Package, amounting nearly RM7 billion to revitalise the economy.

27. The first stimulus package was just an interim measure. Subsequently in March 2009, a month after I took over the office as the Prime Minister, the Second Economic Stimulus Package of RM60 billion was implemented.

28. Clearly, this was a proactive measure to stimulate the slow economic growth at that time. As a result, the economy rebounded with GDP reaching 7.4% in 2010.

Mr. Speaker Sir,

29. Alhamdulillah, following the various incentives from the stimulus packages as well as seven previous Budgets, our economy remains stable and on a positive trajectory.

Mr. Speaker Sir,

30. In reality, the current uncertainties in the external economy are beyond our control.

31. The slower external economic growth is caused by subdued growth among all major economies, simultaneously.

32. As a result, global growth is expected to moderate 3.1% in 2016 from 3.2% in 2015.

33. Nevertheless, we are grateful that our economic growth remained stable and sustainable during first half of the year.

34. Clearly, the country’s economy grew at 4.1% and we are confident of achieving a growth between 4% and 4.5% in 2016 and between 4% and 5% in 2017. InsyaAllah.

35. Indeed, we are now on the right track, as we have and are taking right decisions even though the measures were unpopular.

36. I would like emphasise, that all those major and crucial decisions were deliberately done.

37. As the saying goes, save for a rainy day, we have laid strong foundations for the country’s long-term financial and economic position.

Mr. Speaker Sir, Ladies and Gentlemen,

38. All these were achieved due to the Government’s diligence and planning, focusing on various strategic measures since 2010.

39. Firstly: Diversifying the Government’s sources of revenue, particularly to reduce the dependency on oil and gas sector related revenue from 41.3% in 2009 to 14.6% in 2016.

40. As a result of further diversification of our economy, the growth had been resilient and sustained despite the recent decline in oil prices by almost 50%.

41. Second: The Government’s bold measure to implement GST had diversified the sources of revenue. We should realise that there are only 2.1 million income tax payers out of 14.6 million of the country’s total workforce.

42. In addition, with the recent fall in oil prices, it is estimated a loss of Government’s revenue by RM30 billion from income tax, corporate tax, royalty, PETRONAS dividend and Petroleum Income Tax.

43. Hence, we should be grateful with the implementation of GST, as the Government is able to support its expenditure amid limited resources.

Mr. Speaker Sir,

44. I am pleased to report, the GST collection has reached nearly RM30 billion as of 19 October 2016.

45. I would like to stress, we should not believe the grapevine of the increase in GST rates. Those are just hearsays and are untrue.

46. Third, Subsidy Rationalisation. For example, the oil subsidy in 1995 stood at RM123 million, constituting only 0.24% of the overall national budget.

47. At its peak in 2012, it reached RM24.8 billion or 9.8% of the overall national budget.

48. Overall, the inefficient bulk subsidy system clearly burdens the Government’s financial position and causes leakages. As such we have replaced it with a targeted subsidy system, benefitting those who are really in need.

Mr. Speaker Sir,

49. It is evident, through measures and initiatives implemented by the Government, our economy records sustainable growth. According to the Purchasing Power Parity (PPP), Malaysia is now an upper middle-income country, surpassing many countries not only in Asia but also throughout the world.

50. Malaysia’s PPP per capita has increased from USD23,100

in 2012 to USD26,891 in 2015.

Mr. Speaker Sir,

51. From a different angle, the Government is aware of the rumours on the so called deteriorating investors’ confidence on the Malaysian economy.

52. A nation’s economy is highly related to perception, as without confidence there will be no investment to drive the economy.

53. But, if our own people, undermine and sabotage our economy, we are bringing down our own nation.

54. Therefore, accusations by irresponsible internal and external parties must be stopped!

55. Despite many challenges, the Barisan Nasional Government will do what it takes for the beloved rakyat, from Peninsular to Sabah and Sarawak, we will continue to propel the country

forward.

Mr. Speaker Sir,

56. Syukur Alhamdulillah, facts and figures have proven the truth.

57. For example, the total approved foreign investment was more than RM28 billion during the first half of 2016, an increase by 32% compared with the same period last year.

