Highlights from Malaysia’s highly anticipated Budget 2021 amidst the challenges of the Covid-19 pandemic presented by Malaysia’s Finance Minister, YB Tengku Datuk Sri Zafrul Abdul Aziz.

Updated: Nov 27, 2020

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Budget 2021 Infographic

Budget 2021 Overview

Budget 2021 Theme: Teguh Kita, Menang Bersama (Stand United, We Shall Prevail)

3 Integral Goals

  1. Rakyat’s Well-being
  2. Business Continuity
  3. Economic Resilience

Key Themes

  • Caring for the people
  • Steering the Economy
  • Enabling Sustainable Living
  • Enhancing Service Delivery

“Government expects economy to recover in 2021 and to grow by between 6.5% and 7.5% in line with the stimulus packages and Budget 2021.” ~Datuk Seri Tengku Zafrul Abdul Aziz, Finance Minister

Strategy 1: Covid-19 Pandemic & Public Health

  • Statutory government debt raised from 55% to 60% of GDP as per Akta Langkah-langkah Sementara Bagi Pembiayaan Kerajaan (Penyakit Koronavirus 2019) / Temporary Act for Government Expenditure
  • Ceiling of Kumpulan Wang Covid-19 raised by RM20b to RM65b to fund the Kita Prihatin initiative
  • RM1.8b for MCO enforcement and public health facilities including PPE, reagents and disposables
  • RM1b for Covid-19 3rd wave prevention & RM50m for Sabah
  • RM3b+ for Covid-19 vaccines
  • Frontliners one-off payment of RM500 as appreciation & RM300 for NADMA frontliners
  • RM90m pneumococcal immunisation programme for children expected to benefit 500,000 children
  • Tax exemption for vaccination pneumococcal, influenzas and Covid-19 up to RM1,000 for self, spouse and children
  • Tax relief for medical expenses on serious diseases increased from RM6,000 to RM8,000 for self, spouse and children
  • Tax relief for full medical checkup ailments increased from RM500 to RM1,000 for self, spouse and children
  • Tax relief for parents/special needs child medical expenses and care increased from RM5,000 to RM8,000 for self, spouse and children
  • mySalam protection program extended to included heart stents and prosthetics
  • B40 given RM50 voucher for Tenang Protection Scheme for purchasing takaful and personal accident coverage

Strategy 2: Safeguarding the Welfare of Vulnerable Groups

Measure 1: Improving Financial Aid

  • OKU Incapable of Work assistance increased from RM250 to RM300
  • Older Persons, Carers of OKU and chronically ill patient increased from RM350 to RM500
  • OKU workers incentive allowance increase from RM400 to RM450
  • Children in household poverty assistance increased from RM150 per child (age 7-18) / RM200 per child (age 6 below) up to RM1,000 per family
  • RM2.2b for BPN2.0
  • Bantuan Sara Hidup (BSH) replaced by Bantuan Prihatin Rakyat (BPR)
    • Household income <RM2,500: RM1,200 (up to 1 child) / RM1,800 (2 or more children)
    • Household income RM2,501 – RM4,000: RM800 (up to 1 child) / RM1,200 (2 or more children)
    • Household income RM4,001 – RM5,000: RM500 (up to 1 child) / RM750 (2 or more children)
    • Individuals age 21 below and income <RM2,500: RM350
  • B40 telecommunications credit for new phone/internet subscription: RM180

Measure 2: Alleviating the Rakyat’s Cost of Living

  • Individual tax relief for income RM50,001 – RM70,000 reduced by 1%
  • EPF employee contribution reduced from 11% to 9% from Jan – Dec 2021
  • EPF Account 1 withdrawal of RM500 monthly application open from Jan 2021 if you have lost your job
  • SOCSO EIS allowance for job hunting increased by 3 months (M1: 80% pay; M2-M6: 50% pay; M7-9: 30% pay)
  • Severance pay tax exemption for 2 tax assessment years increased from RM10,000 to RM20,000 for each year of service

Measure 3: Assistance to  Farmers and Fishermen

  • RM1.7b subsidies, aid and incentives for farmers and fishermen
  • Living allowance for fishermen increased from RM250 to RM300 per month
  • Monsoon assistance Rm300 per month for small estate rubber tappers
  • RM400m to pay for FELDA settlers debt interest and new development

