KUALA LUMPUR (Oct 11): The following are the highlights of Budget 2020:
- Budget 2020 has four thrusts including boosting economic growth in new economy and digital era, investing in people.
- Approved foreign direct investment has inreased to RM80.1 billion in 2018 from RM54.1 billion in 2017.
- Proctrated trade war offers Malaysia unique opportunity to become choice destination for FDI with high added value
- Overall debts and liabilities ratio to GDP lowered to 75.4% in 2018 from 79.3% in 2017, but is expected to rise to 77.1% as at end-June 2019. This is largely due to the increase in the committed government guarantee to continue to MRT and Pan Borneo Highway, and RM20 billion bailout of Tabung Haji. Govt saved at least RM46 billion in capex from rationalising megaprojects including LRT3, MRT 2 and ECRL.
- Malaysian economy to grow at 4.8% in 2020 vs 4.7% in 2019
- The government revises Budget 2020 deficit target to 3.2% of GDP, which is slightly higher than the 3% originally announced in Budget 2019.
- Lower public revenue in 2020 in absence of Petronas special dividend
- Government expects RM26.8 billion SST collection in 2019
- Government’s tax revenue up 3.4% to RM180 billion in 2019
- With weakening growth in government revenue, tax reforms necessary
- Higher development expenditure of RM56 billion
- Only 1% growth on exports in 2020
- Malaysia’s current account surplus to narrow to 1.9% of 2020 GNI
- 2% inflation in 2020, to be lifted by the introduction of targeted fuel subsidy
- Unemployment rate to remain healthy at 3.3% in 2020
- Service sector to be the fastest-growing sector of the economy
- 4.1% growth in the manufacturing sector in 2020
- Agriculture sector to grow the slower pace at 3.4%
- Stronger growth of 3.7% in construction sector in 2020, vs 1.7% in 2019
- Mining sector growth to moderate to 0.3%
- Govt will sell assets (approved previously) via competitive bidding to realise their potential; this is expected to generate more than RM3 billion revenue in 2020.
- The Bureau of Public Complaints will be replaced by the Malaysian Ombudsman to enhance govt’s governance and delivery systems
- Govt to move forward with the formation of the Independent Police Complaints and Misconduct Commission (IPCMC) to increase public confidence and trust in police.
- Japan Bank for International Cooperation (JBIC) offers to guarantee additional tranche of Samurai bonds with lower interest rate of less than 0.5% compared with 0.63% previously. The federal government plans to issue the bonds early next year. Issuance size to be determined after further discussion with JBIC.
- Home Ministry to receive RM16.9 billion boost for 2020.
- Allocation for Islamic affairs under PM’s Dept increased to RM1.3 billion from 1.2 billion in 2019
- Govt has set up National Committee on Investments (NCI), chaired by Minister of Finance and Minister of International Trade and Industry
- Allocation for Defence Ministry raised from RM13.9 billion in 2019 to RM15.6 billion in 2020
- Bandar Malaysia project will now proceed and include a People’s Park, with 5,000 units of affordable homes and greater Bumiputera participation. Proceeds from the project will be valued and announced in due course, and will be used to reduce 1MDB’s debts.
- Govt to pay RM2.4 billion to service 1MDB and SRC International’s debt interest in 2019, and a further RM2.7 billion in 2020