Announcement: (my comments in italic)
- Rakyat Goodies:
- i) A generous additional 1 month bonus to 1.4m civil servants
- ii) BRIM 2.0: one-off RM500 cash to households with incomes not exceeding RM3,000/ month; and RM250 cash to single residents with age <21 and incomes not exceeding RM2,000/ month.
- iii) additional RM100 per month of pensions for government pensioners
- iv) special incentive of RM200 per month for all military personnel
- v) one-off RM1,000 for former members of the armed forces who did not receive any pension
- vi) Another schooling assistance of RM100 to all primary and secondary students and book voucher increased from RM200 to RM250 to all Form 6 and tertiary students.
- vii) individual income tax rate cut of 1 percentage point for each group which has annual chargeable income exceeding RM2,500 to RM50,000
- viii) RM200 rebate to 1.5m people under the age group of 21-30 year old for purchase of 3G smartphone.
- 15% Real Property Gains Tax (RPGT) is now payable for properties disposed within two years and 10% within the 3rd to 5th year. Properties held and disposed after 5 years are not subject to RPGT. My first home scheme: income limit for individual loan increased from RM3,000 to RM5,000. – I think the increment of RPGT can hardly curb the property price hike and speculation. From an investor‘s point of view, as long as you make money, you don’t mind paying a little bit more taxes.
- Sugar subsidies reduced by 20 sen to 34 sen/ kg w.e.f 29 Sept 2012. But no mention of proposed subsidy cuts on other items. – The government believe that higher sugar price will reduce the sugar intake of our citizens. What do you think? I don’t add sugar to my Starbucks coffee not because the sugar is expensive. I don’t take much sugar because I’m health conscious.
- No Goods and Service Tax (GST) explicitly spelled out – In fact, I would prefer the introduction of GST, but personal income tax and company tax reduced. Then the government would somehow maintain the tax revenue, while those who love to spend money pay more taxes.
- Investment Tax Allowance of 100% for the period of 10 years for investment in the refinery activities on petroleum products including project like RAPID, oil and gas storage Terminal in Johor, Regasification Plant in Melaka as well as oil and gas terminal in Sipitang, Sabah. GIFT programme will be enhanced with a 100% income tax exemption on statutory income for the first 3 years of operations for LNG trading companies from tax incentive at the rate of 3%. - Since more foreign direct investment is expected, those companies directly or indirectly involved in oil and gas industry will benefit the most. So Shan Saeed is right that investing in energy sector has a bright future. If you missed the live webinar, watch the replay here where Shan Saeed, the renowned financial market economist shared about the prospect of investing in energy especially natural gas.
- No hike in excise duty for tobacco and malt liquor and also gaming duty. – If you smoke, you not only affect your own health, but the health of the people surrounding you. If you gamble heavily, you risk the financial stability of your family. Personally, I love to see more duty imposed on these sinful activities. You might not agree if you own related company stocks.
- No announcement made on the National Automotive Policy (NAP). – Well, Malaysia government continue to invest heavily on road safety campaigns to bring down the fatality rate to below two for every 10,000 registered vehicles by 2020, on par with developed countries. But one of the main reasons there are dead motorist is that not every one can afford a safe ride. I believe you want to be able to easily afford a decent car, with enough air bags. Let us buy a decent car for a fair price, build roads that is safe to drive on and provide well-connected public transport will eventually bring down the road accident death rate.
Last but not least, I would like to share my wish list for future national budget:
Let everyone has a very affordable high speed Internet connection
The reasons are quite straight forward:
- Internet access is the key to economic growth. Every government should treat it the same way they treat water, electricity and roads. Internet is a necessary utility.
- Look at the countries that has the highest Internet speed. No.1 - South Korea. No.2 – Japan. No.3 – Hong Kong. Now, take a look at your household items. My wife use Samsung SIII smart phone. She drives a Hyundai Starex. She watches Korean movies and dramas. My mom uses Samsung fridge and washing machine. There is an LG LED TV in my bedroom. Now everyone in the whole wide world is dancing Gangnam Style!
- Internet is an essential connection. The easier we can connect and communicate, the better we can collaborate. Collaboration is the key to more innovation and creation. It will be easier for businesses to connect to their customers. This allows users to consume goods, services and information anytime, anywhere. E-commerce will flourish.
- If you can do something online, you would so that you don’t get stuck in the traffic, you don’t need to show up at work on time, you don’t need to find a parking place just to pay a bill, file a police report, or purchase an item. You got the idea!
Government can expedite this by
- Invest in information infrastructure
- Let more players into telecommunication sector. Competition drives the price down and gives way to better service.
- Encourage broadband subscription by giving high tax relief, or even subsidy.
- Encourage more Internet or ICT startups by giving more grants, low interest loan and reduce taxes for these business.
Reference: MALAYSIA BUDGET 2013 – An earnest & all-around Budget? 1st October 2012 report by Philip Capital Management Sdn. Bhd.