used for operating expenditure and RM53.7bn for development expenditure.
The Malaysian economy in 2009 is projected to grow by 5.4%. The key driver for economic growth is the oil and gas industry, tourism, transportation, finance and banking, and ICT related industries. The key measures and steps that were outlined by the government in Budget 2009 are as below:
Social Safety Net
The government has raised the eligibility criteria for welfare assistance under the Welfare Department and allocated RM500mn. It is expected that eligible recipients will rise to 110,000 households and 40,000 senior citizens.
Government pensioners who have served at least 25 years upon retirement will receive no less than RM720 monthly, which will involve RM140mn allocation and benefiting 75,00 retirees.
On top of that, the government also set up an RM25mn special fund to channel financial assistance to victims of calamities, such as floods and fire. The government also encourages the private sector to set up more “Rumah Tunas Harapan” and will increase the allowance of caregivers up to RM1,000 monthly.
Eradicating Poverty
The housing assistance programme is one of the tools to eradicate poverty and will be allocated RM 50mn to build 1,400 new houses and repair 1,000 houses for hardcore poor, senior citizens, disabled and single parents. To reduce the burden of lower income groups, the government will bear the cost of electricity bills for households which incur monthly electricity bills of RM20 or less. 1.1mn households are expected to benefit from this measure. Additionally, Sabah and Sarawak will be allocated RM580mn and RM420mn respectively to improve basic amenities such as electricity, water and rural roads.
Increasing Disposable Income
The purchasing power of lower middle income groups was badly affected by the high inflation rate. Therefore, the government proposed the current tax rebate to be increased to RM400 for those taxable income of RM35,000 and below. It is expected that 100,000 tax payers will be out of the tax net.
Moreover, the government also proposed that the highest marginal tax rate for individuals be reduced to 27% and marginal tax rate of 13% will be reduced to 12% too. Civil servants will receive a one-month bonus, subject to a minimum of RM1,000 for 2008 as an appreciation of increasing productivity.
Improving Public Transportation
The government will continue to encourage greater utilization of public transportation and believes that a more efficient, reliable and integrated public transportation is needed to provide seamless travel and greater service frequencies. To further improve the efficiency of public transportation, RM35bn allocation will be expanded during 2009 to 2014 to enhance the capacity of existing rail services, build new rail services and tracks, increase the number of buses and provide better infrastructure facilities. RM3bn additional soft loans were also provided under the Public Transportation Fund and a Public Land Transportation Commission will be established to oversee overall public transportation services by mid 2009.
Therefore, the government agreed to provide 200 additional buses to RapidPenang to service 14 new routes in Penang. It is expected that usage will be increased to 120,000 passengers daily. Other key measures are toll charges for all buses will be reduced by 50% and road tax for all buses and taxi operators will be reduced to RM20 a year.
The existing LRT system in Klang Valley will be extended by 30km and 35 train carriages for the Kelana Jaya line worth RM1.3bn will be fully operational by 2010. A new LRT line will also be built along a 42km route from Kota Damansara to Cheras. The commuter rail services will be upgraded too. An additional 13 new units of commuters will be operational by 2011, with an expanded rail services network of 7.5km for the Sentul-Batu Caves line by 2010. Sam, pls insert Komuter train here
Food Security
RM5.6bn is provided under the national food security policy to implement several agriculture programmes to ensure adequate food supply. To increase fish landings, RM300 mn is allocated for cost of living allowance to fisherman and fish landing incentives.
To increase poultry output, the expansion of chicken and duck farms will be given a Reinvestment Allowance of 60% for a period of 15 years. RM1bn will be allocated for 220,000 padi farmers to increase padi production and 1,300 hectares of abandoned land have been identified for padi and other food production. The government also proposed that import duty on fertilizers and pesticides be abolished.
Health Services
RM 13.7 bn is allocated in 2009 to enhance health facilities and provide equipments, increase supply of medicines, develop human resources and build more hospitals. Other than that, the government also announced that the excise duty on cigarettes will be increased by 3sen to 18sen per stick.
Improving Public Amenities
RM1.8bn will be provided to increase basic amenities and infrastructure in rural areas. For Sabah and Sarawak, RM3bn and RM3.3bn allocations were given respectively for various infrastructure projects.
Enhancing Training and Skills Programmes
RM2.4bn is allocated to enhance facilities as well as undertake training and skills programmes. In addition, the government will increase the number of nurses in public hospitals by allocating RM70mn to train 7,600 nurses.
Improving Quality of Education
RM31mn will be allocated to the Education Ministry benefiting 5.8mn students. 110 primary schools and 181 secondary schools will be built in near term. In addition, RM14.1bn was allocated for the Higher Education Ministry to improve the quality of learning.
New Economic Sectors
New selected regional services such as Islamic finance, business process outsourcing, resource based industries such as petroleum, higher value added manufacturing such as biotechnology will be giving significant opportunities for growth in the Malaysian economy.
Economic Corridors
RM6bn is provided in the 2009 budget for development expenditure of the corridors. An additional allocation of RM30mn is provided under the Strategic Investment Fund in Iskandar Malaysia.
National Energy Plan
A comprehensive national energy plan will be outlined to support the long term energy needs. Renewable energies equipment will be exemption import duty and sales tax.
Ensuring Public Safety
RM5.4bn is allocated in the Budget 2009 to enhance the capacity of the Royal Malaysia Police (PDRM). The allocation will be used to build more police stations and train/hire more Polices.
As a conclusion, the government was seen as responsible to the concerns of the rakyat and has taken measures to lighten the burden of all Malaysians, particularly the lower income group. Support and assistance approach will improve the quality of life and enables all Malaysians to enhance their productivity.