Implication of Budget 2013
According to the Prime Minister Datuk Seri Najib Razak, who is also Finance Minister, at the Dewan Rakyat on Friday, September 28 tabled that the Budget 2013 themed “Prospering The Nation, Enhancing Well-Being of the Rakyat: A Promise Fulfilled” . 2013 budget was formulated with a focus on improving the living standards of people across the country, ensuring sustainable economic growth, prudent spending and reduce the country’s fiscal deficit with the overall goal of focusing on the welfare of the people.
The Government will ensure people get the best services and maximum benefits as a result of the implementation of development programs and projects in 2013, the global economic environment is expected to improve, economic growth is projected to grow more strongly at 4. 5 percent to 5. 5 percent. Though this, the first positive implication is increase economic growth through increased investment activity. Economic growth will continue to be driven by foreign direct investment and domestic. In the first half of 2012, private investment increased to 75. billion dollars from 59. 8 billion dollars in the same period in 2011. This trend is expected to continue in 2013 with private investment is expected to increase to 148. 4 billion dollars. In order to stimulate domestic investment and accelerate the participation of Malaysian companies in the global supply chain, the Government has provided funds Domestic Strategic Investments worth 1 billion dollars under the Investment Development Authority of Malaysia. The fund aims to take advantage of outsourcing activities and the acquisition of technology by local companies.
In addition, the government has also introduced incentives for the acquisition of foreign companies and special tax rates to encourage local service providers to merge into larger entities. Besides, Small and Medium Enterprises (SMEs) play an important role in the economic transformation of the country. As to accelerate the growth of SMEs and the expansion of the scope of the industry across the country, a fund of 1 billion dollars will be made available under the SME Development under the operating SME Bank.
These measures facilitate the access of SMEs to obtain financing and further develop their business. Next, the second positive implication will be he reduces of citizen’s burden especially low income citizens. in term of reduce in burden as in both reducing cost of living and quality of living of Malaysian government provided a program called program Rumah Mesra Rakyat where the NHC will build a total of 21. 000 units for 2013. Under this program also, the NHC will build a house costing 65 thousand dollars with a subsidy of 20 thousand dollars and interest rate subsidies on loans of 2 percent.
In addition, a sum of 543 million dollars will be provided to the National Housing Department implement 45 projects under the Public Housing Program involves 20. 454 housing units will be constructed using the Industrialised Building System. All residential units will be sold between 30 to 40 thousand dollars per unit than the market price around 120 thousand dollars per unit. 20 percent of the PPR housing units allocated to civil servants and some of the people with disabilities.
Besides that ,everyone wish to own a house so to enable this to happen more First Home Scheme, was launched by the last budget, will be improved by increasing the income limit individual borrowers from 3,000 dollars to 5,000 dollars a month or 10,000 dollars a month for joint loans of husband and wife. In addition, reserve requirements and deposit 3 month minimum period of 6 months work will also be abolished. Other then housing subsidy, 1Malaysia People’s Aid (BR1M 2. 0) also launched to establish goal of reduce people living cost.
RM 250 will be given to individual that below 21 years old with income less then RM 2100. Thirdly, Malaysia Budget 2013 also contributes in development of rural and indigenous communities. Rural areas will continue to be developed to reduce the gap of urban and rural development. 4. 5 billion dollars will be provided to implement various development projects in 2013 include ,first ,a total of 1. 2 billion is allocated to implement the project 441 km of rural roads and rural roads benefiting 220 thousand inhabitants. Second a total of 1. billion is allocated for infrastructure projects rural utilities for water supply projects to 24 thousand households and extension project electricity to 19 thousand households. Third, a total of 137 million dollars allocated for Sustainable rural Program involving 29 villages throughout the country and benefit 38 thousand inhabitants. Major programs include the upgrading of marine products processing plants and food, building a new pier, the construction of a centre for marketing, improving the package and recreational activities as well as the home stay.
Fourth, a total of 88 million is allocated for economic development programs and projects of water supply for indigenous peoples; and fifth ,a total of 100 million dollars to supply 40 thousand water tank using rainwater catchment, particularly in remote areas in Sabah and Sarawak. In the other hand, Malaysia Budget 2013 also has some negative implication. First of all, we see that this time the government spending is still a deficit which mean excess of expenditure over income ,although it decreased compared to last year (2012), from 4. 7% to 4. 0% of a 21. billion once the government accumulated outstanding debt of nearly 503 billion or half trillion for to-16 years in a row since 1997. That amount is 53. 7% of the Gross Domestic Product (GDP or GDP) for 2012. The initial RM1. 8 billion that was allocated to BR1M for 3. 4m households in the 2012 budget ballooned to over RM2 billion for over 4 million households. A country whose GDP is projected to expand by 5 per cent in 2012 should see fewer households earning less than 3000RM. And yet, BR1M recipients are projected to increase to 4. 3 million households with another 2. 7m individuals earning less than 2000RM joining them.
Without proper checks and balances, the RM3b that has been allocated to BR1M 2. 0 for Budget 2013 can easily increase to more than RM4b, if not more. The same lack of fiscal prudence could be seen in the expenditure on subsidies. An allocation of RM32. 8 billion was given for subsidies in Budget 2012 but the actual expenditure on subsidies is projected to be at RM42. 4 billion, an increase of RM9. 6 billion or 29. 3 per cent over the original budget! If the same kind of trajectory is followed, the RM37. 6 billion which is allocated for subsidies in Budget 2013 could easily increase to almost RM50 billion.
Besides that, sugar subsidy reduced by 20sen per kg. Sugar Should be a controlled item but it price has gone up four times, by 20sen per kg on Jan 1, 2010, 25sen on July 18, 2010, 20sen on Dec 4, 2010, and 20sen on May 10, 2011. A remarkable affect on the property market seen sugar is a common goods that cannot be replace. Government has proposed the real property derive tax RPGT from the disposal of properties made within a period not surpassing two years from the date of purchase will be taxed at the rate of 15% and at 10% for disposal of property within a period of two to five years.
This symbolise an increase on RPGT of 10% is applied to properties held and inclined of within two years, and a rate of 5% was retained for properties sold within the third, fourth and fifth years after purchase and it would give result in a negative impact on the country. As a conclusion, there are both positive and negative implication toward Malaysia Budget 2013 . In my opinion, most of the positive implication are brings short term effect but the some negative implication might cause long term liabilities to our economy.
