With less than 6 months since the Pakatan Harapan coalition won stunningly the 14th general election on May 9th, the new government’s “Budget 2019” presented on Friday was equally stunning. Considering they have only a short time to investigate, discover, expose and recover every penny available after looted by the previous government, they have indeed done a great job, have they not?
Foul-mouthed opposition MP Bung Mokhtar had decided to walk out of the Dewan Rakyat (House of Representatives) in the middle of the tabling of the 2019 Budget, saying that there was nothing new. In fact, he accused the new government of plagiarism (cetak rompak). He pointed at the continuation of financial aid to the poor B40 group (bottom 40% income earners) as proof.
Mr. Bung was referring to the popular Barisan’s 1Malaysia People’s Aid (BR1M) introduced by the previous Najib regime, of course. Mr. Najib’s “Ponzi Scheme“, disguised under 1MDB (1Malaysia Development Berhad), had accumulated debt of more than RM50 billion by 2016 when the scheme was discovered and exposed. Bung had planned to scream, mock, insult and humiliate the new government.
Hence, Bung, like his former boss Najib, had been looking forward to the Budget 2019 with excitement. In fact, all the opposition parties and pro-Najib cybertroopers, propagandists and bloggers were betting that the new government would screw up big time with their maiden annual budget on Friday. Bung Mokhtar’s walk-out of the House proved that the evil plan had failed.
The opposition parties, especially the previous racist and bully party – UMNO – were furious that the new government can “afford” to continue giving away financial aid to the poor B40. They thought they had almost plundered and looted the national coffers to dry. After all, the crooked ex-PM Najib Razak had plunged the country to RM1 trillion of debts.
The expectation wasn’t high from the public that the new government could pull a rabbit out of the hat. They had expected tough time ahead. In fact, they had expected a new wave of new taxes to fix the “mess” left behind by the previous Barisan Nasional corrupt and irresponsible administration. As it turned out, the Budget 2019 isn’t that bad after all.
Refused to be intimidated by huge debts accumulated by Najib regime, Finance Minister Lim Guan Eng had decided to present an offensive, not defensive, budget instead. The Budget 2019 will have a total allocation of RM314.5 billion – the largest ever. Playing psychology game, Mr. Lim had earlier on pre-empted a difficult budget with “no goodies to give out”.
However, the Budget 2019 was prepared to give lots of goodies to the poor people. Clearly the B40 households are the ultimate winner. Minimum wage was raised to RM1,100 while households with monthly income of RM2,000 and below to receive RM1,000 financial assistance – benefitting 4.1 million households, thanks to RM5 allocation in the budget.
Another gift is the healthcare benefit – B40 Health Protection Fund – a national insurance scheme to provide free protection for the bottom 40% of the population against top 4 critical illness. The pilot project will cover up to 14 days of hospitalisation, subject to RM8,000, while the hospitalisation income cover will be at RM50 per day or RM700 per annum.
The tax relief has also been modified to separate the Employees Provident Fund (EPF) and life insurance or takaful. Effectively, the new tax relief will be separated into RM4,000 for EPF and RM3,000 for life insurance or takaful. Previously the tax relief of RM6,000 for the EPF and life insurance or takaful are “combined”.
More importantly, the new government may have found a solution to an old persistent problem – affordable housing. Although the previous government had started the 1Malaysia Peoples’ Housing Scheme (PR1MA), it has been a failure from the start. Overall, PR1MA had awarded more than RM22.4 billion worth of contracts to its business partners – comprising developers, contractors as well as vendors.
Yet, despite Najib’s promise to build hundreds of thousands of the affordable housing for the people – a promise he made every year during his budget presentation in his capacity as finance minister – the fact remains that only 11,944 units of PR1MA homes have been sold by November, 2017, as admitted by former Minister in the Prime Minister’s Department Shahidan Kassim.
Enter FundMyHome scheme, a creative and innovative plan enabling first-time house buyers to pay only 20% of the price of their home, while the balance 80 will be contributed by Maybank and CIMB as participating financial institutions. After a commitment period of 5 years, the buyer can choose to sell the home or buy back the remaining share of the property not owned at market price.
Home owners can also refinance the home either via FundMyHome or a normal bank mortgage. The investors (in this case the banks), on the other hand, will profit from either regular yields, or increases in the property’s value. Amazingly, buyers may monetise their property by renting out their homes or rooms to earn rental income which could help to free up their funds.
Clearly, it’s an awesome scheme between homeowners and the banks based on a 20:80 “partnership”. The homeowners actually have 5 years to decide whether their property is a good buy, and decide to either buy the remaining 80% share or dispose their 20% share in the property. Theoretically, their risk is limited (20%) as majority of the shareholders are the banks.
