PM Najib presents recalibrated 2016 Budget

PUTRAJAYA: Prime Minister Datuk Seri Najib Abdul Razak today announced 11 prudent measures as a calibration to the 2016 Budget, expected to save the government a total of RM9 billion in operating and development expenditures.
In a special address, Najib, who is also Finance Minister, said the recalibration takes into consideration the current global economic situation and is aimed at alleviating the burdens of the rakyat.
He stressed the current economic condition was not due to the failure of the government to plan, but on account of the global economic crisis which is beyond our control.
"Indeed, every decision that we make today is the best for the rakyat and will surely be recorded in history. Furthermore, Malaysia is neither a failed state nor a bankrupt nation as alleged.
"In fact, the reality is the economy is stable with strong growth as well as resilient and competitive," he said in his speech at the Putrajaya International Convention Centre here.
The 11 measures announced by Najib during the special address were:
1. Reduction on employees' contribution to the Employees Provident Fund by 3% beginning March 2016 to December 2017. However, the contributions by employers remain. This measure is expected to increase private consumption expenditure by RM8 billion a year.
2. Providing special tax relief of RM2,000 to individual taxpayers with a monthly income of RM8,000 or below for the 2015 assessment year.
3.Reducing cost of daily basic necessities, which includes:
- liberalise control on import quotas or Approved Permits on eight agricultural produce.
- Domestic Trade, Cooperatives ad Consumerism Ministry (MDTCC) to identify more fair price shops including foreign and local hypermarkets.
- MDTCC to step up enforcement and legal action against businesses taking the opportunity to profiteer.
- MyBeras programme to be introduced, where every registered hardcore poor will be supplied with 20kg of rice every month until Dec 2016.
4. With immediate effect, houses priced up to RM300,000 for all new housing projects will be limited to first-time house buyers only.
5. 30% from the levy contribution to the Human Resources Development Fund amounting to RM200 million will be provided to enhance competency and skills of employees, including retrenched workers.
6. Enhancing the efficiency and amount of tax collection, which includes:
- government will double compliance and auditing efforts on tax evaders
- special consideration and relaxation for penalty on taxpayers to encourage them to come forward and declare past years' income.
- free duty treatment on imported vehicles in duty-free islands will be tightened
7. Streamlining the management of foreign workers system whereby the levy will be clustered into two categories only. This does not include the foreign domestic maid category. In addition, the government will implement the Rehiring Programme to provide opportunities for foreign workers without permits in Malaysia to be given valid work permits.
8. Government will be more prudent in spending, particularly on supplies and services.
9. Projects and programmes will be focused on those that are rakyat-centric, as well as with high multiplier effect and low import content.
10. Development financial Institutions and government-owned venture capital funds will increase their financial funds by RM6 billion to provide financing to small and medium enterprises and startup companies.
11. Government-linked companies urged to implement initiatives to narrow the income gap between higher management and employees gradually. Private sector urged to do the same.
"These initiatives are very important to ensure sustainable economic growth, and more importantly, to safeguard the wellbeing of the rakyat," Najib said.
"I am confident that together we can overcome these difficult challenges again. We have done it before, God willing, we can do it again," he added.
Najib said as an additional measure to boost the tourism sector in Malaysia, tourists from China are not required to visit the country under specific conditions, beginning Mar 1 to Dec 31.
He said the 1Malaysia People's Aid (BR1M) and welfare assistance would continue to be implemented, while the Goods and Service Tax rate would be maintained.
"The government will continue the implementation of one annual increment for civil servants on July 1, 2016, as promised in the 2016 Budget," he said.
He reiterated that Malaysia is neither in economic nor technical recession.
He said taking into consideration the current economic scenario, the government has decided to revise the 2016 forecast of Gross Domestic Product (GDP) to 4% from 4.5%.
"The government is committed to fiscal consolidation measures for 2016 that is to achieve a fiscal deficit target of 3.1% to GDP.
"The national level will continue to be reduced and will not exceed the prudent level of 55% to GDP," he said.