58. This excludes approved domestic investment which totalled to more than RM60 billion.

59. In fact, during my official visit to Germany last month, I met the business community who expressed their interest to continue to invest in Malaysia as they are confident with the Government’s sound policies, meeting their expectations.

60. For example, OSRAM has announced an investment worth EUR1 billion or equivalent to nearly RM5 billion.

61. This LED plant investment in Kulim, Kedah will be the largest and the latest in the world.

62. Insya-Allah, next week I will be heading to China and we hope to attract more investment.

63. Recently, according to Kaushik Basu, Chief Economist and Senior Vice President of the World Bank, as many nations suffer because of falling commodity prices, Malaysia stands out for having transformed itself from a poor, commodity-exporting nation to a modern diversified economy.

Mr. Speaker Sir,

64. Each time the budget is discussed, many intellectuals will refer and deliberate on several important verses in the Al-Quran, among others, Surah Al-Hasyr verse 7, that, do not allow wealth to circulate only among the rich.

65. I have sought views from various ulama and learned Muslims regarding this verse. They interpreted that this verse has to be seen from a wider and more holistic context.

66. As elaborated by Imam Al-Mawardi, provisions or allocations to the rakyat such as in this Budget are subjective, taking into consideration their needs and benefits.

67. Indeed, to formulate a complex budget is not an easy task. As a Government that feels the pulse of the rakyat, in the past months, we have received thousands of ideas from various segments of the society.

Mr. Speaker Sir,

68. The 2017 Budget is anchored on five principles and philosophies of the Government.

First: This Government prioritises national integration in forming a nation state. Our ethnic diversity is an essential asset in the past, present and future;

Second: This Government prioritises and preserves sovereignty, upholding the Constitution and laws as well as national security;

Third: This Government is cohesive and stable as well as work as a strong team;

Fourth: This Government is a diligence Government with a clear direction, systematic planning as well as holistic, efficient and structured implementation plans. Indeed, this Government has delivered, we are still delivering and most importantly, we will continue to deliver; and Fifth: We uphold the national ideology, which is the Rukun Negara. As such, in governing the country, the Government has been firmly upholding the universal Islamic philosophy and principle of Wasatiyyah. This philosophy comprises moderation; balance; social justice; fairness; and excellence.

This means that we are always striving for excellence, not just average and complacent, what more to settle for mediocrity.

Mr. Speaker Sir and beloved rakyat,

69. While we strive to succeed through joys and sorrows, we have never forgotten exemplary leaders who have inspired us.

70. In this regard, we would like to express our deepest condolences to families of several individuals who have served the nation. I would like to share their stories though they were not

members of Parliament.

71. First, Allahyarham Tan Sri Haji Abdul Aziz Tapa, who loyally served the party and people till he was 93 years old.

72. Second, another close family friend, Allahyarham Tuan Guru Dato’ Dr. Haron Din.

73. Indeed, Malaysians have lost two respected figures.

74. Clearly, despite our political differences, Allahyarham Tuan Guru was highly respected for his contribution to the ummah. As such, the Government has conferred him the 2016 Maal Hijrah

Special Award. We are sad and disappointed that there are certain parties that openly hate and insult him.

Mr. Speaker Sir,

75. In fact, during my visit to the hospital, Allahyarham Tuan Guru hinted that both the feelings of love and hatred should not be too extreme.

76. Al-Fatihah.

Mr. Speaker Sir,

77. We are approaching six decades of independence. During these years, public servants, which currently stand at 1.6 million have been the backbone and pillar of the nation’s administration.

78. To appreciate the contribution of public servants, I am pleased to announce the following:

First: To extend the fully paid Study Leave with scholarship to the Support Group, that is currently limited to Management and Professional Group;

Second: To grant Quarantine Leave up to five days without record to public servants whose children are ill and required to be quarantined;

Third: This year’s Budget will extend the existing Computer Loan facility to encompass the purchase of smartphone. This facility can be utilised by public servants once every three (Note 1. See footnote)

years with a maximum loan of RM5,000; and Fourth: The Government has also decided to increase the motorcycle loan limit from RM5,000 to RM10,000. (Note 2)

Mr. Speaker Sir,

Fifth: The Government is concerned with public servants’ housing needs and is committed to enable them to own houses.

