1. YAB Perdana Menteri presented a progressive, balanced and a rakyat centric budget which clearly underlines Government’s effort and commitment towards transforming the economy, reducing the national fiscal deficit and ensuring the prosperity of the nation while placing the concerns and wellbeing of the citizen at the core of the budget.
2. The provisions in the budget under MITI are targeted on two focus areas:
- Intensifying Economic Activities; and
- Human Capital Excellence.
3. Following the momentum of increasing inflow of foreign direct investment, the 2014 Budget continues to introduce new measures to ensure Malaysia remain attractive to investors.
4. A total of RM264.2 billion has been allocated to implement the development plans under this Budget. Of this, RM217.7 billion for operating expenditure and RM46.5 billion for development expenditure. Private and public investments are expected to increase 7.3% and 7.4% respectively. This positive growth will help spur Government efforts towards the next phase of the country’s development.
5. The services sector continues to be the main contributor for economic growth. To encourage further growth, The Services Sector Master plan will be introduced in 2014.
Incentives to Spur Investments
6. Among incentives to promote private investments:
A. Incentives for the hotel, logistics, aviation and tourism industries.
Hotel Industry - in the form of 70% exemption on statutory income for the period of 5 years and 60% investment tax allowance.
Impact
- Continue to support investment in 4 and 5 stars hotel by extending the incentives period that will lapse by 1 January 2014 (Pioneer Status and Investment Tax Allowance for another 3 years, i.e. until 31 December 2016.
- The establishment of more luxury hotels will further promote tourism, raise the standard of hospitality in Malaysia to attract high yield tourists especially during the Visit Malaysia Year 2014.
- The Entry Point Project 12:- Improving Rates, Mix and Quality of Hotels, targeting 37,000 more rooms for 4 and 5-star hotels by 2020. As at December 2012, 3,908 rooms have been added.
- The incentives will also stimulate other related activities especially in Meetings, Incentives, Conventions and Exhibitions (MICE) in Malaysia.
- It is also consistent with the Government’s aspiration of positioning Malaysia as a high income nation by 2020 through the revitalisation of private sector’s investments.
Logistics Sector Masterplan
- The Masterplan will guide policymakers across agencies, sectors, and regions in the implementation of measures to improve the efficiency, integration, competitiveness and environmental sustainability of the country’s trade logistics, while meeting the requirements set by the broader policy goals for economic development.
- Efficient freight logistics services will support manufacturing and agricultural supply chains with linkages to international gateways, and rural networks for access to local markets and production sites.
- Will also contribute towards increasing the level of efficiency of logistic management, reduce the cost of services provided thereby enhancing trading activities as well as to increase competitiveness of country export
Maritime Development Fund
- Maritime Transport (particularly shipping and port) plays an important role in international freight, particularly to transport bulky items such as crude oil and grains.
National Aviation Policy
- The aviation industry is vital in the rapid expansion of trade and thriving tourism industry for Malaysia and will help place Malaysia as a leading regional air transport hub.
- The industry is expected to grow with the Visit Malaysia Year 2014 and other tourism boosting initiatives by the Government.
- Moreover, the Government has also introduced earlier a myriad incentive within aerospace industry. The incentive available includes activities that directly and indirectly contribute to the design and development, construction, operation, maintenance and disposal of aerospace related products covering Manufacturing and Design, MRO, General Aviation, Regulator and Aerospace Training sub-sectors.
B. Incentive for Vendor Development Program in the form of double deduction on Operational Expenditures to attract more anchor companies participating in vendor development programmes.
Impact
- The double deduction on operational expenditure awarded to anchor companies is expected to attract greater participation in the programme. Anchor companies would be encouraged to develop and enhance more Bumiputera SMEs as their component manufacturers and suppliers. This is in line with the Fourth Focus under the Bumiputera Economic Empowerment Agenda announced by the Y.A.B. Prime Minister on 14 September 2013.
- Benefits provided under the Vendor Development Programme include:
- promote and encourage anchor companies to engage local Bumiputera vendors for supplies of products and services;
- promote localisation and import substitution;
- increase competitiveness and ability of Bumiputera SMEs through capacity building programmes and training provided by anchors;
- encourage more Bumiputera SMEs to upgrade existing products or services through R&D supported by their anchors;
- encourage more Bumiputera SMEs to invest in new technologies; and
- increase quality of products produced by Bumiputera SMEs to comply with requirements of anchors.
