The Budget 2019 carries the theme of "Credible Malaysia, Dynamic Economy, Prosperous Rakyat".

Tabled by Finance Minister Lim Guan Eng earlier today, it focuses on institutional reforms, the people's wellbeing and promotion of entrepreneurial culture to recapture Malaysia's "Economic Tiger" status.

These are the highlights of Budget 2019:

FUEL

- Government will subsidise RON 95 petrol for those with cars with the engine capacity of 1,500cc, and under, and those with motorcycles with engine capacity of 125cc and under.

- Subsidy will be RM0.30 per litre and capped at 100 litres a month for cars and 40 litres a month for motorcycles.

- Price of RON 95 will be floated after subsidy is put in place.

TAX

- Under the GST, 545 goods were zero-rated while under SST, almost 10 times more the items were exempted from SST.

- Based on preliminary studies by the Ministry of Domestic Trade and Consumer Affairs, 70 per cent or 291 of the 417 products and services that have been inspected saw prices drop in September.

- Government will introduce a credit system for sales tax deduction from January next year. The credit system will avoid double taxation and lower business costs. 

- Effective January 1, 2019, the government will grant SST exemptions to specific services provided by registered businesses to other registered businesses.  

- The finance minister says the government will also introduce a tax cut credit system for small manufacturers who purchase source materials from importers and not registered factories.  

- Starting January 1, 2019, the government will tax imported services to ensure that local service providers such as architects, graphic designers, software developers can compete more competitively.  

- Online services imported by users will also be required to register with the Customs Department from January 1, 2020. This includes software, music, videos, or any digital advertising.  

- The Government will launch a Special Voluntary Disclosure Programme, giving taxpayers an opportunity to voluntarily declare any unreported income.

- Introducing Soda Tax. The government is to introduce excise duty  at 40 sen per litre on two categories of sugary drinks which are manufactured in the form of ready-to-drink packaging, starting April 1, 2019.  

- Beverages containing sugar or other sweeteners containing sugar exceeding 5 grams per 100ml; and  

- Fruit juices and vegetables containing sugar more than 12 grams per 100ml.

TRANSPORTATION

- Government will continue the LRT3 project with a savings of 47 per cent from the initial estimated cost of RM31.6 billion to RM16.6 billion.

- Government will be able to save RM15 billion based on the announcement.

- The MRT2 will also continue with a savings of 22.4 per cent from the initial estimated cost of RM39.3 billion to RM30.5 billion.

- The RM5.2 billion Klang Valley Double Tracking Project will be re-tendered through open tender and is expected to provide substantial cost savings.

- From January 1, 2019, no tolls for motorcycles on the First and Second Penang Bridge and the Second Link in Johor.

- Public transportation users can buy RM100 monthly passes for unlimited trips on RapidKL rail or bus services starting from January 2019.  There is also a RM50 monthly pass for those who only use RapidKL busses. This scheme will be expanded to other bus companies in stages.

- The government will freeze toll charges on all highways in the city in 2019 with an estimated budget RM700 million.

- Government will implement the Biodiesel B10 Programme (a mixture of 10 per cent palm oil content) for the transport sector and B7 for the industrial sector in 2019.

- RM2.46 billion to be spent on railway track upgrading.

EDUCATION

- Tax exemption for employers who help settle their employees' PTPTN arrears for the year ending 2019

- Loan deductions for students from B40 households who get first class results.

- Education Ministry to get biggest allocation of RM60.2 billion.

- RM2.9 billion education aid proposed for disadvantaged students in the form of food supplies, textbooks, cash aid.

- RM652 million allocation to upgrade, maintain all schools.

- RM3.8 billion set aside for scholarships, education loans including RM2 billion for Bumiputera students under MARA sponsorship.

- To ensure the sustainability of the National Higher Education Fund (PTPTN), several initiatives have been announced, including payment through deductions of between 2 per cent and 15 per cent from the borrower's salary, based on their monthly income rate. This system is only applicable to borrowers earning more than RM1,000 a month.