As such, the Government is pleased to increase the public servants’ housing loans eligibility from between RM120,000 and RM600,000 to between RM200,000 and RM750,000;

Sixth: To complete 30,000 units of 1Malaysia Civil Servants Housing (PPA1M) with selling price between RM90,000 and RM300,000, which is 20% below the market price;

Seventh: To extend the contract of service and contract for service officers, expiring end of this year, for at least one year;

Eighth: To address the issues of specialist doctors leaving the public service and delays in promotion, the Government will introduce a grade 56 between grade 54 and JUSA C

for medical and dental specialists; and Ninth: To appoint the first group of doctors, dentists and

pharmacists on contract latest by December 2016 due to constraints in permanent posts.

For information, nearly 2,600 doctors who were unable to undergo housemanship in any hospitals will now serve on contract. Hopefully, this will be good news to them and their families.

Mr. Speaker Sir,

79. Before proceeding with the tabling of the budget, allow me to clarify several repeated allegations and misconceptions that create fear among the rakyat, leading to public confusion on Malaysia’s economic situation.

80. First misconception and misperception – the Government will go bankrupt.

81. In this regard, I would like to clarify that a government will be declared bankrupt only if it is unable to pay off its debt.

82. There are three reputable international rating agencies, namely, Fitch, Moody’s and Standard & Poor’s.

83. The ratings and reports from these rating agencies are accepted in assessing a country’s ability in paying off its debts.

84. As a comparison, Fitch had rated Malaysia with A- compared with the Philippines (BBB-), Thailand (BBB+) and Viet Nam (BB-).

85. In fact, our rating is similar to that of advanced and larger economies such as Republic of Korea (AA-), China (A+), Taiwan (A+), Japan (A).

86. This means, bankruptcy is never in Malaysia’s economic dictionary!

Mr. Speaker Sir,

87. Second allegation – Malaysia is said to be a Failed State.

88. This is a false accusation. I would like to clarify the meaning of a failed state. It refers to a country that fails to implement most of its responsibilities and basic functions of a government.

89. This includes the failure of police and armed forces in

maintaining national security and public order of the country; failure of the Government to pay salary of the civil servants; failure in providing basic amenities such as water and electricity as well as hyperinflation that could collapse the economy.

90. These characteristics do not exist in Malaysia and with the blessings of Allah, this Government will never allow our country to become a failed state.

Mr. Speaker Sir,

91. This Budget is not intended to benefit any particular group. However, it is engineered to be inclusive for the well-being of the rakyat.

92. As illustrated in a household income pyramid, there are three main categories of rakyat in our country, namely T20, M40 and B40.

93. For the M40 group, the household income ranges between RM3,900 and RM8,300.

94. This M40 group includes singles as well as most working married couples, highly educated and skilled.

95. Alhamdulillah, this group do not face difficulties in meeting their basic needs. However, the Government intends to increase their disposable income.

96. This includes aspects such as job security, increase in income from time to time, housing, safety, education, health as well as balanced lifestyle among work, recreational and quality time with their families.

Mr. Speaker Sir,

97. For public knowledge, B40 refers to the bottom 40% of households with monthly income RM3,900 and below. From the macroeconomic perspective, the existence of this group is common in any developing countries.

98. According to Khazanah Research Institute Report, the household income of the B40 households recorded faster growth rate compared with the income growth of M40 and T20 groups.

Mr. Speaker Sir, ladies and gentlemen and beloved rakyat,

99. In the 2015 Budget, I have defined People Economy and Capital Economy. This time, I would like to add another important concept towards becoming an advanced economy i.e. public happiness.

100. What I mean, this Budget is not merely about income but it is related to quality of life such as free from crime, enjoy clean environment, with various colourful arts and cultures. (Note 3)

101. Also, attaining higher education, raising one’s academic and intellectuality; with guaranteed healthcare services as well as access to efficient public transport.