C. Entrepreneurial Development Scheme
- Establishment of the National Entrepreneur Development Office (NEDO) under the Unit National Strategy of Ministry of Finance to plan and coordinate all development plan and activities related to entrepreneurship.
Impact
- Establishment of NEDO will ensure that all programmes and activities related to entrepreneurship will be monitored and coordinated in a very systematic, efficient and effective manner.
D. Malaysian Global Innovation and Creativity Centre
- The creation of Malaysian Global Innovation and Creativity Centre (MAGIC) will ensure that the development of entrepreneurs will be conducted in a very comprehensive and integrated manner. In relation to this, we foresee that all the elements pertaining to the development of competitive, resilient and sustainable entrepreneurs will be in place.
E. High Impact Bumiputera Equity Financing Scheme
- The RM 300 million High Impact Bumiputera Equity Financing Scheme is the expansion of the existing BFF to support Bumiputera equity ownership in identified non-core activities of GLCs that to be divested. The enhanced scope will include the acquisition of majority interest in PLC and potential companies to be listed (owned by GLC ect.)
Impact
- Target to finance more than 20 entrepreneurs.
F. Bumiputera Property Ownership Financing Program
- The RM300 million Bumiputera Property Ownership Financing Program aims to support the Bumiputera entrepreneurs property ownership in strategic locations.
Impact
- Expected to assist more than 100 entrepreneurs to own business premises
G. Small and Medium Enterprises (SMEs)
- Budget 2014 is a windfall for SMEs in terms of access to financing. It offers a complete package covering a full spectrum of financing for SMEs, starting from the small entrepreneurs, to those that need revitalisation and finally to innovative SMEs at the higher-end of the value chain.
- MITI is glad to note that Budget 2014 continues to be supportive towards SMEs and Entrepreneur Development. I noted about 13* specific programmes, with a combined allocation of about RM2.6 billion, that will ultimately benefit the growth of Malaysia’s SME and entrepreneurs. Although many of these programmes are under various ministries and agencies, SME Corp, as the Central Coordinating Agency for SME development will be coordinating these programmes.
- We are very pleased that the Government recognises the importance of SMEs to remain innovative through the extension of the Green Lane Policy until 2017. Introduction on a special package amounting to RM120 million for SMEs to undertake automation, mechanisation, capacity building will assist SMEs in increasing their productivity.
- Intensive support in terms of financing with funds amounting to RM1.18 billion in total (from AIM, TEKUN, BSN and SME Bank) for the microenterprises is also seen as Government’s effort to accelerate the growth of the microenterprises. This is in line with the objective of SME Masterplan 2012-2020 to increase business formation which is targeted to growth at 6% by 2020.
- MITI is very pleased that the Government has agreed to introduce special incentive in the form of financial packages (RM250 million) to enable SMEs to adopt accounting application into their business in preparation to the GST starting 1 April 2015. MITI will facilitate promotion and outreach to business community in order to prepare them for GST.
*List of the 13 Programmes
- Microenterprises Financing through Amanah Ikhtiar Malaysia and TEKUN amounting to RM1 billion
- Special financing for Indian entrepreneurs by TEKUN – RM50 million
- Dana Ekuiti Bumiputera – RM30 million – SME Bank
- Pembangunan Tanah Rizab Melayu – RM200 million
- Skim Usahawan Permulaan Bumiputera – RM30 million
- Training Grant in preparation for GST – RM100 million
- Financing for purchase of ICT accounting application for SMEs – RM150 million
- Skim Usahawan Pasar Malam by BSN - RM100 million
- Tabung Usahawan Siswazah – RM50 million – SME Bank
- Tabung Pembangunan Kemahiran (for youth) - RM330 million - Perbadanan Pembangunan Tabung Kemahiran
- Up skilling and reskilling fund – PSMB – RM400 million
- Establishment of 60 new shops under Kedai Rakyat 1 Malaysia KRIM - RM30 million
- Pakej bersepadu bagi PKS untuk meningkatkan produktiviti dengan melaksanakan automasi dan pembangunan kapasiti – RM120 million
Impact
- The additional allocation for the Graduate Entrepreneur Scheme of RM50 million provide greater opportunities for new graduates to venture into. Under the 2013 budget, a total of 861 graduates have been trained as entrepreneurs.
H. Outcome Based Budgeting
- MITI, MOH and MOF will be the first three Ministries to undertake the performance evaluation process under OBB.