- Individual income tax breaks for the National Education Saving Scheme is increased from RM6,000 to RM8,000.

HUMAN RESOURCE

- Labour laws to be reviewed to improve labour market, ensure workers' well-being and prevent discrimination by employers.

- Minimum wage to increase to RM1,100 nationwide starting January 1, 2019.

- Government will allocate RM10 million to work with NGOs and social enterprises to help underprivileged communities.A one-off assistance of RM500 will be paid to pensioners who are receiving pensions of less than RM1,000.

- To encourage the hiring of those above the age of 60 who want to work, the government proposes that their mandatory EPF contributions be reduced from 6 per cent to 4 per cent.

- Lim says this group will also not have their income deducted for EPF contributions to increase the money available to them.

- There will also be tax incentives for companies that hire senior citizens, with a salary limit of RM4,000 a month.

- The government will help those who lost their jobs by fully implementing the Employment Insurance System (SIP) beginning January 1, 2019.

HEALTHCARE

- B40 National Health Protection Fund - Protection for four major critical illnesses up to RM8,000 and maximum 14 days of replacement income during hospital treatment at RM50 /day or equivalent to RM700 /year

- RM50 million set aside to treat patients with rare diseases, Hepatitis C and other initiatives.

- Government will continue providing free mammogram, HPV vaccination and PAP Smear screening at government hospitals and clinics with an allocation of RM20 million

- The government will allocate about RM29 billion for health services which is an increase of 7.8 per cent from the previous year.

- Exclude stamp duties on all Tenang Protection Products for two years from January 1.

- RM100 million for Health Protection Scheme (Peka), with health screening pilot project for 800,000 people from B40 group ages 50 and above.

- RM50 million for rare diseases treatment, Hepatitis C, programme to overcome stunting among children, screening and haemodialysis treatment and enhanced primary health care.

- Expand public-private partnership where government provides health infrastructure facilities such as with the Federal Territory Katarak Islamic Council Centre in Selayang.

- Great Eastern Life Insurance contributed RM2 billion as start-up to the fund to be managed by Bank Negara Malaysia.

- Government has allocated RM10 million annually to extend medical benefits to parents of contractual civil servants.  

- Contractual civil servants whose children have infectious diseases will be eligible for quarantine leave.

PROPERTIES

- Government to create a Real Estate Investment Trust (REIT) for its airports. Through this initiative, the government is expected to rake in RM4 billion, disposing 30 per cent of the REIT equity.

- Real Estate and Housing Developers' Association Malaysia (Rehda) agrees to reduce house prices as much as 10 per cent for houses which are not subject to price control for new projects.

- For companies, non-citizens and non-PR holders, real property gains tax will be increased from 5 per cent to 10 per cent. For citizens and those with PR, real property gains tax will be increased from 0 per cent to 5 per cent.

- Government hopes to get back at least RM1 billion from efforts to combat smuggling and fraudulent activities that were previously unrecoverable. 

- RM1.5 billion to build and complete affordable homes under the People’s Housing Programme, Civil Servants Housing Project, PR1MA, and Syarikat Perumahan Nasional Bhd.

- RM1 billion fund to be set up by the Central Bank of Malaysia (BNM) for those earning under RM2,300 per month to buy affordable houses priced at RM150,000 and below.

- The fund will be made available for two years or until the fund is depleted through AmBank, CIMB Bank, Maybank, RHB Bank and BSN at an interest as low as 3.5 per cent.

- RM25 million will be allocated to Cagamas Berhad to prepare a mortgage guarantee (jaminan pajak gadai) to ensure that first time house buyers with a household income of up to RM5,000 will receive a higher financing, including for their deposit. This is expected to lower the cost between 7 per cent and 11 per cent for buyers, apart from the discounts given by developers.

- Stamp duty exemption for the first RM300,000 on the property transfer letter (surat cara pindah milik) and loan agreement for first time house buyers purchasing a house priced at a maximum of RM500,000 for two years until December 2020.

