Key points of the 2024 Malaysian Budget

The government will continue to encourage women to re-enter the workforce, extending the tax incentive policy for this group until December 31, 2027.

The tax-exempt amount for childcare allowances (paid directly by employees or employers to childcare centers) will be increased from 2,400 ringgit to 3,000 ringgit.

The 1983 Drug Addicts (Treatment and Rehabilitation) Act will be amended to allow drug addicts to receive treatment and rehabilitation without being sent to prison.

If individuals or companies donate to institutions, organizations, or funds approved under Section 44(6) of the 1967 Income Tax Act for educational projects (including sports projects), the government will provide tax relief of up to 10% of their total income.

Starting from October 14, 2023, discounts will be provided for PTPTN loan repayments, where the unpaid portion of a full loan repayment will receive a 10% discount, 50% repayment of the remaining amount will receive a 10% discount, and salary deductions for repayment will receive a 15% discount.

The government plans to implement a fixed stamp duty of 10 ringgit for real estate transfer documents involving beneficiaries who are relinquishing inheritance rights (under the concept of will or Faraid (Islamic rules governing the distribution of a deceased person's assets to their heirs)), instead of the ad valorem stamp duty.

The government will allocate 0.1 billion ringgit for infrastructure and social infrastructure in Chinese New Villages.

For companies involved in expenditure related to the development of carbon projects in terms of Measurement, Reporting, and Verification (MRV), the government proposes a maximum additional tax relief of 0.3 million ringgit, which can be deducted from the carbon credits sold on the Malaysian Carbon Trading Exchange (BCX).

The activation price of the Rubber Production Incentive Scheme (IPG) will increase from the budgeted 2.70 ringgit per kilogram in 2023 to 3 ringgit per kilogram, with a budget allocation of 0.4 billion ringgit.

The tax relief limit for purchasing sports equipment and activities will be increased from 500 ringgit to 1,000 ringgit. This relief policy will also be extended to expenses for sports training.

A global service center tax incentive policy will be introduced, providing a 5% or 10% income tax incentive based on performance over 10 years.

Special income tax rates of 0-10% will be implemented for film production companies, foreign film actors, and staff, applicable to film shootings in Malaysia.

The Microfinance company Amanah Ikhtiar Malaysia (AIM) will receive a capital allocation of 0.1 billion ringgit to provide funds for small businesses. Its non-performing loan rate for 2022 was 0.26%.

The government is considering exempting income tax on the sale and purchase of Islamic bonds (ISSB) from the fiscal year 2024 onwards.

While awaiting the completion of the study on the salary and allowance scheme for civil servants, the government will provide an initial incentive allowance of 2,000 ringgit to all civil servants below grade 56, including contract-appointed civil servants, and pay an incentive allowance of 1,000 ringgit to the police, firefighters, military personnel, and uniformed members.

All government retirees will receive an incentive allowance of 1,000 ringgit, to be paid once by the end of February 2024.

The Ministry of Defense is allocated 19.7 billion ringgit, while the Ministry of Home Affairs is allocated 19 billion ringgit.

The allocation for the management and development of Islamic affairs by the Department of Islamic Development Malaysia is 1.9 billion ringgit.

To facilitate the redevelopment of stratified schemes, the threshold for collective sales agreed by residents will be lowered from 100% to a consistent level based on international practices (such as Singapore), to encourage urban renewal and promote the reconstruction of old urban buildings.

A fixed stamp duty of 4% will be levied on property transfers for non-citizen individuals and foreign companies (excluding Malaysian permanent residents), aimed at controlling property prices.

Under the unified leadership of the government, the government has taken over the development of Wanda Malaysia to ensure that strategic land is best utilized for projects that align with Malaysian values. This includes providing affordable housing projects for veterans, considering the interests of the indigenous communities in federal territories, and providing parks and green spaces for all residents of the Klang Valley to use.

The Housing Loan Guarantee Scheme will be expanded to 10 billion ringgit, benefiting 0.04 million borrowers.

The total allocation in 2024 is 0.247 billion ringgit, used for the implementation of the people's housing project.

The development tender work for the 19 projects under the Sabah Pan Borneo Plan (Phase 1B) will be completed in November 2023, with a total project value of 15.7 billion ringgit.

