THE Prime Minister announced four measures to strengthen the resilience of the domestic economy in his Budget speech on Friday.
The measures are boosting domestic investment, invigorating the capital market, energising small and medium entreprises, and improving infrastructure.
Domestic investment activity, he said, will be intensified with its contribution to GOP estimated at 26.7% in 2016.
Datuk Seri Najib Tun Razak said it will be driven by the increase in private investment at RM218.6bil and supported by public investment of RM112.2bil.
Under this measure, among the projects and initiatives that will be implemented are the development of the Malaysian Vision Valley, covering an area of 108,000 hectares from Nilai to Port Dickson, as announced in the 11 Malaysia Plan.
This project has an initial investment forecast of RM5bil in 2016.
Another project will be the implementation of the Cyber City Centre in Cyberjaya, with a development cost of almost RM11bil for a period of five years.
An airport township or KLiA Aeropolis will be constructed in an area covering 1,300 acres, and is expected to attract an investment of RM7bil.
An investment of RM6.7bil by Khazanah Nasional Berhad will be channelled into nine high impact domestic projects in sectors such as healthcare, education, tourism as well as communication software and infrastructure.
Khazanah Nasional will also allocate RM500mil as venture capital and private equity fund, including a tourism capital venture fund of RM50mil.
An investment of RM18bil is estimated in 2016 for the Refinery and Petrochemical Integrated Development Project (RAPID) Complex in Pengerang, Johor.
To attract more private investment, among the projects being implemented are the development of Rubber City, Kedah with an allocation of RM320mil, Samalaju Industrial Park, Sarawak for RM142mil and Palm Oil Jetty in Sandakan, Sabah for RM20mil.
“Focus will also be given to chemical, electrical and electronics, machinery and equipment, aerospace and medical devices industries as well as services.
“For this, RM730 million is allocated to funds under the Malaysian Investment Development Authority (MIDA) and to further promote reinvestment among existing companies in the manufacturing and agriculture sectors whose Reinvestment Allowance incentive has expired, a new incentive that is, Special Reinvestment Allowance, will be provided,” he said in his speech.
The rate of claim, he said, is at 60% of the qualifying capital expenditure and is allowed to be set off against 70% of statutory income from year of assessment 2016 to 2018.
For the second measure, to further invigorate the capital market, the Government will implement several initiatives, including tax deduction on issuance costs of Sustainable and Responsible Investments (SRI) sukuk and 20% stamp duty exemption on Shariah-compliant loan instruments to finance the purchase of houses.
As SMEs played a key role in developing the business value chain and are expected to contribute 41% of GDP by 2020, he said five initiatives will be implemented.
An additional RM1bil will be channelled to the Shariah-compliant SME Financing Scheme until December 31, 2017 with the Government subsidising 2% of the financing profit rate, and RM107mil will be allocated for the SME Blueprint to provide funds for entities at various stages of business development.
Another RM60mil will be directed to the Entrepreneurs Acceleration Scheme and SME Capacity and Capability Enhancement Scheme, while a RM200million SME Technoiogy Transformation Fund will be set up under the SME Bank to provide soft loans at 4%.
Another measure is the RM18mil allocation to expand the Small Retailer Transformation Programme (TUKAR) and Automotive Workshop Modernisation (ATOM) projects.
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