Impact
- Performance of government delivery system including KPI’s will be monitored through OBB that will improve the budget management system through close monitoring and effective implementation of programmes and activities.
This Budget is balanced and will go a long way in providing benefits not only for the business community but also to the average citizens. The measures reflect the Government’s commitment to reduce the effect of the rising cost of living on the low-income group.
Ministry of International Trade and Industry
Malaysia
25 October 2013
Comments on the 2014 Budget byYB Dato’ Sri Mustapa Mohamed Minister of International Trade and Industry
Additional Comments:
A. Regional Economic Corridors
The government will continue to encourage investment in 5 regional economic corridors. As at 2012, RM124 billion investments realised. For the first 9 months of 2013, all regional corridors attracted committed investment of RM53.4 billion with 50% realised.
Impact
The allocation of RM1.6 billion for the development of five economic corridors will facilitate the expansion and development of commercial plantation projects including in Sabah and Sarawak. Among the major projects:
- Eastern Corridor: Expansion of Port Kauntan, establishment of Integrated Pertokimia Complex in Gebeng and Kertih.
- Northern Corridor: commercial plantation projects.
- Agropolitan, palm oil industry in Sabah Development Region
- Halal hub Samalaju in Sarawak Corridor Region.
B. Assessment of Impact of Budget 2014 Measures on SMEs
The 2014 Budget has been encouraging with continued focus on SMEs and entrepreneurship development. Altogether there are 13 specific programmes for SME development, with funding amounting to RM2.6 billion including funds from the private sector ie banking system. The programmes cover a wide spectrum of beneficiaries including Bumiputera; youth; graduates; microenterprises and petty traders; smallholders; cooperatives; and associations. The Budget measures are aimed at promoting innovative and high growth firms, increasing business formation, enhancing productivity as well as creating an overall conductive entrepreneurship ecosystem. These will contribute towards achieving the goals of the SME Masterplan and raise the contribution of SMEs to 41% of GDP by 2020. In this context, the incentives under the Green Lane Policy have been extended until 2017.
In addition, the Government has also taken the necessary measures to ensure that SMEs are not adversely affected by the on-going policy reforms under the New Economic Model. This includes the Minimum Wage policy introduced in 2013 and the newly announced Goods and Services tax which will come into effect on 1 April 2015.
- These measures include further tax deduction to ease the impact of increase in wage costs and measures to promote productivity for SMEs through the RM120 million financing to encourage automation, training in specialised skills and participation in Lean Transformation programme.
- For GST, SMEs will be granted special financing package of RM150 million to facilitate adoption of accounting applications and a training grant of RM100 million to enable GST compliance. At the same, SMEs have been given sufficient time of about 17 months to make the necessary preparation for GST adoption. During that period, the Government will intensify promotion and outreach initiatives nationwide to ensure smooth transition of GST adoption.
For the bottom 40% of the income group, the Government has intensified support in terms of financing with total funds amounting to RM1.2 billion to accelerate the growth of microenterprises channelled through AIM, TEKUN, BSN and SME Bank as well as soft loan of RM100 million for night market traders.
Other key initiatives:
- Dana Ekuiti Bumiputera – RM30mil – SME Bank
- Pembangunan Tanah Rizab Melayu – RM200mil
- Skim Usahawan Permulaan Bumiputera – RM30mil
- Skim Usahawan Pasar Malam by BSN - RM100mil
- Special financing for Indian entrepreneurs by TEKUN – RM50 mil
- Tabung Usahawan Siswazah – RM50mil – SME Bank
- Tabung Pembangunan Kemahiran (for youth) - RM330mil - Perbadanan Pembangunan Tabung Kemahiran
- Up skilling and reskilling fund – PSMB – RM400mil
- Establishment of 60 new shops under Kedai Rakyat 1 Malaysia KRIM - RM30mil
- Additional tax deduction for SMEs, cooperatives, organisations and associations for the increase in wage bill in 2014 to mitigate the impact of minimum wages implementation.
- RM 6 billion for agriculture programmes with high value-add and commercially viable
- RM634 million for NKEAs – agriculture products with high demand
- R&D incentive under Biotech Corp.
- New entity named National Entrepreneur Development Office under Unit Strategik Nasional, MOF to implement entrepreneurship development plan
- Establishment of Malaysian Global Innovation and Creativity Centre (MAGIC)
Last Updated 2015-05-26 12:11:16 by admin2