The Sarawak Pan Borneo Highway project is expected to be completed in 2024.

The implementation of the second phase of the Sarawak-Sabah Link Road project, involving 7.4 billion ringgit, will commence by the end of 2023.

The North-South Expressway (PLUS) from Sedenak to Simpang Renggam will be expanded, costing 931 million ringgit, widening the road to six lanes.

The government will proceed with the construction of the 5 previously cancelled Light Rapid Transit 3 (LRT3) stations, including Tropicana, Raja Muda, Temasya, Bukit Raja, and Bandar Botanik stations, with an investment of 4.7 billion ringgit. Keeping these stations operational is expected to enhance Kuala Lumpur Valley's public transportation network, benefiting 2 million residents.

An allocation of 1.1 billion ringgit is aimed at addressing water supply issues, especially in Kelantan, Sabah, and Labuan areas.

The Sarawak State Pan Borneo Highway is expected to be completed by 2024.

The 33 high-priority flood prevention projects, with a total cost of 11.8 billion ringgit, are scheduled to be implemented starting in 2024.

The Ministry of Finance, the Inland Revenue Board (IRB), and Petronas are studying tax incentive policies for carbon capture and storage (CCS) and hydrogen sulfide projects, which are expected to be finalized by the end of the year.

The scope of automated tax incentive policies will be expanded to include plantations and commodity sectors to increase productivity of plant products and reduce reliance on foreign labor.

A research and development fund allocation of 0.51 billion ringgit will be provided to the Ministry of Science, Technology, and Innovation (Mosti) and the Ministry of Higher Education.

The government will provide 2.4 billion ringgit to promote economic activities and social development of agricultural products and smallholders, involving the Federal Land Development Authority (Felda), Federal Land Consolidation and Rehabilitation Authority (Felcra), and Rubber Smallholders Development Authority (Risda).

The government will extend the maximum income tax deduction of 2500 ringgit for expenditures on purchasing electric vehicle (EV) charging facilities for four years, and continue the income tax exemption for electric vehicle leasing costs for two years.

The government will purchase 150 electric buses, build three bus depots, with a total investment of 0.6 billion ringgit.

For buyers with annual incomes below 0.12 million ringgit, the government will provide up to 2400 ringgit in subsidies for the purchase of electric bicycles, as part of the initiative to promote the use of electric motorcycles.

The government, together with the Port Klang Authority, has allocated 50 million ringgit for maintaining the Port Klang roads to bear the load restrictions of heavy vehicles, and additionally, a joint allocation of 20 million ringgit for upgrading the Malaysia's Maritime Single Window System (MMSW).

To increase franchise trading, the government will provide an allocation of 10 million ringgit for the 'Program Pengukuhan Francais' to boost exports.

The government has allocated 6.8 billion ringgit for the field of professional education and training, with 0.1 billion ringgit allocated for providing industry-recognized professional certifications for graduates of professional education and training, as well as incentives for collaboration between the industry and public professional education institutions.

The Human Resources Development Company will utilize 1.6 billion ringgit to provide 1.7 million training opportunities, while reallocating 15% of the total levy collection to implement the Madani Training Program - training programs for micro, small, and medium enterprises (MSMEs), as well as training programs for vulnerable groups.

The government announced a digitalization grant of 0.1 billion ringgit to fund the upgrading of sales, inventory, and digital accounting systems for 0.02 million micro, small and medium enterprises (MSMEs). The Central Bank of Malaysia (BNM) will provide a 0.9 billion ringgit loan fund for automation and digitalization of small and medium enterprises (SMEs).

Through Bank Negara Malaysia (BNM), National Savings Bank (BSN), and the National Entrepreneur Group Economic Fund (Tekun), a financial assistance of 0.24 billion ringgit will be provided for small and medium enterprises.

To incentivize companies to invest in high growth and high value areas (HGHV), the government plans to provide a tiered reinvestment tax incentive policy in the form of investment tax allowances, with 70% to 100% investment tax allowances.

Government-Linked Investment Companies (GLICs) will provide up to 1.5 billion ringgit to encourage startups, including small and medium enterprise entrepreneurs, to venture into the HGHV sector.

