• Handouts and tax cuts for the lower income will help mitigate the impact of high inflation. However, those with higher pay bracket will be subjected to higher taxes. There will be no Goods and Services Tax (GST) but indulgence would come with a price via :
  i) Luxury Tax on items such as watches and fashion goods and
  ii) excise duties on liquid nicotine used in e-cigarettes and vapes.
• In addition, there will be tax relief for those in special medical needs and those opted for higher voluntary contributions to EPF
• Those with loans

In view of the above, we maintain our stance that the Government will not be too eager to adjust interest rates going forward as this will derail all the above.

In addition, the absence of “windfall tax” is a huge relieve for corporate Malaysia. 

Biggest cheer from Contractors

Record high development expenditure of RM97bn

• Govt to review and kickstart MRT3 project, confident of reducing it to below RM45bn from around RM50bn currently.
• To relieve road congestion at tourist hotspots, the govt allocated a total of RM1.5bn for upgrading works within Cameron Highlands, Melaka, Port Dickson and Johor
• Expansion and improvement of airport capacity in Penang and Subang to encourage entry of investors, businesses and tourists.
• RM1.2bn to expedite repairs of 400 clinics and 380 schools that are dilapidated.
• RM1.5bn to develop new rural roads and village link roads.

Sabah and Sarawak’s allocation has increased to RM6.5b and RM5.6b

• Develop cities bordering Kalimantan and accelerate the implementation of the Pan Borneo highway and the Sarawak-Sabah Link Road (RM20bn)
• Sabah Sarawak infrastructures esp. roads street lightings as well as water and electricity supply (RM2.6bn).

Source: Rakuten Research - 27 Feb 2023