102. With regard to environmental matters, we must continue to preserve our nature especially water catchment areas and declare these areas as forest reserves and national parks are kept as well as protected from intrusion. This will only become a reality if all state governments provide full cooperation in collaboration with the private sector and the rakyat.

103. For the well-being of the rakyat, the Government remains committed to implement Rakyat Centric projects and programmes in urban and rural areas, as follows:

First: From the information and site visits, there are still villages without street lights.

To brighten the villages at night, a total of 97,000 street lights and 3,000 LED lights will be installed at crossroads. This involves 7,500 villages nationwide, including Sabah and Sarawak.

Second: To enhance connectivity of villages, towns and cities, a total of 616 kilometres of village roads and bridges will be built and upgraded with an allocation of RM1.2 billion;

Third: To maintain state roads, a total of RM4.6 billion is allocated to all states under the Malaysian Road Records Information System (MARRIS);

Fourth: To build and refurbish 17,000 units of destitute and dilapidated houses in remote villages and Orang Asli settlements with an allocation of RM350 million. Each unit will be given a assistance for renovation between RM1,000 and RM15,000 depending on the condition of the houses; and

Fifth: To increase the supply of clean water with an allocation of RM732 million, targeting 5,200 houses, including the upgrading of FELDA water supply system.

104. In recent times, we have been facing various water supply issues in several states including lack of supply capacity; drought; pollution from industrial wastage and logging; and pipe leakages.

105. To improve capacity and ensure water supply, the Government will allocate grants totalling RM156 million and loans amounting to RM509 million.

106. In addition, a Water Supply Fund will be established immediately with an allocation of RM500 million to address water supply issues throughout the nation.

Sixth: To provide electricity supply in rural areas, targeting approximately 10,000 houses with an allocation of RM460 million; and

Seventh: The Government is concerned about the welfare of urban residence especially those living in flats. These rundown flats are due to lack of maintenance, including malfunctioning lifts.

Therefore, the Government allocates RM300 million under the 1Malaysia Maintenance Fund (TP1M) to repair facilities at flats and 113 People’s Housing Programme (PPR) in urban and suburban areas.

107. In addition, the Government will implement People-Friendly Projects with an allocation of RM800 million. These projects include upgrading and building surau, small bridges, drainages, community halls, markets and kiosks. Priority will be given to local G1 and G2 contractors for the implementation of these projects.

108. Furthermore, a total of 69 Flood Mitigation Plans will be continued nationwide with an allocation of RM495 million.

Mr. Speaker Sir,

109. I am pleased to announce the implementation of a new National Blue Ocean Strategy (NBOS) initiative, namely MyBeautiful New Home, especially for the B40 throughout the country with an allocation of RM200 million.

110. At the initial stage, a total of 5,000 units will be built with prices ranging from RM40,000 to RM50,000 per unit.

111. Interestingly, the Government will finance RM20,000, while the remaining will be paid as instalments by each owner. These houses will be built on their own land; land permitted by the landowner; and land awarded by state governments.

112. The Ministry of Urban Wellbeing, Housing and Local Government (KPKT) will build 9,850 houses under People’s Housing Programme (PPR) with the allocation of RM134 million in 2017.

113. Meanwhile, a total of 11,250 PPR houses are being built with an allocation of RM576 million. These PPR houses will be sold between RM35,000 and RM42,000, even though the actual construction cost is between RM120,000 and RM160,000.

Mr. Speaker Sir,

114. To assist in improving the rakyat’s income opportunities, especially for the B40 group, a total of RM275 million is allocated for the followings:

First: Expanding the MySuria Programme with an allocation of RM45 million. Through this initiative, solar panels will be installed in more than 1,600 housing units. Each participant will receive RM250 per month;

Second: Expanding Mobileprenuer Programme by GIATMARA with a total allocation of RM30 million, targeting 3,000 participants using motorcycles; (Note 4)

Third: Implementing Agropreneur programme to produce 3,000 young entrepreneurs with an allocation of RM100 million. These entrepreneurs are involved in the production of high-value agricultural products; and

Fourth: Revitalising eUsahawan and eRezeki programmes under the Malaysia Digital Economy Corporation (MDEC), comprising 300,000 participants with an allocation of RM100 million. (Note 5)

Ladies and Gentlemen,

115. To ease the cost of living, the Government will provide nearly RM10 billion for subsidy allocation. This allocation comprises of fuel subsidies including cooking gas; toll charges; and public transport.

