Malaysia Budget 2018: Winners and Losers as Najib Courts Votes
(Bloomberg) -- Malaysian Prime Minister Najib Razak on Friday announced a 280 billion ringgit ($66 billion) spending plan in the final budget before general elections take place in the next 10 months.
The premier lowered taxes for millions of Malaysians and increased social assistance as he gave an upbeat assessment of the economy. At the same time, those expecting corporate tax cuts were left disappointed and some toll concessionaires found themselves with fewer highways to collect from.
Here are the winners and losers.
Najib announced personal income tax cuts of 2 percentage points for those earning between 20,000 ringgit and 70,000 ringgit a year. He said that would benefit 2.3 million taxpayers, including 261,000 people who wouldn’t have to pay the levy, and increase disposable income by as much as 1,000 ringgit.
The 1.6 million-strong force will get a 1,500 ringgit bonus over two payments, while government retirees will get half the amount. Najib also introduced more flexible hours and increased medical and education-related benefits. Employees of government-linked companies will also gain as the prime minister announced organizations will increase profit-sharing programs and introduce benefits such as substituting leave allowance for cash.
Najib outlined benefits of about 6.5 billion ringgit for farmers, fishermen, smallholders and rubber tappers. Voters from the agricultural sector have a higher weighting than their work, which contributes to less than a tenth of gross domestic product. Allocations include money for fertilizers, irrigation systems and replanting programs.
Planes, ships and oil rigs
Imports of aircraft, ships and oil rigs are among items that will be given relief from the 6 percent goods and services tax from next year. Cruise operators will also get relief from paying the tax on handling services by port operators for several years.
After warning student-loan dodgers three years ago of the dangers of non-payment, the prime minister is reaching out to them again to settle their debts. Najib has sought to woo younger voters with discounts on outstanding student loans and he gave them more time to remain eligible for such reductions. For those who just completed their studies, they will have a longer grace period before having to start to make payments.
Venture capital: The minimum investment in venture companies will be reduced to 50 percent from 70 percent, while tax incentives will be expanded.
Pregnant women: Those in the civil service can leave work an hour early when they’ve passed the fifth month of pregnancy. For the private sector, the government is proposing 90 days of maternity leave from 60, matching what those in the public sector are already getting.
Comic book fans: They can rejoice too as more reading materials become zero-rated.
The budget focused on increasing disposable income for consumers but companies wishing for tax cuts after years of rising costs were left disappointed. Manufacturers in particular have struggled from higher operating expenses costs as a result of the implementation of minimum wages and the removal of energy subsidies.
Toll collections will be removed on specific highways in the opposition state of Selangor, as well as battleground states of Kedah and Johor. Already, one toll operator said it’s awaiting "receipt of further details" from the government before commenting on the loss in collections.
The battle for votes continues to be an uphill one for opposition groups with a lack of access to resources that Najib and his coalition have at their disposal. The election-friendly budget may be a swing factor for voters battling higher costs of living even as they blame the government for the increases.
©2017 Bloomberg L.P.