KUALA LUMPUR: The Budget 2018 unveiled by Datuk Seri Najib Tun Razak on Friday is broad based and encompasses all levels of the rakyat, SMEs, corporations while setting a stronger foundation for greater economic growth.
The Prime Minister's Budget proposals will see Malaysia, being a trade-oriented economy, pushing ahead to expand the exports while also accelarating the logistics and transport system.
To strengthen the country’s financial market, the Budget 2018 proposals focuses on boosting the exchange-traded fund (ETF) and structured warrants, stimulate capital market and provide access to investment and an alternative trading system.
The Budget 2018 proposals will also accelerate Green Technology with an allocation of RM5bil under the Green Technology Financing Scheme.
On exports, the government is allocating RM1.25bil by focusing on high-impact export sectors.
A total of RM150mil has been allocated to Matrade, Mida and SME Corp to implement promotional programmes, and expand export markets including Market Development Grant.
Najib said the government has also earmarked RM1bil for Exim Bank to provide insurance coverage credit facilities and RM200mil for credit financing facilities to SME exporters; and RM100mil is provided as loan with 70% guaranteed by the Government to automate production of local furniture for exports.
The government has also taken cognizance of the importance of an efficient infrastructure system to improve the logistics and transportation sectors.
For instance the proposed East Coast Rail Link (ECRL) project, linking Port Klang to Pengkalan Kubor, Kelantan has the capacity to transport cargo and passengers within four hours. Construction of this project will begin in January 2018.
A total of RM110mil will be provide to build an alternative road to Port Klang to smoothen and complement the transportation network.
Transport, MRT, logistics
The government is also pushing ahead with the Mass Rapiud Transit (MRT) 2 Line from Sungai Buloh–Serdang–Putrajaya, spanning 52km, covering 37 stations. The estimated construction cost is RM32bil.
Najib said the government will also speed up the construction of MRT3 or Circle Line with the completion target date of 2025, two years earlier than the initial 2027.
The Light Rail Transit (LRT) 3 project, which will connect Bandar Utama to Johan Setia, Klang is expected to be completed by February 2021.
The Kuala Lumpur and Singapore High Speed Rail, when completed by 2026, will enable commuters to travel the 350km stretch in 90 minutes.
Work is also under way for the RM5bil West Coast Highway from Banting, Selangor to Taiping, Perak.
“A sum of RM3bil is allocated to transportation development fund to procure vessels as well as develop aerospace technology industry and rail,” Najib said.
The Budget 2018 proposals also targets to strengthen the country’s financial market
Najib said RM1.5bil was allocated under SJPP, using intellectual property as an instrument of financial collateral with up to 80% financing guarantee.
The government is also providing tax exemption on stamp duties imposed on contract notes for sales and purchase transactions of Exchange-Traded Fund (ETF) and Structured Warrants for three years, effective January 2018.
“To stimulate capital market and provide access to investment, the alternative trading system will be introduced subject to compliance to all requirements and regulatory standards. This will enable efficient and significant transactions,” he said.
Najib said RM1bil would be provided by major institutional investors for investments in venture capital in main selected sectors. This will be coordinated by Securities Commission (SC).
The proposals will also expand income tax exemption to include management and performance fees received by venture capital management company, effective from year of assessment 2018 to 2022.
He also said to facilitate venture capital companies to invest in venture companies, the minimum investment in venture companies will be be reduced from 70% to 50%, effective year of assessment 2018 to 2022.
Meanwhile, companies or individuals investing in venture capital companies are provided tax deduction equivalent to the amount of the investment made in the venture companies, limited to a maximum of RM20mil annually.
Sustainable and responsible investment
The government will continue to invigorate the sustainable and responsible investment (SRI) through a series of measures.
Najib said there would be an income tax exemption for recipients of the special Green SRI Sukuk grant totalling RM6mil.
Income tax exemption on income from management fee will be expanded to approved conventional SRI fund managers from year of assessment 2018 to 2020.
Beginning 2018, Bank Negara Malaysia will monitor salary payment through local bank accounts for foreign workers, excluding domestic helpers.
Abolishment of tolls
Separately, the Budget 2018 proposals also announced the abolishment of tolls at the Batu Tiga, Shah Alam, Sungai Rasau, Selangor, Bukit Kayu Hitam and Eastern Dispersal Link (EDL), Johor beginning Jan 1, 2018.
Malaysian Resources Corp Bhd (MRCB), which is the concessionaire and owner of the EDL, may likely be compensated by the Government’s move to scrap the toll.
MRCB is currently in the midst of selling its Eastern Dispersal Link (EDL) highway, and so far, it has been reported that there are two suitors.
Industrial Revolution 4.0
Under the Industrial Revolution 4.0, the Government has proposed to provide a matching grant worth RM245mil under the Domestic Investment Strategic Fund to upgrade the Smart Manufacturing facilities.
The government has also extended the incentive period for Accelerated Capital Allowance of 200% on automation equipment from year of assessment 2018 to year of assessment 2020.
The capital allowance for ICT equipment, which includes spending on computer software development, is claimable for the period of four years beginning year of assessment 2018 to 2020, including for SMEs.
As the population expands, there is a crucial need to ensure a reliable and steady supply of treated water to households.
The government intends to implement the non-revenue water (NRW) programme with a cost of RM1.4bil to reduce the average loss of water.
Also on the cards is the construction of an off-river storage with a cost of RM1.3bil as an alternative water resources while RM517mil will be allocated for flood mitigation programmes.
Malaysia will be the first in the world outside China to establish a Digital Free Trade Zone (DFTZ) which comprises e-Fulfilment Hub, Satellite Services Hub and e-Service Platform to stimulate growth in electronic trade. DFTZ will transform KLIA as the regional gateway.
The first phase of DFTZ aims for 1,500 SMEs to participate in digital economy and is expected to attract RM700mil worth of investment and create 2,500 job opportunities.
A total of RM83.5mil will be allocated to construct infrastructure for the first phase of DFTZ in Aeropolis, KLIA.
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