RM60 Billion Mini Budget as Second Stimulus Package 2009 By Government To Help Malaysia Survive From The Global Economic Crisis
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KUALA LUMPUR: Deputy Prime Minister Datuk Seri Najib Tun Razak tabled an RM60bil “mini budget” (see below for full text) as part of the second economic stimulus package to help Malaysia weather the global economic crisis.
Najib, also the Finance Minister, pulled no punches as he unveiled the Supplementary Supply Bill 2009 in Parliament, noting that more than half of the major world economies — in particular the United States, Europe and Japan — are in recession and experiencing the worst economic contraction since the Great Depression of the 1930s.
The RM60bil package, to be implemented over 2009 and 2010, includes RM15bil as fiscal injection, RM25bil in Guarantee Funds, RM10bil for equity investments, RM7bil for private finance initiatives and off-budget projects, as well as RM3bil in tax incentives.
Four Main Thrusts Of The RM60bil Stimulus Package
1) To Reduce Unemployment And Increase Employment Opportunities
2) To Ease The Burden Of The Rakyat
3) To Assist The Private Sector In Facing The Crisis
4) To Build Capacity For The Future
For The Rakyat
- RM674mil will be allocated in subsidies to prevent price increases of necessities such as sugar, bread and wheat flour; and RM480mil to ensure that toll rates are not increased. Without these subsidies, the price of sugar will increase RM0.47 per kilogramme, wheat flour RM0.60 per kilogramme, and a 400-gramme loaf of bread by RM0.26. The Government will also provide RM480 million to ensure that toll rates are not increased. With these measures, the Government will allocate a sum of RM27.9 billion for subsidies in 2009.
- House purchasers be given tax relief on interest paid on housing loans of up to RM10,000 a year for three years to stimulate the housing sector and encourage for more home ownership.
- RM200mil will be allocated to repair and maintain drains and roads, and improve the surroundings of public flats to ensure more comfortable living conditions.
- RM150mil will be provided to undertake renovation, maintenance and repairs of welfare homes, fire and rescue stations and quarters, as well as public toilets in mosques, surau and tourist spots.
- Syariah-compliant Savings Bonds amounting to RM5bil will be issued by Government this year to increase people’s income. The bond will have a maturity of three years, with an annual return of 5% and will be paid quarterly to bond holders. The bonds are available to all citizens aged 21 and above, with a minimum investment of RM1,000 and a maximum of RM50,000.
For The Workers
- 163,000 training and job placement opportunities in the public and private sectors will be created to assist retrenched workers and unemployed graduates.
- The existing tax exemption of RM6,000 given on retrenchment benefits has been proposed to be increased to RM10,000 for each completed year of service to reduce their burden and increase disposable income of retrenched workers.
- Employers who hire workers retrenched from July 1 2008 has been proposed to be given double tax deduction on the amount of remuneration paid. The amount of remuneration eligible for this deduction shall not exceed RM10,000 per month.
- 63,000 staff will be recruited by government to fill vacancies and serve as contract officers in various government agencies.
- Malaysians would also be encouraged to pursue Masters and PhD courses. The Government will undertake to finance tuition fees and research grants of up to RM20,000 for every student pursuing a PhD locally. Up to RM10,000 per student will be provided by Government for students in the Masters programme.
- The levy on foreign workers will be doubled for all sectors except construction, plantation and for domestic maids. The levy will be paid by the employers and not by the workers. In the event the services of foreign workers are prematurely terminated, the levy will be refunded on a pro-rated basis to the employers. The issuance of licences to foreign labour recruitment agencies will be freezed and the conditions for recruitment of foregin workers by existing agencies will be tighten. These are purposed to reduce the dependence on foreign workers and give priority to hiring local workers.
- Allocation of RM230mil will be provided to increase the coverage of electricity and water supply in rural areas, particularly in Sabah and Sarawak.
The Private Sector
- Working Capital Guarantee Scheme totalling RM5bil will be established by the Government to provide working capital to companies with shareholder equity below RM20mil.
- Industry Restructuring Guarantee Fund Scheme totalling RM5bil will be set up for loans to increase productivity and value-added activities, as well as the application of green technology.
- Permanent resident status would be considered for high-net-worth individuals bringing more than US$2mil for investments or savings in Malaysia. Highly skilled foreign professionals may also be considered for permanent resident status too.
- Levy payments to the Human Resource Development Fund for a period of six months for employers in the textile as well as electrical and electronics industries will be exempted by Government with effect from Feb 1. Levy payment rate will be reduced from 1% to 0.5% for all employers for a period of two years effective April 1.
- The company’s current year losses has been proposed to be allowed to be carried back to the immediate preceding year to assist company incurring losses. The treatment will improve the company’s cash flow compared with the current tax treatment. Total losses to be carried back is up to RM100,000 per year. The tax treatment is applicable for year of assessment 2009 and 2010.
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