The macroeconomy view

• Government expects 2024 gross domestic product growth of 4% to 5%. 
• Revenue collection is expected to rise to RM307.6 billion in 2024 from RM303.2 billion this year; with fiscal deficit to drop to 4.3% from 5% this year and 5.6% in 2022.
• Budget 2024 is the largest in Malaysia’s history, with an allocation of RM393.8 billion. Of this, RM303.8 billion is for operating expenditure (opex) and RM90 billion for development expenditure.

Ministerial allocations

• Education Ministry gets the biggest allocation of RM58.7 billion under Budget 2024, up from RM55.2 billion in 2023.
• Health Ministry gets an allocation of RM41.2 billion for 2024, up from RM36.3 billion for 2023. Of this, RM5.5 billion is for medical supplies.
• Higher Education Ministry allocated with RM16.3 billion for 2024, against RM15.3 billion in 2023. RM19.7 billion allocated for the Defence Ministry, and RM19 billion for the Home Affairs Ministry.
• RM1.9 billion allocated for the management and development of Islamic affairs.
• Allocation of RM510 million for research and development (R&D) funds under Science, Technology and Innovation Ministry (Mosti) and Higher Education Ministry.

For Sabah & Sarawak

• Development allocation to Sabah and Sarawak increased, with Sabah getting RM6.6 billion (previously RM6.5 billion) and Sarawak getting RM5.8 billion (previously RM5.6 billion).
• For more effective implementation, the federal govt has given the authority to implement development projects below RM50 million to Sabah and Sarawak's technical agencies.
• Interim Special Grants' rate for Sabah and Sarawak raised to RM300 million, from RM16 million for Sarawak, and from RM125.6 million for Sabah. 
• Transfer of regulatory powers for Sabah’s electricity supply to the state govt to take effect on Jan 3, 2024.
  • In view of electricity supply disruptions, the federal govt will support the generation of hybrid solar energy and the construction of an electricity transmission line network in south Sabah.
• Putrajaya negotiating with Sarawak to realise the handover of Bintulu Port and rural air service operation to the state government.

Broadening the revenue base

• Service tax will increase to 8% from the current 6%, and will expand to logistics, brokerages, underwriting and karaoke services. To not burden the rakyat, this increase will not cover services such as food & beverages (F&B) and telecommunications.
• Capital gains tax will be at 10% on net profit derived from the disposal of local companies' unlisted shares, starting from March 1, 2024, with exemption for IPOs, internal restructuring and venture capital companies.
• A new legislation will be enacted to implement the high value goods tax (luxury goods tax) at 5%-10%, which will be imposed on certain high value goods, such as jewellery and watches, based on the threshold value of the goods. This is exempted for foreign tourists.
• Government to impose excise duty on chewing tobacco products at a rate of 5% and RM27 per kg.
• Government plans to implement a global minimum tax for companies with global revenue of at least €750 million (RM3.74 billion) in 2025.
• The IRB will implement mandatory e-invoicing on taxpayers with annual income exceeding RM100 million from Aug 1. The same will be enforced on other income categories in phases, with full implementation by July 1, 2025.

Subsidy rationalisation

• Targeted subsidy to be implemented in phases next year 
  • Part of the savings to be used to increase cash handouts, given through the Rahmah Cash Contribution, from RM8 billion to RM10 billion.
• Ceiling prices on chicken and eggs will be removed, allowing prices to float.
• The implementation of targeted subsidies for electricity consumption that started this year — where the top 10% of electricity consumers are no longer being subsidised — saved the government over RM4.6 billion from the projected RM20 billion electricity subsidy bill.
• The government will continue to give monthly rebates of RM40 to severely poor households with an allocation of RM55 million. Deposits for individual accounts to be exempted.
• Diesel subsidies to be rationalised, targeting specific users only, such as freight operators.

