The Malaysian government has allocated RM372.3 billion (US$80 billion) for its 2023 spending, the largest budget allocation to date. This is an increase from last year’s budget which was RM332.1 billion.
In introducing the Supply Bill 2023 today, Finance Minister Tengku Zafrul Tengku Abdul Aziz stated that a total of RM272.3 billion would be spent on operations expenses and RM95 billion on development.
The Covid-19 fund will receive an additional RM5 billion, and RM2 billion will be set aside for emergency savings.
The ministries that will receive the most funding are the Ministry of Finance (RM67.2 billion), the Ministry of Education (RM55.6 billion), and the Ministry of Health (RM36.1 billion)
Budget 2023 key takeaways:
For Malaysians in the taxable income bands of RM50,000-RM70,000 and RM70,001-RM100,000, there would be a two percentage point tax reduction. Tengku Zafrul stated that people in the RM50,001-RM70,000 tax band will witness a tax reduction from 13% to 11%. Meanwhile, the tax rate for those with taxable incomes between RM70,001 and RM100,000 would drop from 21% to 19%.
“At the same time, taxpayers from the RM250,001-RM400,000 bracket will be combined with the RM400,001-RM600,000 bracket – and they will have a tax rate of 25%.
“It is estimated that taxpayers from the middle-income group will save about RM1,000 (due to the tax cuts) while those from the higher salary groups will be able to retain up to RM250,” he said.
People with disabilities (PwD):
The budget for the coming year devotes a large amount of money – RM1.2 billion – to allowances and healthcare benefits for PwD. The Supply Bill 2023 includes payments for PwDs who are unable to work as well as care for chronic diseases.
The government has granted RM10 billion in the form of travel vouchers through e-hailing firms to help the community move and travel more conveniently.
Additionally, RM 20 million has been set aside to upgrade the equipment and facilities required at special education schools. Working parents will also be given a special incentive in order to send their disabled children to childcare.
Women in the workforce:
Women returning from ‘career break’ will be eligible for a five-year tax exemption from 2023 to 2028. Meanwhile, in order to strengthen gender equality, the government has decided to set up a Focal Gender Team in all of its ministries.
It has also set aside RM235 million in financial funding to help women entrepreneurs expand their business capacity and enhance their marketing plans.
On another note, a total of RM11 million has been allocated to increase breast cancer screening tests, mammograms, and cervical cancer screening tests.
The Health Ministry would get RM36.1 billion under the Budget 2023, an increase from RM32.4 billion this year. Nearly 10% of the entire RM372.3 billion budgeted for the next year is allotted to the ministry. Along with RM420 million for hospital and clinic repairs, this includes RM4.9 billion for medications, vaccinations, and consumables. Additionally, the government has set aside RM1.8 billion for the purchase of medical equipment and the building of new hospital facilities, including five new clinics.
The government has declared that all statutory payments received by Malaysian tourist operators would be completely tax-exempt, including commissions, bonuses, allowances, and more in addition to monthly salary.
This would help towards a portion of the RM200 million budgeted for the tourism industry in 2023, according to Tengku Zafrul, primarily to further boost tourism projects, promotions, and marketing. The government anticipates that in 2023, there would be over 15 million visitors who will spend over RM47.6 billion there.
In Budget 2023, more than RM1.5 billion has been designated for Islamic development initiatives and the administration of religious matters. The budget for the government’s Islamic agencies totals RM1,178,704,800, up more than RM54 million from the previous year. The Islamic Development Department (Jakim), which receives RM1.01 billion, is the fund’s largest recipient.
As part of a long-term plan to adapt to climate change, the government has allotted RM15 billion for flood control initiatives until 2030. The majority of projects would get an anticipated expenditure of RM700 million for the upcoming year.
Tengku Zafrul said to lower the risk of debris and mud floods, sabo dams will be built in 46 places around the country using RM562 million.
RM2 billion will also be set aside for the construction of a reservoir that serves as both a storage facility for raw water supply and a solution to flood concerns. Another RM500 million will also go toward enlarging Kelantan rivers and enhancing the weather forecasting system.
Meanwhile, in an effort to encourage Malaysians to switch from internal combustion engine (ICE) cars, individuals who buy imported, fully assembled units of electric vehicles (EV) would not be required to pay import and excise taxes. The incentive for importing fully assembled electric vehicles will remain in force through December 31, 2024.
Tengku Zafrul declared that until the end of the next year, authorised permit payments will also be free from payment. Separately, he stated that starting with the 2023 fiscal year, makers of EV charging equipment will also benefit from complete income tax exemptions above their statutory revenues for a period of ten years.
The country’s utility company, Tenaga Nasional Bhd has pledged to build more solar roofs and supply EV charging stations, with RM165 million set aside for these purposes.
The Education Ministry has received RM55.6 billion under Budget 2023, a 15% increase from this year when it received RM52.6 billion. A whopping RM6.7 billion has been budgeted for technical and vocational education and training. Meanwhile, another RM3.8 billion will go towards scholarships and education loans.
According to Tengku Zafrul, RM2.3 billion has also been set aside to establish “a secure and suitable learning environment for pupils,” including RM1.1 billion for upkeep and repairs to educational facilities. The renovation of Sabah and Sarawak’s outdated schools would also get RM1.2 billion.
Additionally, RM430 million was provided by the government for the construction of five new schools in Selangor, Sabah, Sarawak, Terengganu, and Cyberjaya.
The government has set aside RM150 as help for students to purchase school supplies, which comes to RM875 million.
Separately, RM777 million has also been set aside for the Rancangan Makanan Tambahan school food programme, which would assist 7,300 school cafeteria operators and 800,000 pupils.