2010 Budget: A High-Income Economy

Datuk Seri Mohd Najib Tun Razak yesterday tabled the 2010 Budget totalling RM191.5 billion and which has a three-pronged strategy to drive the nation towards a high-income economy; ensuring development; ensuring holistic and sustainable development; and focusing on the well-being of the people.

Najib, in tabling his maiden budget as the Prime Minister with the theme ’1Malaysia, Together We Prosper’, allocated RM183.3 billion or 72.2% for operating expenditure and RM53.2 billion or 27.8% for development expenditure.

The 2010 Budget Highlights:

• Malaysia economy to grow 2-3% in 2010.
• Per capita income to increase by 2.5% to RM24,661.
• RM30 billion allocated for primary and secondary education, among others, for student assistance and scholarships and to build 80 new national and primary secondary schools, government-aided religious schools, national-type Chinese and Tamil schools and mission schools. Additional RM1.1 billion to refurbish and upgrade schools nation-wide especially in Sabah and Sarawak.
• Individually taxpayers to be given tax relief on broadband subscription fee up to RM500 a year from 2010 to 2012.
• Civil servants are eligible to apply for computer loans once in every three years and up to a maximum of RM5,000 from the government once in every five years.
• Income tax for 2010 based on income derived from 2009 will be allowed to be paid in installments in five years.
• A RM50 service tax to be imposed on each principal credit card and charge card and RM25 a year on each supplementary card from Jan 1, 2010.
• The government propose the maximum income tax rate to be further reduced to 26% from 27% effective from the 2010 year of assessment.
• Personal tax relief will be increased to RM9,000 from RM8,000 effective from the 2010 year assessment.
• Government to launch a scheme in January 2010 that enables EPF contributors to utilize current and future savings in Account 2 to promote house ownership.
• Employees EPF contributions will be raised again to 11% on a voluntary basis with immediate effect. However, from Jan 1, 2011 employees’ EPF contribution will revert to 11%.
• The Government proposes existing personal tax relief of RM6,000 for EPF contributions and life insurance premiums be raised to RM7,000.
• All ministries and government departments are required to provide day care and education centres for children with allocation of RM200,000 for each.
• Thirty national scholarships for top students based on merit to further education in world-renowned universities; PTPTN loans converted to scholarships for first class honours degree undergraduates; Netbook package including free broadband service for university students for RM50 per month for two years.
• All civil servants from Grade 41 to Grade 54 or its equivalent as well as those on mandatory retirement will get special payment of RM500 in December.
• Government to enhance tax incentives for healthcare service providers who offer services to foreign health tourists with income tax exemptions of 100% on the value of increased exports from 50% previously.
• A five per cent tax to be imposed on gains from disposal of real property from Jan 1, 2010.

“The small the gap between pledges and works done the more credible would the government be, and vice-versa”. – Dato Sri Dr James Masing

As far as I concern, though the allocation is a bit small it has somewhat given enough to promote the development emphasis of the past as Najib tries to link things up toward high income economy. Even in terms of human capital development, such as the development of schools, Sarawak and Sabah have been given priority. The most important things are the 2010 Budget tabled by Najib would enable people in Sabah and Sarawak to have better access to clean water, electricity, education, health facilities and other basic amenities. :)