What to watch for in Budget 2017

  • Economy
  • Thursday, 20 Oct 2016

KUALA LUMPUR: Malaysia's Prime Minister Datuk Seri Najib Tun Razak presents the Government's Budget 2017 on Oct 21.

Below are some items that could feature in the coming year's budget, according to analysts' research notes and local media reports.


RHB Bank foresees a RM100 ringgit hike in cash handouts for low-income households, bumping up the allocation to about RM6.6 billion next year in a bid to stimulate consumer spending. For 2016, it was increased by RM50 to RM1,000 per household.


The Government will likely maintain the goods and services tax introduced in April 2015, at 6% to avoid any disruption to household expenses and cost of doing business, says asset management firm Affin Hwang.


Affin Hwang thinks a one percentage point cut to corporate tax, effective 2018, will be announced. The rate was cut by one percentage point this year to 24%.


There will likely be no cut to personal income tax rates, though there may be more provisions for tax relief next year, according to Maybank Investment Bank.

BIMB Securities said the Government may increase income tax relief for "lower middle income" individuals. It says the size of the tax deductions they can claim for themselves and for children aged below 18 may be increased to RM2,500 from RM2,000. Relief for a taxpayer whose spouse has no income may be increased to RM4,500 from RM4,000, BIMB said.


Prime Minister Najib has said the Budget 2017 will also focus on industries reeling from the sluggish global economy.


Budget 2017 will likely firm up details of major infrastructure projects that have yet to take off to maintain momentum in the sector to support growth, says Maybank IB. These would include highway and public transport projects in the peninsula and Sabah, and a timeline for the implementation of the Kuala Lumpur-Singapore High Speed Rail project.


Further cuts may be made to subsidies for daily necessities such as flour, cooking oil and cooking gas, according to RHB, though these will likely be at a gradual and moderate pace.


First-time housebuyers may have more funds to use for downpayments on properties through the Employees Providence Fund (EPF), says Affin Hwang. 

Second Finance Minister Johari Abdul Ghani said the Government is studying a proposal to increase the allocation for funds available for low-cost housing purchases under the EPF to 40% from 30% of a savings account.

RHB expects the First House Deposit Financing scheme to be extended to more buyers. It was introduced this year with an allocation of RM200 million, aimed at helping up to 30,000 first-time house buyers with downpayments.

BIMB Securities expects the Government to relax loan assessment methods to boost home ownership.


A cabinet minister has said there might be more incentives for small and medium-scale enterprises (SMEs). 

He said SMEs contributed 35.9% to GDP in 2015, and account for over 98% of all businesses nationwide.


A local news report said the Government is mulling over an exemption for first-time car buyers from excise duties for local and imported small car models assembled in Malaysia, with projected savings of up to RM2,000. - Reuters

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