116. To assist paddy farmers, the Government will allocate RM1.3 billion to subsidise paddy price, seeds and fertilisers including hill paddy.

117. As an incentive to registered rubber smallholders, the Government will implement the purchase of floor price with an allocation of RM250 million.

118. As an additional measure, the Government will introduce Rainy Season Assistance with an amount of RM200 monthly for 3 months in November, December and January, benefitting 440,000 rubber tappers and smallholders.

119. Furthermore, to ease the cost of living of 57,000 fishermen, the monthly allowance of RM200 to RM300 will be continued.

Mr. Speaker Sir,

120. Since the introduction of 1Malaysia People's Aid (BR1M), without fail, this programme has been well-received and obtained positive feedbacks from the recipients.

121. In an event that I attended, a Malaysian Indian BR1M recipient had expressed his appreciation towards the Government for the BR1M which had assisted his family.

122. Therefore, Mr. Speaker Sir, ladies and gentlemen, BR1M is not animal feed neither bait rather it is a sincere assistance from the Government as we always prioritise rakyat’s needs. Hence, we provide more assistance.

123. In this regard, BR1M’s assistance for next year will be increased as follows:

First: For households in the e-Kasih database with a monthly income below than RM3,000, BR1M will be increased to RM1,200 from RM1,050 and RM1,000;

Second: For households earning between RM3,000 and RM4,000, BR1M will be increased from RM800 to RM900; and

Third: For single individuals earning below RM2,000, BR1M will be increased from RM400 to RM450.

124. At the same time, the Bereavement Scheme will be continued with the RM1,000 compensation given to the next of kin of BR1M recipients for households and the elderly category. Overall, the BR1M programme will benefit 7 million recipients with an allocation of RM6.8 billion.

125. In order

to produce local workforce that meets the industries’ requirement, TVET education capacity will be enhanced with an allocation of RM4.6 billion to TVET institutions.

126. Through NBOS, to optimise the Government’s assets, nine unused Teachers’ Training Institutes (IPG) will be transformed into Polytechnics and Vocational Colleges.

127. Finally, four will be become polytechnics, another four will be vocational colleges and one training institute for TVET trainers.

128. Through this creative initiative, the expenditure involves only RM400 million compared with RM250 million to build a new polytechnic. This will save the Government approximately RM2 billion.

129. Furthermore, a sum of RM270 million is allocated to upgrade educational equipment in TVET institutions as well as RM360 million for Skills Development Fund Corporation.

130. In this regard, double tax deduction is given on expenses incurred by private companies to provide Structured Internship Programme for students pursuing undergraduate degree, diploma and Malaysian Skills Certificate Level 3 and above under the TVET Program. This incentive is extended for a period of 3 years from the year of assessment 2017 until year of assessment 2019.

131. In addition, training matching grants and curriculum development to public TVET which successfully obtained assistance in the form of equipment from industries.

Mr. Speaker Sir,

132. To enhance graduate employability, a sum of RM50 million is allocated to extend the 1Malaysia Training Scheme (SL1M) programme by GLCs to 20,000 graduates in 2017 (Note 6) compared with 15,000 graduates in 2016.

Mr. Speaker Sir,

133. House ownership is an issue that is very close to my heart. The Government is committed in ensuring that every family could own a house.

134. To enhance first home buyers’ affordability, the Government will introduce the following concepts:

First Concept: Through NBOS, we will provide Government’s vacant lands at strategic locations to GLCs and Perumahan Rakyat 1Malaysia (PR1MA) to build more than 30,000 houses with the selling price ranging between RM150,000 and RM300,000 which is much lower than the market price from RM250,000 to RM400,000.