Because all homes on the scheme are either completed or nearing completion, FundMyHome discourages fly-by-night real estate developers, therefore, ensure peace of mind to homeowners who have been scammed by irresponsible developers. Banks, meanwhile, have to work with reputable developers only to minimise their own risk.
Household electricity subsidy for the Bottom-40 (B40) is also increased from RM20 to RM40. The abolishment of tolls at First and Second Bridge in Penang and the Second Link Expressway in Johor for motorcyclists, from Jan 1, 2019, will also reduce the daily expenses for the group. The other awesome surprise is the introduction of unlimited monthly public transportation pass.
Depending on one’s route of journey, the RM100 monthly pass can save tons of money, not to mention it will encourage more people to use LRT or MRT and reduce the number of cars on the road. Additionally, Kuala Lumpur City Hall (DBKL) will allocate RM20 million to provide more GoKL free bus services in addition to the existing 4 routes – further increases public transport usage.
The most controversial goody is the introduction of petrol subsidy for owners of cars with a capacity of 1,500cc and below and motorcycles 125cc. They will enjoy RON95 petrol subsidies of 30 sen per litre – limited to 100 litres for car owners and 40 litres for motorcycle owners. Essentially, the present fixed-price of RM2.20 per litre would be slashed to RM1.90 per litre for the lucky owners.
About RM2 billion is allocated to benefit around 4 million car owners and 2.6 million motorcycle owners. However, critics have pointed out that not all cars below 1,500cc belong to poor people. Luxury cars such as BMW 3 Series 318i (1.5), Audi A4 1.4 TFSI, Mini Clubman (1.5), Volkswagen Tiguan (1.4) and even the newly facelifted Mercedes-Benz C200 (W205) would theoretically enjoy the fuel subsidies.
Finance Minister Lim Guan Eng has also proposed to make Pangkor Island a duty-free island, something which the previous government could not deliver. All toll hikes in the city will be frozen from 2019, although it would cost the government RM700 million in compensation. One of the biggest casualties of the Budget 2019 is the casino industry.
The license fee for casinos has been increased from RM120 million to RM150 million while the gaming tax on casinos to be raised to 35% of Gross Gaming Revenue (GGR) or casino tax. Annual license fee for dealer machines has been increased from RM10,000 to RM50,000 annually. Tax on gaming machines has been increased from 20% to 30% of gross collection.
To curb speculations, the government has raised the Real Property Gains Tax (RPGT) for locals from 0% to 5%. Exceptions will be made for homes under RM200,000. Property investors are furious for obvious reason. This means they will continue to pay the 5% RPGT even though they, in order to escape the tax, have “preserved beyond the 5 years or more” of their properties.
Other new taxes introduced are the international travel tax and sugar tax – an excise duty of RM0.40 per litre or sugary drinks. But there’re two scariest things revealed in the budget that the previous Barisan Nasional government (now opposition) doesn’t like at all. First, the allocation of RM286.8 million to MACC (from previous RM242.1 million) – an 18.5% increase.
The additional RM44.7 million to the Malaysian Anti-Corruption Commission (MACC) is primarily to hire 100 more employees. But the previous corrupt government has condemned such allocation as additional funds to “catch more people”. Second, Finance Minister Lim also revealed IRB (Internal Revenue Board) will scrutinise and investigate unexplained extraordinary wealth.
Politicians and their family members of the previous corrupt government possessed an extraordinary habit of showing off luxury goods, jewellery, handbags, cars or property. The IRB will be given the license to use all necessary measures permitted by the law to recover such monies, whether in the form of additional taxes, penalties or fines.
Mr. Lim has also unveiled the Special Voluntary Disclosure Program to allow taxpayers to voluntarily declare any unreported income for tax purposes, including offshore accounts. Income declarations which are made after the programme ends on June 30, 2019, would be subject to penalties – ranging between 80% and 300% – in accordance with existing laws.
It will be interesting to watch if wealthy politicians belonging to the previous government would declare their offshore accounts to take advantage of the program. And it is certainly entertaining to watch if crooks like Nazri Aziz’s son Nedim Nazri could explain his fleet of Porsche, Lamborghini and American Hummer 2 SUV.
Of course, former disgraceful Speaker Pandikar Aman Mulia probably needs to explain how he got his Bentley. Let’s hope UMNO warlord Annuar Musa hasn’t sold off his Porsche Panamera out of panic after the Budget 2019. Even the “Holy Man” spiritual leader of PAS, Mr. Hashim Jasin, has in his possession a Porsche Cayman.
The information chief of its Ulama (clerics) wing, Khairuddin Aman Razali, was reportedly bought an Audi Q7, a large sport utility vehicle costing more than RM500,000, for his wife. So, the opposition wasn’t only mad at Mahathir government for revealing a creative and innovative budget, but was also both furious and panicked at the programmes targeting at their ill-gotten wealth.
Source : Finance Twitter