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Tuesday, October 27, 2009

What does the 1Malaysia 2010 Budget has in store for you? - Part 1



The Malaysia Prime Minister Datuk Seri Najib Tun Razak has tabled the 2010 Budget last Friday evening with the theme "1Malaysia, Together We Prosper" totalling about RM191.5B. The summary of the 2010 1Malaysia Budget is here. So, what does it really have in store for most us?

From the summary of the 2010 Malaysia Budget, it looks like there are few points for us, me at least.


  • To ensure that fuel subsidies only benefit targeted groups, Govt will implement a fuel subsidy management system in early 2010, which will utilise the MyKad.

I'm not sure how the government going to implement this, but if government is to implement this, why not give the allocated budget for fuel subsidy to everyone fair and square. If they plan to allocate RM1B for the fuel subsidy, might as well, divide the RM1B to the number of citizens in Malaysia so that everyone is getting the same amount fair and square.

By implementing the fuel subsidy using MyKad, the poor will be badly affected. With this implementation, public transportation fees might increase, the same goes to food price and many other things will have increase in the price as businessmen will take the opportunity to increase the price according to the un-subsidized fuel price. So, what the poor in Malaysia can do? They are not getting anything from the subsidy since most of them will not be driving or at least not enjoying the benefit of subsidy. Why can't our government implement something similar to Brunei?

Giving the subsidy money to the people is always better, because the poor can enjoy the subsidy. The money can be use to ease their burden, but our Government choose to use subsidy program, thus helping the rich to pay less for fuel, while at the same time increasing the inflation rate in Malaysia. Is this "1Malaysia, Together We Prosper"?

More like another rich man budget to me. What is your comment on the fuel subsidy?



There are other "goodies" from the 2010 Malaysia Budget for poor citizen like me which I will discuss it in my next post. Below are the other "goodies" which the Malaysia PM has in store for the "rakyat".
  • The maximum income tax rate for individuals to be reduced to 26% from assessment year 2010. Personal relief increased to RM9,000.
  • Personal relief for EPF and life insurance schemes to be increased to RM7,000.
  • Taxpayers will get tax relief on broadband subscription fee of up to RM500 from 2010 to 2012.
  • To promote prudent spending, a service charge of RM50 a year to be imposed on each principal credit card and charge card; and RM25 a year on each supplementary card, effective from Jan 1, 2010.

Friday, October 23, 2009

Malaysia Budget 2010: 1Malaysia, Together We Prosper

Below are the summary in the Budget 2010 which was tabled by the Malaysia Prime Minister, Datuk Seri Mohd Najib Tun Razak:-

* Government to make it easier for skilled/qualified people to get permanent residence status. Visa to be granted for family within 14 days.

* CSR Fund of RM100mil to be set to carry out social programmes.

* Tax breaks for registration of patents and copyrights.

* Big scale factory outlets to be set up to boost tourism besides having major events like KL Grand Prix Fest, National Water Festival, Malaysia International Golf Exhibition and Rain Forest Eco-Challenges

* Taxpayers will get tax relief on broadband subscription fee of up to RM500 from 2010 to 2012. Civil servants can apply for computer loans up to a maximum of RM5,000 from the govt once in every 5 years.

* RM6bil for agriculture sector for paddy fields irrigation, fish production, fruit farming, livestock farming infrastructure, training

* RM2bil subsidy for farmers and fishermen including subsidies for fertilisers, incentives for padi yields and allowances for fishermen

* RM9bil to finance infrastructure projects including road and bridges projects and rail, sea ports and airports facilities

* RM1.5bil fund to promote green technology by providing soft loans to companies that supply and use green technology

* RM200mil Creative Industry Fund to finance film, drama, music productions, animation, advertisements through Bank Simpanan Nasional

* In a bid to develop high quality human quality, RM30bil will be allocated to enhance primary and secondary education nationwide

* Rewards for students who excel in studies:

- 30 National Scholarships to the creme de la creme of students stictly based on merit

- Convert PTPTN loans to scholarships for students who graduate with 1st class honours degree, beginning from 2010,

- Offer a netbook package, including free broadband service, to university students for RM50 per month for 2 years.