For individuals — EPF, tax exemptions, Second Chance Policy

• An EPF Flexible Account, which can be accessed by members at any time, will be introduced.
• Government to continue to encourage women to return to work, with tax incentives for this group to be extended until Dec 31, 2027.
• Income tax exemption limit on childcare allowances (received by employees or paid directly by employers to childcare centres) to be raised to RM3,000, from RM2,400.
• To encourage upskilling and venturing into new fields, the tax relief of up to RM2,000 for participation in self-improvement courses will be extended till 2026.
• Tax relief of RM1,000 for purchase of sports equipment and activities. The relief will also be expanded to include fees paid for sports training.
• Government will also expand the scope for lifestyle relief to cover fees for personal development courses, such as language, photography, sewing and et cetera.
• Discounts announced for PTPTN loan repayments starting from Oct 14, 2023 until end-March 2024 — 10% discount on outstanding debt for full loan settlement, 10% discount for payment of at least 50% of the remaining debt in one payment, and 15% discount for payment by salary deduction.
• The Second Chance Policy, Insolvency (Amendment) Act 2023 will be expanded to include young people aged 40 and below next year, with debt of not more than RM200,000.
• Governement will increase monthly wage ceiling for Socso contribution from RM5,000 to RM6,000

Cash aid, welfare

• Governmentt to allocate RM58.1 billion for various social welfare initiatives, including subsidies, incentives and assistance, with 50% of the allocation for controlling prices of goods and services.
• Allocation for Rahmah Cash Aid (STR) raised to RM10 billion for 2024, from RM8 billion in 2023, to benefit nine million recipients. Maximum rate increased to RM3,700, from RM3,100.
• Govt to allocate RM100 million to support NGOs (non-governmental organisations) and civil society organisations, including Yayasan Hasanah — the impact-based foundation of Khazanah Nasional Bhd. 
• To ensure the sustainability of the income sources of institutions, organisations and funds approved under subsection 44(6) of the Income Tax Act 1967 and support the welfare initiatives envisaged by the government, the ceiling for funds raised for the purpose of business will be increased to 35% from 25%.
• Govt to give a tax deduction of up to 10% of an individual or company's aggregate income if it contributes to institutions, organisations or funds approved under subsection 44(6) of the Tax Act 1967 that conduct educational programmes, including sports.

For businesses

• Government to provide an allocation of up to 10% of the total New Industrial Master Plan (NIMP) 2030 investment (RM95 billion) to drive the NIMP mission, with an initial fund of RM200 million in 2024.
• Government to propose Pengerang Integrated Petroleum Complex (PIPC) as development hub of chemical and petrochemical sector, to give tax incentive in the form of a special tax rate or investment tax allowance.
• To encourage companies to invest in high-growth and high-value areas (HGHV), the government plans to provide a tiered reinvestment tax incentive in the form of an investment tax allowance of 70% to 100%.
• To build a wider ecosystem for the electrical and electronics (E&E) cluster in the northern region, the government will open a high-tech industrial area in Kerian, in northern Perak.
• Government to allocate RM28 million to develop the MYStartup platform for start-up companies.
• Government-linked companies and government-linked investment companies (GLCs and GLICs) to provide funds of up to RM1.5 billion to encourage startups, including small and medium enterprises (SMEs) entrepreneurs, to venture into HGHV fields.
• Via Bank Negara Malaysia (BNM), Bank Simpanan Nasional (BSN) and National Entrepreneurial Group Economic Fund (Tekun), financial facilities amounting to RM2.4 billion to be made available to micro, small and medium enterprises (MSMEs).
• Government announces RM100 million in digitalisation grants — RM5,000 to 20,000 MSMEs — to fund upgrades of sales, inventory and digital accounting systems. Under BNM, RM900 million in loan funds will be made available to SMEs for automation and digitalisation.
• RM44 billion worth of loans and financing guarantees will be made available next year for the benefit of MSMEs.
• Micro lender Amanah Ikhtiar Malaysia (AIM) to be provided with a funding allocation of RM100 million for the provision of small business capital. Its non-performing loan rate stood at 0.26% in 2022.
• To increase franchise trade, the government will provide RM10 million under "Program Pengukuhan Francais" to increase exports.
• Government to exempt income tax on income arising from Islamic Securities Selling and Buying (ISSB) from Assessment Year 2024.
• Government to exempt income tax in full for five years for Labuan entities that carry out trading activities related to Islamic finance.

