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| The Cover of The Edge Malaysia - 29 Jan 2016 |
As expected ($32) from my previous post the govt has now changed the budget to be in line with an expected oil per barrel price of $30 to $35. Here are some of my selected highlights (NOT salient points) from Prime Minister Datuk Seri Najib Razak's announcement of the following measures under Putrajaya's recalibration of Budget 2016:
EPF contributions by employees to be reduced by 3% from March this year until December 2017. Contribution rate by employers, however, remains the same.
Najib said the reduced contributions would boost spending by an estimated RM8 billion.
- More disposable income = more taxable income. Also with the extra money you will spend on goods which are likely to be GST-ed. Didn't they just say that 60% of EPF savers do not have enough. My advice is to opt back to 11%, do NOT rob your future savings.
*Income tax is calculated based on the gross salary minus the individual tax relief (RM 9,000 per year) and monthly EPF contribution made by the employee (limited to RM 6,000 per year). No other tax reliefs have been taken into account for the income tax calculation.
Tax exemption of RM2,000 for Malaysians earning RM8,000 and below for the financial year of 2015, a move that would affect two million tax payers.
- I like this though as this will boost domestic demand and have a multiplier effect on the economy.
Food and cost of living
Cash aid programme BR1M will be continued: "The government will not compromise on what is right for the country and people," Najib said.
- BR1M does not really help in terms of solving the financial problems faced by the people since it is only a one-off monetary aid. Instead, the Government needs to come out with long-term measures like improving productivity = increase wages. Handouts are commonly demonized for its social corrosiveness for breeding laziness and dependence.
Housing
For new housing developments, sale of houses priced not more RM300,000 to be limited to first-time house buyers.
- Does nothing but to distort the market further. First: banks are tightening now; it helps little if the buyer still could not secure the housing loan. Second: this can only work in tier 1 cities (Penang, KL and JB). Nak beli rumah kedua kat Kangar macam mana, kena cari >300k? Third: will drive demand for investors towards the higher range which in turn will fuel potential bubbles due to overcrowding.
Improving revenue collection
Optimise revenue from telecommunications by redistributing bidding processes.
- This is stupid. This is more or less an indirect tax to the telcos. Already at yesterday's closing nearly RM10 billion market capitalization was wiped out of the big three: Axiata (-10.31%), Maxis (-6.36%) and Digi (-4.31%). The private sector do not like nasty surprise, stability is the key thing in creating a conducive free market.
Civil service and government-linked companies
Government to keep its promise of July 1, 2016 additional salary increase for civil servants.
- Why do we keep growing the operational expenses? It's already a record high of 82% of our national budget. Banyak cantik. Banyak bodoh.
Education and scholarships
The National Scholarship Programme (Program Biasiswa Nasional) will allow 20 top SPM-scorers to pursue their studies in universities abroad;
The Bursary Programme (Program Lepasan Bursary) for 744 students to pursue their undergraduate degrees in public and private higher education institutions in the country
- Poor kids. Bursary recipients in tears after budget revision (link). This is not the Asian financial crisis. Education is the last thing that should be cut for its economic gains in the long run are tremendous. Here we are sacrificing not just the budget but our brightest minds.
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