* The Permata programme that emphasises early childcare and education, including the gifted child programme, will get RM100mil

* Insurance industry to be improved to meet market demand.

* Govt to clamp down on the abuses committed by Ah Longs by enforcing Anti-Money Laundering and Anti Terrorism Financing Act 2001. Moneylenders Act 1951 to be also reviewed.

* Allow 100% foreign equity participation in corporate finance and financial planning companies compared with the present requirement of at least 30% local shareholding.

* To ensure rapid development of financial services, the existing tax incentives to be extended to 2015.

* Among steps to combat corruption is to set up 14 Special Corruption Sessions Courts and 4 Special Corruption Appeal High Courts.

* Tax of 5% to be imposed on gains from the disposal of real property from Jan 1, 2010. Existing tax exemption will be retained for gifts between parent-child, husband-wife, grandparent-grandchild.

* To promote prudent spending, a service charge of RM50 a year to be imposed on each principal credit card and charge card; and RM25 a year on each supplementary card, effective from Jan 1, 2010.

* To ensure that fuel subsidies only benefit targeted groups, Govt will implement a fuel subsidy management system in early 2010, which will utilise the MyKad.

* All Ministries and govt departments are required to provide day care and education centres for children of civil servants.

* The maximum income tax rate for individuals to be reduced to 26% from assessment year 2010. Personal relief increased to RM9,000.

* Police force to get RM1bil to improve its services in govt's efforts to reduce crime. Major measures include to increase police presence, including mobile police stations in 50 crime hotspots.

* To promote house ownership, Govt will launch a scheme that enables EPF contributors to utilise current and future savings in Account 2.

* Employees' EPF contribution to be increased to 11% again, on a voluntary basis, effective immediately. However, from Jan 1, 2011 employees' EPF contribution will revert to 11%.

* Personal relief for EPF and life insurance schemes to be increased to RM7,000.

Tuesday, October 20, 2009

Turmoil in the financial world is finally settling albeit slowly

Is the financial world finally recuperating? Although there are statistics and incidents in shreds and patches that indicate that the financial world is settling down but a particular change has to last for a considerable time period before it establishes itself as a trend. What gave rise to the turmoil in the financial markets? The factors that are responsible for creating upheavals in the economy didn’t impact the economy in one day; it started seeping into the economy few years ago. Since the economy wasn’t strong enough to withstand the turmoil, it gave in. However, the economy was seemingly healthy. But this wasn’t the true picture.

It started with subprime lending activities that assumed an uncontrollable proportion due to manipulation and irregularities. Mortgage brokers and lenders had scrupulously inflated income levels and manipulated appraisals. They approved mortgage loans of borrowers that were not eligible to get a mortgage.

As more and more borrowers started defaulting on their mortgages, the number of foreclosures increased and so did bankruptcies. There was a credit crunch and consumers received a bolt from the blue with the turn of the economy. The recession affected consumer spending, investor sentiment etc.

As credit crunch assumed a horrendous proportion, it became difficult for consumers to make ends meet. Business houses closed down or declared bankruptcy. Employers went on a cost cutting spree and nothing seemed to be working well for the economy. Credit card issuers altered their payment policies and reduced credit limits. But the same was not communicated to the consumers. So, the credit cardholders started defaulting on their credit card payments too. All this added to the increase in delinquencies (mortgage as well as credit cards).

The financial world as a whole was affected. The financial stalemate that started in United States sent ripples to all the major economies of the world. It affected all the sectors of the economy since it affected all the macroeconomic indicators drastically.

However, the economy is slowly looking up and according to experts, it will take another year or 2 for the economy to recover if not completely at least partially.