Tourism & Creative sector

• 2026 is now set as Visit Malaysia Year, targeting the arrival of 26.1 million foreign tourists and an estimated domestic spending of RM97.6 billion. 
• Govternment to set aside RM350 million to boost tourism promotion and activities in Malaysia, to return the country to its spot as a top tourism destination.
• Entertainment duty for federal territories reduced from 25% to full exemption for stage performances by local artists, 5% for theme parks, family recreation centres, indoor game centres and simulators, and 10% for stage performances by international artists.
• Government to introduce new initiatives under the Malaysia Visa Liberalisation Plan to facilitate:
  • approval of employment passes for strategic investors in key sectors
  • introduction of Long-term Social Visit Pass for international students who have graduated, to meet the needs of the industry's skilled workforce, and
  • improvement of the visa-on-arrival, social visit pass and multiple-entry visa facilities to encourage the influx of tourists and investors, especially from India and China.
• Government to relax conditions of Malaysia My Second Home (MM2H) application to increase the arrival of foreign tourists and investors to Malaysia.
• Special income tax of 0%-10% planned for film production companies, foreign film actors and crew who shoot films in Malaysia.

Agriculture

• Government to raise floor price of paddy to RM1,300 per tonne, from RM1,200 per tonne set since 2014.
• Activation price of the Rubber Production Incentive (IPG) Scheme raised to RM3 per kg, with an allocation of RM400 million, from RM2.70 per kg set in Budget 2023.
• Government will provide RM2.4 billion to Federal Land Development Authority (Felda), Federal Land Consolidation and Rehabilitation Authority (Felcra) and Rubber Industry Smallholders Development Authority (Risda) to boost agricommodity activities and socioeconomic development for smallholders.
• The scope of automation tax incentives will be expanded to cover the commodity sector under the Plantation and Commodities Ministry, to increase productivity of plantation products and reduce dependence on foreign labour.

Housing

• The government proposed a stamp duty of only RM10 instead of the ad-valorem rate for real estate transfer documents involving a beneficiary giving up his/her rights to an eligible beneficiary, according to a will or faraid (Islamic law concept that determines the distribution of a deceased's property to his or her heirs) or the Distribution Act 1958.
• To facilitate the redevelopment of strata schemes, the threshold for residents agreement for en-bloc sales will be reduced from 100% to a consistent level based on international practice, such as in Singapore, to encourage urban renewal and promote the redevelopment of old buildings in the city.
• Stamp duty at a flat rate of 4% imposed on transfer of ownership of real estate by non-citizen individuals and foreign-owned companies (except permanent residents in Malaysia) aimed at controlling the price of real estate.
• Housing Credit Guarantee Scheme to be expanded by up to RM10 billion, benefiting 40,000 borrowers.
• A total of RM2.47 billion allocated for the implementation of people's housing projects in 2024.
  • A special guarantee fund of RM1 billion has been allocated to encourage reputable developers to revive identified stalled projects.

Health

• Drug Dependants (Treatment and Rehabilitation) Act 1983 to be amended enable drug addicts to receive treatment and rehabilitation without being admitted to prison.
• The current excise duty rate for sugary drinks will be raised from 40 sen to 50 sen per litre. This excise duty revenue will be channelled to address and treat diabetes, including to provide support for dialysis centres.
• Skim Perubatan Madani will be expanded nationwide, with an allocation of RM100 million, benefiting 700,000 rakyat, and the mySalam scheme will be continued for an additional two years. RM50 million will be allocated for medical device expenses claims such as heart stents.

Infrastructure/public projects

• Govt to allocate RM100 million for New Chinese Village for basic and social infrastructure.
• Global Services Hub tax incentive to be introduced, with an income tax rate incentive of 5% or 10%, to be determined based on results for a period of up to 10 years.
• Under the unity administration, the government has taken over the development of Bandar Malaysia to ensure strategic lands are best used for people's projects based on the Madani values. This includes affordable housing projects for veterans, taking into account the interests of Bumiputeras in the federal territories, as well the provision of parks and green spaces that can be used by all Klang Valley residents.
• Tender process for 19 work packages for the Sabah Pan Borneo project (Phase 1B) involving RM15.7 billion to be completed by November 2023.
• Sarawak Pan Borneo Highway to be completed in 2024.
• Implementation of Sarawak-Sabah Link Road project Phase 2 involving RM7.4 billion to start in end-2023.
• North South Highway (PLUS) from Sedenak to Simpang Renggam to be widened to six lanes, at cost of RM931 million.
• Government to resume the proposed construction of five Light Rail Transit 3 (LRT3) stations that were cancelled previously, namely the Tropicana, Raja Muda, Temasya, Bukit Raja and Bandar Botanik stations, for RM4.7 billion. Retaining these stations is expected to complement and improve the public transport network in Klang Valley, which could benefit two million residents.
• A total of RM1.1 billion allocated to resolve water supply issues, particularly in Kelantan, Sabah and Labuan.
• The implementation of 33 high-priority flood mitigation projects will begin next year, involving a total cost of RM11.8 billion.
• Government announces a joint matching grant of RM50 million with Klang Port Authority to maintain Port Klang roads to bear load limits of heavy vehicles, and another joint matching grant of RM20 million to upgrade the Malaysian Maritime Single Window (MMSW) system.
• An allocation of RM47 million to improve passenger facilities at Tioman airport and extend existing runway to 1,300 metres.

