PETALING JAYA: Prime Minister Datuk Seri Abdullah Ahmad Badawi on Friday tabled the 2007 Budget in Parliament.
It is Abdullah's third budget since he became Prime Minister and Finance Minister.
The Economic Report 2006/2007 was also released simultaneously. (Click here for the full report)
The Government proposed that the corporate tax rate be reduced by two percentage points in two stages - the tax will be reduced to 27% in 2007 and 26% in 2008. This is aimed at promoting greater private sector investment, said Abdullah Ahmad Badawi in presenting the Budget.
Abdullah shaking hands with Housing and Local Government Minister Datuk Seri Ong Ka Ting inside Parliament before tabling the Budget. In the middle is Deputy Prime Minister Datuk Seri Najib Tun Razak.
He announced a wide array of tax and financial incentives for the private sector to help it to continue as the catalyst that will spearhead the nation's economic growth.
Tax incentives are offered to the biotechnology sector. Bionexus companies, for instance, will be given tax exemption for 10 years.
Abdullah noted that computer ownership is low. Hence, the eligibility period for the incentive to buy a computer, currently given once in every five years, is shortened to once in every three years, and the RM500 tax rebate is replaced with a tax relief of RM3,000.
Among the highlights of the budget are: RM112.9bil is allocated for operating expenditure, an increase of 11.6%. RM46.5bil is allocated for development expenditure, an increase of 31%. The budget deficit will be reduced to 3.4% of GDP in 2007. A Customs tribunal will be established for appeals on decisions made by the Customs Director-General. Tax rebate of RM500 for computer purchases will be replaced with tax relief of RM3,000, once every three years. Students with 10A1s in SPM from families earning RM1,500 and below to be given scholarships for tertiary education.
Tax relief on purchase of books increased from RM700 to RM1,000. Lower taxes for dividends received from real estate investment trusts (REITs). Dividends received by local and foreign individual investors and local unit trusts from listed REITs will be taxed at 15%, and for foreign institutional investors, 20%. To promote tourism, especially for Visit Malaysia Year 2007, income tax exemption for eligible tour operators is extended for five years. To foster a culture of maintenance, expenses incurred by property developers within the defects liability period will be allowed as deduction from the same project. Sime Darby will lead several new projects in agriculture, high tech industries and tourism in the Northern Corridor Perlis will be declared a promoted area in which designated projects will be eligible for a higher level of tax exemption. RM3.6bil allocated to the agriculture sector.
Ministers listening to the budget speech in parliament. - Starpic by Kamarul Ariffin
Exam fees for all public examinations abolished in all Government schools, beginning with 2007 school session. Excise duty on cigarettes up by one sen per stick. Duty on liquor with alcohol content of more than 40% up by RM5 per litre. Tax deduction for Zakat paid by cooperatives and trust bodies up to 2.5% of their aggregate income. Minimum compound of five times of the total tax payable be imposed for under declaration and smuggling of high duty goods. RM20bil worth of projects had been identified to be implemented under the private financing initiatives (PFI) on a build, lease and transfer basis. The RM20bil PFI projects will be financed and owned by the Employees' Provident Fund (EPF) and the Pension Trust Fund (KWAP) and leased back to the government. The government's support of PFI projects include sponsoring students to private institutions of higher learning as well as providing land and basic infrastructure. The Fund for Food to be increased to RM1.9bil from RM300mil. Non-Food Agriculture Scheme to be set up with an initial allocation of RM20mil. RM111mil to be allocated to implement livestock projects. RM40mil to be allocated for the implementation of the beef valley in Gemas, Negeri Sembilan. RM92mil to be allocated for the development of the aquaculture industry. Khazanah Nasional to establish an agriculture fund of RM200mil, to be funded jointly by the government, Khazanah Nasional and the private sector. Bank Negara Malaysia to establish another agriculture fund of RM200mil to invest in integrated agriculture and livestock projects. RM210mil to be allocated for the development of thebiotechnology sector. RM59mil to be allocated under the R&D for genomics and molecular biology, production of pharmaceutical and nutraceutical products as well as promotion of agrobiotechnology activities. Halal Industry Development Corporation to be established under the Prime Minister's Department, with a launching grant of RM25mil. RM50mil is allocated to set up halal parks in Pasir Mas, Gambang, Chendering and Padang Besar. RM20mil to be allocated for SME Bank to finance halal park entrepreneurs. Multimedia Development Corporation (MDeC) to receive RM154mil allocation. The Content Industry Development Fund to be established with an initial funding of RM25mil. MIMOS to be allocated RM162mil. Universal Service Provision fund will be expanded toinclude broadband infrastructure in rural areas. The MSC Grant Scheme to be allocated RM20mil. RM193mil is allocated to agriculture researchagencies. Several PFI projects valued at RM4 billion will be implemented in 2007. RM1bil to be provided for the maintenance of buildings and public facilities, to be awarded to small contractors. RM33.4bil to be allocated for operational and development expenditure to further strengthen the education and training system. RM1bil allocated for 22 new primary and secondary schools to be operational next year plus 198 schools to be built, including fully residential schools. RM90mil is allocated for the construction of two new Mara Junior Science College (MRSM) and for the purchase of equipment for existing MRSM facilities. RM782mil to be allocated for teacher training. RM101mil to be allocated to implement 67 housing projects for teachers especially in rural areas. RM288mil to be allocated under the Bestari school programme to enhance computer usage in schools. From 2007, Chinese language will be taught as a full subject in 150 national schools while Tamil will be taught in 70 national schools. RM195mil to be allocated for the upgrading and improvement of facilities in existing universities. RM450mil to be allocated for the construction and upgrading of polytechnics and community colleges. RM148mil will be allocated for construction two Industrial Training Institutes and four Advanced Technology Training Centres under the Ministry of Human Resources. RM214 million to be provided for several training programmes under Mara, Advanced Skills Training Institutes, Giat Mara programme, and UniKL. RM30mil grant for NGOs to undertake women, family and community programmes. RM50 subsidy for every mammogram done in private clinics and hospitals. RM721mil to be provided to implement various youth and sports programmes. RM91mil to be provided for sports and training programmes.
The PM leaving for Parliament from the Treasury holding a briefcase which holds the Budget 2007 report. - Starpic by Rohaizat bin MD Darus
Click here for the full text of the Budget 2007 speech by the Prime Minister