PETALING JAYA - Prime Minister Datuk Seri Najib Tun Razak has announced a revised Budget 2016 to optimise the country's developmental and operational expenditures in the face of slower economic growth.
The revised budget will include precautionary and proactive measures in managing national revenue and expenditures, while ensuring that the well-being of the people remained a priority.
Najib said the recalibration is necessary due to a slump in global oil prices and a slower economic growth in the United States and China.
When Budget 2016 was unveiled in Parliament last October, the crude oil price was at US$48 (RM203) per barrel.
However, the current price per barrel stands at US$30 (RM127), a sharp fall since the Budget was presented.
- The 2016 global economy expected to be more challenging and economic groweth expected to fall from 3.6 per cent to 3.4 per cent.
- Malaysia not alone in facing global economic challenges. Current crude oil price stands at US$31 (RM131) per barrel.
- Latest developments indicate that the global economy is at a very volatile stage and requires a proactive move to revise Budget 2016.
- We are not in a recession, neither are we in a technical recession.
- Eleven recalibrated measures announced.
- 1. EPF contributions by employees to be reduced by 3 per cent. This is expected to increase private sector spending by RM8bil.
- 2. Tax relief of up to RM2,000 to those with income RM8,000 a month or lower. Two million taxpayers to benefit.
- 3. To reduce cost of living, Govt to liberalise APs for agricultural products including coffee beans and meats.
- 4. Domestic Trade, Cooperatives and Consumerism Ministry ordered to increase enforcement and action against unethical traders.
- 5. 30 per cent of contributions to the human resource development fund to be utilised for skills training, including those who are unemployed.
- 6. MyBeras programme to be introduced until Dec 2016. Each hardcore poor family will be given 20kg of rice every month.
- 7. The Government will update the management system of foreign workers, with levies clustered into two categories, not including foreign maids.
- 8. Government will exercise prudent spending on supplies and services and to continue with grant rationalisation.
- 9. Development budget to focus on projects and programmes that place the people first, have high multiplier effect and reduce imports.
- 10. Development financial institutions and Government venture capital funds to increase allocations by RM6bil for benefit of start-ups and SMEs.
- 11. GLCs urged to implement initiatives to reduce the income gap between senior management and workers, to be monitored by the Economic Planning Unit.
Najib said Thursday's recalibrated budget was based on the approach of "shared responsibility" by certain segments of society.
He said lower-income groups will not be affected, and continue to benefit from measures such as the 1Malaysia People's Aid (BR1M).
"The present rate of the Goods and Services Tax (GST) will also be retained at 6 per cent. The Government has no plans to increase this," said Najib at the Putrajaya International Convention Centre (PICC).
He also said that Malaysia would not resort to imposing capital controls and pegging the Ringgit, such as was done during the 1997-1998 financial crisis.
"The Government remains committed to maintaining the fiscal consolidation measures for 2016, which is to achieve a GDP target of 3.1 per cent.
"Our country's debt will be reduced and will not exceed 55 per cent of the GDP. The Government also has no plans to impose capital controls and peg the Ringgit," he said.
Najib also made mention of the Trans-Pacific Partnership Agreement (TPPA), which had been debated at a special Parliamentary sitting on Tuesday and Wednesday.
He provided assurances that with the signing of the free trade agreement, there would be no compromise on the country's sovereignty.
"The Bumiputera agenda remains intact. In fact, it is no longer a national agenda. With the TPPA, it has reached a global scale," he added.