Strategy 3: Generating and Retaining Jobs

Measure 1: PenjanaKerjaya Initiative (Hiring Incentive)

  • RM3.7b for JanaKerja Scheme to provide 500,000 new job opportunities including skills upgrading and retraining
  • Recruitment of workers under SOCSO 6 months incentives:
    • Workers earning >RM1500 incentive increased from RM800/mth to 40% of monthly salary (limited to RM4000/mth)
    • Employers 20% additional incentive to hire OKU, long-term unemployed and terminated workers
    • Sectors with high reliance on foreign workers (e.g. construction and plantation sector) special incentive 60% of monthly salary to hire local workers replacing foreign workers (40% channeled directly to employers and 20% to local workers)
  • Training claims for employees hired under PenjanaKerjaya raised from RM4000 to RM7000 for high-skilled or professional certificate programme

Measure 2: Reskilling and Upskilling

  • RM150m for KPT-PACE for fresh graduates given RM3,000 for professional certification programme
  • RM100m for HRDF for programmes with private employers
  • RM100m for MDEC for ICT talent transition
  • RM100m for IRDA and SEDIA for skills development affected by closed borders and drop in foreign tourists
  • RM30m for PERHEBAT for army veterans
  • Tax relief RM1,000 for approved skills upgrading programmes

Measure 3: MySTEP (Shorterm Employment Programme)

  • RM700m for short term contractual employment in public service and GLCs

Measure 4: Targeted Wage Subsidy

  • RM1.5b targeted wage subsidies extension for tourism and retail sectors of RM600 per employee with pay RM4,000 below for up to 500 employees

Measure 5: Social Protection

  • EPF withdrawal from Account 2 to purchase life insurance and takaful and critical illnesses coverage
  • Tax relief for PRS extended until 2025
  • RM24m for SOCSO payments to army volunteers, reserve police force, religious teachers, contracted public servants, and delivery riders

Strategy 4: Prioritizing the Inclusiveness Agenda

Measure 1: Empowering the Bumiputera

  • RM11.b for Bumiputera development to reduce inequality including:
    • RM6.5b for education through institutions such as MARA and UiTM
    • RM510m for SME and Micro SMEs through TEKUN and PUNB
    • RM800m for development of Bank Pembangunan Malaysia and SME Bank
    • RM2b for SME through SJPP
    • RM1.3b for development programmes including Dana Kemakmuran Bumiputera and other projects

Measure 2: Upholding Islam Tenets

  • RM1.4b for Islamic development through PM’s department
  • Waqf through PNB’s ASNB qualifying for tax relief which will be channeled to national waqf projects
  • One-off special payment of RM500 to religious reachers

Measure 3: Enhancing the Role of Women

  • RM95m micro credit through TEKUN, MARA and AgroBank
  • RM50m for Islamic financing through Ar-Rahnu BizNita
  • RM21m for local social support centers providing support for women facing domestic violence, divorce and abuse
  • RM30m for child care centers at government buildings, especially hospitals
  • RM20m for child care centers at private employer’s premises
  • RM10m for cervical cancer screening program and mammogram test subsidy incentive

Measure 4: Community-based Initiatives

  • RM177m for Chinese community improvement of education facilities, housing and new village development
  • RM100m for Indian community socioeconomic empowerment through Indian Community Transformation Unit (MITRA)
  • RM15m to Cultural Economy Development Agency (CENDANA) for the implementation of various art and cultural programmes
  • RM158m for Orang Asli socialeconomic empowerment including new kindergartens and protection of Native Customary Rights
  • OKU tax relief increased from RM3,500 to RM5,000
  • Tax deduction for employers hiring senior citizens until 2025

Measure 5: Enhancing Rural Infrastructure

  • RM2.7b allocation for rural infrastructure:
    • RM1.3b for rural roads
    • RM632m for clean water
    • RM250m for electricity
    • RM355m for poor to build or repair homes
    • RM121m for lights
  • Mobile banking services in Sabah and Sarawak

Measure 6: Youth and Sports Development

  • Apprenticeship program incentive of RM1,000 for employers hiring fresh graduates for 3 months and RM4,000 grant application for development programmes
  • RM100 (originally RM50) e-wallet credit via eBelia (eYouth) programme for youths age 18-20+ including students in institutes of higher learning
  • RM19m for Healthy Malaysia National Agenda for healthier lifestyle and reduce the risk of diabetes, hypertension and obesity
  • RM103m for upgrading and maintenance of sports facilities including RM15m for e-Sports development
  • Lifestyle tax relief increased from RM2,500 to RM3,000 and expanded to include sports competitions entrance fees and e-newspapers

