YB Tuan Lim Guan Eng. – the Malaysian Minister of Finance, presents the 2020 budget in Malaysia on October 11, 2019. The central theme of the 2020 budget of Malaysia is “Stimulating growth and equitable results towards shared prosperity”. This budget is oriented towards the vision of shared prosperity for 2030.
This budget focuses on the four main objectives and the strategies are as follows:
Stimulate economic growth in the new economy in the digital age
The strategy is simple, like making Malaysia the preferred destination for investment by accelerating the digital economy. Strengthen economic diversity and improve access to corporate finance.
• Level human capital by investing in people
According to the 2020 budget, the government is increasing job opportunities for the Malaysian people. They invest in education and other talents while modernizing the job market.
• Create a united, inclusive and equitable society
The plan is to create a fair and united society through inclusive development. Promoting access to housing, better health and transport services, unity through sport are the main strategies.
• Revitalization of public finances and institutions
This can be achieved by strengthening governance, institutions and integrity. The commitment to budgetary consolidation can also be envisaged.
Here is the Malaysia 2020 budget summary, take a look at the key points.
Malaysia’s economy continues to improve with GDP growth of 4.7% at the start of 2019. It is hoped that it will get better and drop to 4.8% in 2020. The private sector will be the backbone of the Malaysian economy, particularly in the construction and service sectors.
In addition, prices fell to their lowest level in the second half of 2019 by 0.2%. It is estimated that the inflation rate could reach 0.9 to 2% in 2020. We will also discuss the areas of budgetary and fiscal proposals.
Destination for investments:
The personalized packaged incentives of 1 billion will be granted for the next 5 years for:
• Fortune 500+ companies in the high-tech, creative and new economic sectors which will invest 5 billion in Malaysia.
• 10 million will be allocated to MITI to speed up the approval of the investment. It will also focus on investment and completion after approval.
• To the most competitive companies that will grow worldwide and export products.
• Another investment of 50 million to improve the transport infrastructure as a regional maritime center and a hub for freight logistics.
• 100 million with a 1: 5 guarantee ratio to be provided for private equity funds for projects bidding abroad.
• The formation of the new financial institution to merge between Danajamin Nasional, Bank Pembangunan Malaysia, SME Bank and Export-Import Bank of Malaysia. It will strengthen the financial ecosystem.
• Islamic finance to develop the Islamic finance ecosystem by setting up a special committee.
To bring the digitization:
Implementation of NFCP in the next 5 years with high-speed and quality connectivity at the national level.
• A subsidy of 500 million euros is allocated to digitize the way in which they previously operated the first SMEs in 1 lake.
• An additional 550 million for intelligent automation to encourage business automation.
• The central bank will finalize its digital banking licensing framework in 2020 in the first half.
• About 50 million will be allocated to the development of the 5G ecosystem.
• Improvement of the digital skills of the workforce for grants and technological training.
• Increase in wages up to 1200 MYR per month.
• Maternity leave will last 2 to 3 months from 2021.
• Unemployed graduates, women will receive MYR 500 a month.
• Those earning less than 4K MYR will receive overtime claims.
• PDF will extend coverage to contract workers.
• Software protected by copyright will be granted for a tax exemption of up to 10 years.
• The commercialism of R&D from research universities to the public sectors.
• Improvement of R&D in the public sector with public agencies and ministries.
KEY TAX PROPOSALS
• The 15-year-old electronics sectors will benefit from a 50% investment
• 100% ACA for automation equipment and 70% for solar rental activities.
• Full tax interception for companies that bring together at least 500 foreign participants for conferences.
• Tax deduction granted to companies that display art, culture and heritage.
• LLP and SMEs can benefit from a tax rate of 17%.
• Companies will be able to claim allowances for small workers up to 2,000 MYR per worker. For non-profit organizations, it is MYR 20,000 per year.
• The tax deduction for the secretariat and tax returns will be exceeded to reach 15,000 MYR combined.
• Non-resident individuals will be taxed at 30%, while resident individuals will be 2 MIO.
• The income tax exemption for women workers will be extended by 2023.
• 6,000 MYR awarded for medical treatment costs.
• Tax deduction on donations for sports, charitable and other national projects of 10%