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Malaysia PM Anwar tables record RM393.8 billion Budget, rolls out several tax hikes and reforms

SINGAPORE: Malaysian Prime Minister Anwar Ibrahim on Friday (Oct 13) tabled the country’s largest-ever budget, as he made a further push for a shift from the current blanket subsidies to a more targeted approach aimed at giving more to the truly needy.

Among the measures announced included an increase to the Sales and Services Tax (SST) from six per cent to eight per cent, though it will not include food and beverages or telecommunications.

A capital gains tax on unlisted shares will also be introduced at a rate of 10 per cent from March 1 next year.

Separately, a high-value goods tax of five to 10 per cent on items such as jewellery and watches will also be introduced, he said.

The expansionary 2024 budget of RM393.8 billion (US$83.29 billion) surpasses the RM388.1 billion unveiled for the 2023 budget in February this year, the largest then.

The 2024 budget, which was keenly anticipated as the first under Mr Anwar to bear his imprint since he took office in November last year, marks a return to the regular year-end budget announcement cycle.

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Mr Anwar, who is also the country’s finance minister, announced that RM303.8 billion – about 77 per cent of the RM393.8 billion budget next year – will be allocated for operating expenditure while RM90 billion is for development expenditure.

In his speech, Mr Anwar stressed that only by reducing the country’s deficit and liabilities that the government is able to restore its sustainable fiscal position.

TARGETING THE SUBSIDIES

Mr Anwar also took aim at Malaysia’s broad subsidies, saying that such subsidies have benefited the rich. 

“Economic policy should be directed towards economic growth and equality. However, what has happened is that the amount of subsidies (given out) has benefited the rich.

“It is hoped that by improving and plugging the leakages in the subsidy system, that the proceeds could be passed on to the public, including wage increments for the working class,” said Mr Anwar.

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He added that the targeted approach to the subsidies will begin next year.

“Thus, from next year, a targeted approach to the subsidies will be implemented in phases.

“If it is true that we can save on the subsidy spending, then I guarantee that God willing we will increase the allocation of cash assistance through the Rahmah Cash Contribution (Sumbangan Tunai Rahmah) from the current RM8 billion to RM10 billion for almost 9 million residents,” said Mr Anwar, who noted that subsidy cuts are largely on fuel and electricity.

Diesel subsidies, will however, still be enjoyed by certain groups of consumers, such as logistics companies, he said.

“With this approach, this will reduce subsidy leakages, and at the same time, reduce the impact on the price of daily goods for the people.”

The targeted approach to electricity subsidies implemented this year – where subsidies for the top 10 per cent of those with the highest electricity consumption was released – has allowed the government to save more than RM4.6 billion, said Mr Anwar.

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