- The government is negotiating with the Sarawak State Government on the handover of the Port of Pahang and rural airline services.

- To establish a more comprehensive ecosystem for the electronics and electrical (E&E) industry cluster in the northern state of Kedah, the government will set up a high-tech industrial zone in Kerian, northern Kedah.

- The government will allocate 28 million ringgit for the development of the MYStartup platform to support startups.

- In response to power supply interruptions, the federal government will support the generation of solar energy and the construction of power transmission lines in southern Sabah.

- The government plans to designate the Pengerang Integrated Petroleum Complex (PIPC) as a development center for the chemical and petrochemical sectors, providing special tax rates or investment tax incentives.

- To more effectively implement, the federal government has authorized the transfer of power to implement development projects below 50 million ringgit to the technical agencies of Sabah and Sarawak.

- The power supply authority will be transferred to the Sabah government on January 3, 2024.

- The express grant rates for short-term special grants have been raised to 30 million ringgit, previously 16 million ringgit (for Sabah) and 12.56 million ringgit (for Sarawak).

The government will provide up to 10% of the total investment of the National Industry Master Plan (NIMP) 2030 total investment (95 billion ringgit), with an initial funding of 0.2 billion ringgit in early 2024.

Allocation for development in Sabah and Sarawak will increase, with Sabah receiving 6.6 billion ringgit (previously 6.5 billion ringgit) and Sarawak receiving 5.8 billion ringgit (previously 5.6 billion ringgit).

The Second Chance Policy will be expanded to include individuals under 40 years old with debts not exceeding 0.2 million ringgit.

The Central Bank of Malaysia (BNM), in collaboration with the financial sector, is developing a National Fraud Portal (NFP), expected to be completed by mid-2024. The NFP will be able to automatically track funds, expedite detection, freeze, and return funds.

Funding for the National Scam Response Center (NSRC) will increase from 10 million ringgit to 20 million ringgit to enhance the center's capabilities in combating fraudulent activities.

An allocation of 18 million ringgit will be used to implement legal reforms, including drafting legislation on alternative punishments to the death penalty.

The government will allocate 0.1 billion ringgit to support non-governmental organizations and civil society organizations, including the impact fund Yayasan Hasanah under Khazanah Nasional Berhad.

The Special Taskforce on Agency Reform (STAR) will expedite maintenance work on government housing units. A total allocation of 2.4 billion ringgit will be used for the construction, maintenance, and refurbishment of housing units for civil servants, teachers, hospitals, police, soldiers, and firefighters.

Targeted subsidies for electricity consumption will be implemented this year, no longer providing subsidies to the top 10% of the highest electricity users, expected to save 4.6 billion ringgit, instead of the expected 20 billion ringgit in electricity subsidy costs.

The government will continue to provide monthly assistance to extremely poor families, allocating 55 million ringgit. Deposits in individual accounts will be exempted.

Diesel subsidies will be rationalized, targeting specific users, such as freight operators.

The price ceiling for chicken and eggs will be lifted, allowing prices to float freely.

The total amount of direct cash assistance will increase from 8 billion ringgit to 10 billion ringgit.

The Inland Revenue Board (IRB) will implement a mandatory e-invoicing system starting from August 1, 2023, applicable to taxpayers with annual income exceeding 10 million ringgit, with other income categories to be implemented in stages, expected to be fully implemented by July 1, 2025.

Targeted subsidies will be implemented in stages for the next fiscal year.

Tax on high-value goods (luxury goods) will be levied at a rate of 5% to 10% based on the threshold value of the goods, such as jewellery and watches, exempting foreign tourists.

Starting from March 1, 2024, a 10% capital gains tax will be levied on the net profit from the sale of unlisted company shares, excluding IPOs, internal reorganizations, and venture capital companies.

The service tax will be increased from the current 6% to 8% and will be expanded to include logistics, brokerage, underwriting, and karaoke services.

The 2024 budget is the largest in Malaysian history, with a total allocation of 393.8 billion ringgit, of which 303.8 billion ringgit is for operational expenses and 9 billion ringgit for development expenditures.

The government expects a 4% to 5% growth in gross domestic product in 2024.

The second Madani budget reflects the unified government's determination to boost the national economy and improve the well-being of the people.