- Financing under the Public Sector Home Financing Board (LPPSA) will be extended from 30 years to 35 years for first-time financing and 25 years to 30 years for second financing (pembiayaan kedua).

- RM400 million will be allocated to improve the living quarters of civil servants such as police and military personnel and teachers.

- Government is suggesting on an exemption of stamp duty on property transfer letter for first house purchase for houses priced between RM300,001 and RM1 million for the period of six months starting from January 1, 2019.

- This will be part of the National House Ownership Campaign, of which developers have agreed to give a 10 per cent discount to houses under existing projects.

- Property crowdfunding platform will be allowed, which will be headed by the private sector. Overseen by the Securities Commission, it will allow house buyers to use peer-to-peer lending to finance their purchase.

- Stamp duties for property transfers worth more than RM1 million will be raised by 1 percentage point from 3 per cent  o 4 per cent.

HOUSEHOLD

- Government will continue and improve the financial aid (Bantuan Sara Hidup) to the B40 group by providing more targeted assistance.

- Households with monthly income of RM2,000 and below will receive RM1,000.

- Monthly income from RM2,001 to RM3,000 and below will receive a total of RM750; and

- Monthly income from RM3,001 to RM4,000 will receive a total of RM500.

- Government will introduce an additional aid (BSH) of RM120 for each child aged 18 years and below, to be limited to four persons, except disabled persons (OKU) with no age limit.

- It is estimated that 4.1 million households will continue to receive financial assistance from the government with a total allocation of RM5 billion.

- Government to spend RM1.5 billion on affordable housing. To help those earning no more than RM2,300, a fund will be set up by Bank Negara for homes up to RM150,000 at interest rate of 3.5 per cent through selected banks.  

- Monthly electricity subsidy will be given  to the poor and hardcore poor registered with the e-Kasih program, the subsidy rate is increased to RM40 per month and will benefit 185,000 accounts. An allocation of RM80 million will be provided.

-Government will allocate RM10 million to work with NGOs and social enterprises to help underprivileged communities.

RETAIL

• Based on early studies by the Domestic Trade and Consumer Affairs Ministry, 70 per cent or 291 of the 417 products and services that have been inspected showed price drop in September.
• For online services imported by users, foreign service providers are required to register with Customs Department, charging and remitting related service tax will take effect from January 1, 2020.
• Allocation of RM100 million for TEKUN to help small businesses.
• RM20 million for the launch of 'Beli Barangan Malaysia' campaign to support local products and services. Lim says RM20 million has been allocated for the programme, which was previously carried out during Prime Minister Dr Mahathir Mohamad's first stint in office.  The programme will give local manufacturers and service providers access to hypermarkets, shopping warehouses, and trade expos.
• Government has earmarked 380 acres of land in Pulau Indah as a Free Trade Zone to support and catalyse shipping and logistics activities in Port Klang.

ENTERTAINMENT

• Film in Malaysia Incentive (FIMI) will continue with an allocation of RM30 million. Khazanah will allocate RM100 million for FIMI, specifically for the production of films at the Pinewood Studios in Iskandar Johor.

TOURISM

• Pangkor to be made a duty-free island to realise its true potential.
• Status of Langkawi as duty-free island will be expanded.
• Federal Government to get a 50 per cent share of the tourism tax proceeds received in these states (Penang, Perak and Langkawi).
• Tax exemption facility to be given to duty-free shops at Swettenham Port in Penang to further promote cruise tourism
• To encourage domestic tourism, the Government proposes to impose a departure levy for all outbound travellers by air starting 1 June 2019.

DIGITAL ECONOMY

• To promote digital economy, the government will implement the National Fiber Optic and Connectivity Plan (NFCP) with an allocation of RM1 billion.
• The plan aims to develop the nation's broadband infrastructure. In addition, the target broadband service speed is 30 mbps in rural areas and remote areas within five years to enable Malaysia to achieve world-class infrastructure at an affordable price.
• The Government will also enforce the Mandatory Standard Access Pricing (MSAP) to reduce fixed line broadband prices by at least 25 per cent by the end of 2018.

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