Civil servants & Bumiputera agenda

• While awaiting the completion of a study on the salary and allowance scheme for civil servants, the government will give RM2,000 as initial incentive payment to all civil servants at grade 56 and below, including contractual appointments, and RM1,000 to all key public sector posts, including the police, firefighters, soldiers, armed forces, and uniformed members.
• Incentive payment of RM1,000 extended to all government pensioners, to be paid in one lump sum at end-February 2024.
• Pelaburan Hartanah Bhd will be parked under Permodalan Nasional Bhd (PNB) and strengthened by the injection of government strategic land in KL for housing projects.
• Government to consolidate Bumiputera investment institutions, including Ekuiti Nasional Bhd, under Bumiputera Investment Foundation or Yayasan Pelaburan Bumiputera.

Green agenda

• Government to continue tax exemption for fund management companies managing sustainable and responsible investment (SRI) funds, and tax deductions on SRI sukuk issuance costs until assessment year 2027.
• Finance Ministry, Inland Revenue Board (IRB) and Petronas (Petroliam Nasional Bhd) studying tax incentives for carbon capture and storage (CCS) and hydrogen sulphide projects, expected to be finalised by year end.
• Additional tax deduction of up to RM300,000 proposed for companies that spend on measurement reporting and verification (MRV) related to the development of carbon projects. These expenses can be deducted from the sale of carbon credit traded on Bursa Carbon Exchange (BCX).
• Government to provide up to RM2,400 rebate for the purchase of electric bikes to buyers with an annual income of below RM120,000, under its Electric Motorcycle Use Promotion Scheme.
• Government to extend up to RM2,500 income tax relief for electric vehicle (EV) charging facility expenses for a period of four years, and tax deduction for EV rental cost for two years.
• Putrajaya to serve as Malaysia's low carbon city model, with government buildings set to have solar panels installed in partnership with Tenaga Nasional Bhd (TNB) and Gentari.
  • It also plans to adopt EVs as official vehicles, as TNB, Gentari and Tesla invest over RM170 million to establish EV charging stations.
• Prasarana to acquire 150 electric buses and build three bus depots at a cost of RM600 million.

Institutional reforms

• To drive the reform agenda, the Special Task Force on Agency Reform (STAR) to expedite maintenance of govt quarters. A total of RM2.4 billion allocated to build, maintain and refurbish the quarters of civil servants, teachers, hospitals, police, soldiers and firefighters.
• RM18 million allocated to launch legal reforms, including the drafting of the Bill on implementation of alternative punishment to the mandatory death penalty.
• RM38 million provided to increase productivity of judicial institutions, and refurbish infrastructure and upgrade obsolete and damaged ICT facilities, includes RM20 million to empower the Academy of Judiciary Malaysia and the Academy of Syariah Judiciary Malaysia to train judges of upper courts.

Battling online fraud

• BNM, in collaboration with the financial sector, is developing a National Fraud Portal (NFP), expected to be completed in mid-2024, that can automate the tracking of funds, and hopes to speed up detection, freezing and the return of funds.
• National Scam Response Centre's (NSRC) allocation to be raised to RM20 million, from RM10 million, to increase the centre’s functionality in combating scams.

Enhancing capacity

• Government has set aside RM6.8 billion for technical and vocational education and training (TVET), with RM100 million allocated to provide industry-recognised professional certification to TVET graduates, and as incentive for industries to collaborate with public TVET institutions.
• HRD Corp will utilise RM1.6 billion to provide 1.7 million training exercises in 2024. To reallocate 15% of total levy collection to implement the Madani Training Programme — a training programme for MSMEs and vulnerable groups.