CPA Australia: Malaysian budget announcements you may have missed

November 10, 2020 - 10:07
CPA Australia: Malaysian budget announcements you may have missed

KUALA LUMPUR, MALAYSIA - Media OutReach - 10 November2020 - Helping people navigate the rough times as well as sustaining businessestook centre stage at the Malaysian budget 2021 on Friday, but there were a hostof other initiatives designed to elevate the living standards of Malaysians.

Below are some examples of budgetannouncements you may have missed.

Rural connections boosted

A total of RM1.3 billion (AUD1.03 billion) isallocated to build trunk roads, provide water supply (RM632 million or AUD2.1million) and electricity (RM250 million or AUD83.4 million).

Research and development

A RM400 million (AUD133 million) allocationfor research and development will be channelled to universities and governmentagencies to ramp up Malaysia's endeavour to become a knowledge economy.

To support that announcement, tax incentivesfor non-resource-based R&D product commercialisation activities will bereintroduced and tax incentives for the commercialisation of R&D productsby public research institutions will be extended to private higher educationinstitutions.


A total of RM500 million (AUD166.8 million)has been allocated to build 14,000 homes for people on lower incomes, whileanother RM125 million is set aside to build low-cost flats for the urban poor.

Civil servants also get assistance, with RM310million (AUD 103.4 million) earmarked for homebuilding.

The full stamp duty exemption for first timehome buyers has been extended until 31 December 2025 and the limit on theexemption has been increased to properties valued at RM500,000 (AUD170,000(from RM300,000), enabling homebuyers to save up to RM9000 (AUD3000) in stampduty.

Encouraging healthier lifestyles

Malaysians have the highest incidences ofhypertension, diabetes, lung cancer and other non-congenital diseases in SouthEast Asia.

To foster a healthier lifestyle, a total ofRM19 million (AUD6.3 million) has been allocated for sports development andRM103 million (AUD34.36 million) to build, maintain and upgrade sportsfacilities.

A total of RM55million (AUD18.5 million) hasbeen allocated to further boost the development of hockey, rugby, badminton andwomen athletes.

Mental wellbeing

The Health Ministry has been allocated RM24million (AUD8million) to assist with mental health issues, such as depression,arising from the pandemic lockdown.

Assisting people with disabilities

Allowances for the disabled were increasedfrom RM250 to RM300 (AUD100). The allowance for those who are bedridden,suffering from chronic disease, will receive RM500 (AUD166) a month.

The rate for the Incentive Allowance forDisabled Workers will increase from RM400 to RM450.

Fishing industry receives a boost

Some 40,000 people working in the fishingindustry will get an increase in their allowances to RM300 (AUD 100) from RM250(AUD83).

Empowering female entrepreneurs

A total of RM95 million (AUD32 million) microcredit has been allocated to assist women especially those in rural areas tostart a business.

Aid for indigenous peoples

For 2021, a total of RM158 million has beenallocated for the indigenous people of Malaysia to assist them with livingexpenses, building or repairing houses, food and education and travel.

Rebate for the purchase of "green"refrigerators

A RM200 (AUD66) rebate will also be offered tobuyers of "green" refrigerators and air conditioning units, as partof Malaysia's efforts to become a green nation. The appliances must be locallymanufactured.

Cleaning up the rivers

Malaysian rivers continue to be polluted byillegal factories and irresponsible dumping. To combat this scourge, a total ofRM50 million (AUD16 million) will be spent to clean up rivers, increaseenforcement and erect observatory towers to clamp down on polluters.

Improving Malaysia's digital capability

The government is taking additional steps toreduce the financial burden lower income Malaysians experience in accessing theinternet.

In the first quarter of 2021, an estimated 8million individuals in the B40 category will each be eligible for atelecommunications credit worth RM180 to help pay for internet subscription orbuy new mobile phones. Telecommunication companies will also provide benefitsto this group such as free data.

In addition, the government is allocatingRM150 million to 100,000 businesses to encourage the adoption of e-commerce,which will be supplemented by the RM150 million Shop Malaysia Onlineinitiative. 

The eligibility for the SME DigitalizationGrant Scheme and Automation Grant has been broadened to businesses that havebeen operating for at least six months and a further RM150 million has beeninjected into the scheme.

Promoting e-wallets

A one-off RM50 (AUD16.68) payment will becredited into the e-wallets of Malaysians between the ages of 18 and 20. Thisis to bolster a cashless society as Malaysia migrates to e-wallet transactions.

E-wallets have taken off significantly in thecountry, of which there are some 20 providers.

Supporting the unemployed

To assist Malaysians that have recently lostwork due to COVID-19, the Budget proposes to increase the cap on the income taxexemption for compensation received on the loss of employment from RM10,000 toRM20,000 for 2020 and 2021.

The hiring incentive, now known asPenjanaKerjaya, has been enhanced and includes an increase in the incentiveemployers receive when hiring disabled, long-term unemployed and retrenchedworkers. The 20 per cent increase brings the total incentive an employer may beeligible for to 60 per cent of that employee's monthly income.

The government and Government LinkedCorporations will offer 50,000 job opportunities on a contract basis startingJanuary 2021. The government will give priority to filling up positions such asnurses, medical attendants, social workers and temporary teachers.

Government loans will be provided to 24,000 traineesto pursue technical and vocational education and training (TVET) programs inpublic and private skills training institutions.

The government will also provide training andplacements for 8000 employees of airline companies in Malaysia.

Tax incentives for business

The government announced several business taxincentives in the Budget including:

  • relaxing the conditions for thePrincipal Hub incentive and extending the incentive until 31 December 2022
  • taxing the income of global tradingcentres at a concessionary 10 per cent rate for five years and renewable foranother five years
  • taxing non-resident individualsholding key positions in companies investing in new strategic industries at aflat 15 per cent for five years
  • pharmaceutical manufacturers will betaxed at 0 to 10 per cent for 10 years and at 10 per cent for a subsequent tenyears
  • all tax incentives due to expire thisyear will be extended until 2022.   

A comprehensive study of existing taxincentives is underway. The intention of the study is to provide a competitive,transparent and more attractive tax incentive framework.

For further information, visit the CPAAustralia website.

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