Second Concept: To build around 10,000 houses in urban areas for rental to eligible youths with

permanent job including young graduates entering labour market. They may rent up to a maximum five years, at a lower than the market rate, while they strengthen their financial position to own a house; and

Third Concept: To build 5,000 units of People’s Friendly Home (PMR), with the Government subsidising up to RM20,000 per unit. For this purpose, RM200 million will be allocated to Syarikat Perumahan Negara Berhad (SPNB);

Mr. Speaker Sir,

135. PR1MA is well-received. To date, more than 12,000 units worth RM3.3 billion has been booked, while 85,000 units are at various stages of approval.

136. I would like to take this opportunity to announce a new special “step-up” end-financing scheme for the PR1MA programme.

137. Through this special scheme, financing will be easier and more accessible to the buyers with total loan up to 90% to 100% with loan rejection rate to be reduced drastically.

138. Application process for this scheme will be implemented effective 1 January 2017. This scheme is collaboration among the Government, Bank Negara Malaysia (BNM), Employees Provident Fund (EPF) as well as four local banks, namely, Maybank, CIMB, RHB and AmBank.

139. For example, an applicant with a monthly income of RM3,000 will only be eligible for loan more than RM187,000. However, through this special financing scheme, an applicant will be able to borrow more than RM295,000.

140. In addition, the stamp duty exemption be increased to 100% on instruments of transfer and housing loan instruments, to help reduce the cost of first home ownership, compared to 50% at present.

141. However, this exemption is limited to houses with the value up to RM300,000 for first home buyers only for the period between1 January 2017 and 31 December 2018.

Mr. Speaker Sir,

142. For Second Generation House infrastructure development, a sum of RM200 million is allocated to FELDA, RM100 million for FELCRA and RM100 million for RISDA.

Mr. Speaker Sir,

143. There is good news for the taxpayers. Currently, there are 21 categories of individual tax reliefs. In order to facilitate tax payers in claiming the existing tax reliefs, the purchase of reading materials, computers and sports equipment be combined as the lifestyle tax relief.

144. This relief is extended to include the purchase of printed newspapers, smartphones and tablets, internet subscriptions (Note 7) as well as gymnasium membership fees. The relief is given up to RM2,500 per year, and will be effective from year of assessment 2017.

Mr. Speaker Sir,

145. The NBOS initiative has successfully saved RM3.5 billion on Government’s expenditure.

146. As it is well-received by the rakyat, four more Urban Transformation Centres (UTC) in Negeri Sembilan, Perlis, Pulau Pinang and Selangor and three more Rural Transformation Centres

(RTC) in Selangor, Sabah and Sarawak will be built with an allocation of RM100 million.

147. As a new measure, each UTC will be provided with a Job Centre to assist matching between job seekers and potential employers.

148. UTC operates from 8am to 10pm, seven days a week. This is only possible with the Barisan Nasional Government.

149. Furthermore, other NBOS initiatives include 1Malaysia English, Coding in schools, Volunteering for International Professional and Global Entrepreneurship Community 2 with an allocation of RM40 million.

Mr. Speaker Sir,

150. While implementing various Rakyat-Centric programmes, the Government is committed enhance long-term fiscal sustainability, among others, through the establishment the Collection Intelligence Arrangement (CIA) under the Ministry of Finance. It involves Inland Revenue Board (IRB), Royal Malaysian Customs Department and Companies Commission of Malaysia (SSM) as they will share data to enhance efficiency in tax collection and compliance.

151. In addition, the rate of stamp duty on instruments of transfer of real estate worth more than RM1 million, will be increased from 3% to 4% effective 1 January 2018.

152. Furthermore, various Rakyat-Centric projects will be continued through Private Finance Initiative (PFI) with an allocation of RM10 billion.

**MORE TO COME**

© New Straits Times Press (M) Bhd

 

Hi Guys/Gals,

 

I haven't posted on the comments from Note 1 to 7 yet. Also the points ends at 152 only. There are still many points in the Budget Speech. And more about DRB & POS involvements

Will explain later.

 

Good night

 

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