Strategy 5: Ensuring the Well-being of the Rakyat

Measure 1: Digital Connectivity

  • RM500m for Jalinan Digital Negara (JENDELA) for connectivity in schools
  • RM150 for laptop computers as Tabung CERDIK pioneer project funded by GLC and GLIC

Measure 2: Access to Quality Education

  • RM50.4b to Ministry of Education, which is the highest allocation at 15.6% of budget
  • RM420m for daily milk supplement scheme
  • RM800m for upgrade and maintenance of government schools and government-assisted schools
  • RM50m for stable internet connection in universities through MYREN (Malaysian Research & Education Network) broadband access upgrade from 500bps to 10Gbps
  • RM100m loans for higher education students with PTPTN loan for laptop loan purchase through Skim BSN MyRinggit-i COMSIS
  • SSPN-i RM8,000 annual tax relief extended to year 2022

Measure 3: Increasing Home Ownership

  • Full stamp duty exemption for 1st home purchase below RM500,000 with purchase date between Jan 1, 2021 until Dec 31, 2025
  • Stamp duty exemption for abandoned properties transferred for new contractor and original home buyer with purchase date between Jan 1, 2021 until Dec 31, 2025
  • RM1.2b for affordable and low-cost housing
  • Rent-to-own schemes until 2022 for PR1MA developments

Measure 4: Public Transport

  • My30 unlimited travel pass extended to Penang and Kuantan
  • RM5 monthly unlimited travel pass for OKU

Measure 5: Defending the Nation’s Sovereignty and Security

  • RM16b allocation to Ministry of Defense
  • RM17b allocation to Ministry of Home Affairs
  • RM2.3b to upgrade military assets
  • RM27m to upgrade cyber-security

Other Notable Budget 2021 Highlights

Business Continuity and Economic Resilience

  • RM500m High Technology Fund provide by BNM to support high technology and innovative companies.
  • Special tax rates of 0%-10% for 10 years through PENJANA extended 1 year until Dec 31, 2022.
  • RM100m to maintain the infrastructure of industrial parks.
  • RM20m for Malaysia Techlympics and Science Space programmes to create expertise in AI and robotics among youth.
  • RM25m for Micro Franchise Development and Affordable Franchise programmes, and Buy Made in Malaysia programme.
  • RM150m to implement Shop Malaysia Online initiative to encourage online spending.
  • RM50m for training and placement for employees of airline companies.
  • RM150m for SME Digitalisation Grant Scheme and Automation Grant and eligibility relaxed.
  • RM50m allocated for P2P financing platforms especially invoice financing on matching investments basis.
  • RM30m allocated for ECF financing on matching grant basis and 50% income tax exemption (max RM50,000).
  • HRDF levy exemption for 6 months for tourism sector and companies affected by Covid-19 from Jan 2021.
  • Freezing on new import licensed for cigarettes and tightening renewal of import license.
  • Taxes will be imposed on all cigarettes and tobacco products (no more duty-free).
  • Excise duty of 10% on all e-cigarettes and vaping products, and RM0.40 per mm on e-cigarette liquids.
  • Continuation of High-Speed Rail Project (HSR) subject to further discussion with Singapore.
  • Construction of 2nd phase Klang 3rd bridge, Central Spine Project, bridge across Sungai Marang, upgrading Federal Road connecting Gerik, Perak to Kulim, upgrading Pulau Indah, Klang Ringroad, Construction Pan Borneo Highway Sabah, and Cameron Highlands Bypass road.
  • e-Rebate of RM200 for locally made air-con or fridge through SAVE 2.0 program.
  • RM600 special finance aid for public servants grade 56 below and RM300 for pensioners and veterans.

Yang Kurik itu Kundi, yang Merah itu Saga
Yang Baik itu Budi, Yang Indah itu Bahasa
Yang Berdamai Kan Permai
Yang Sehaluan Kan Keberkatan
Yang Satu Suara Kan Mara
Yang Teguh Biarlah Kita
Teguhkan Kita…
Teguhkan Kita…
“TEGUH KITA, MENANG BERSAMA”

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