Photo - Dato' Yasmin Mahmood, CEO, MDeC, helps kickstart industry commentary on Budget 2016.
Though the local ICT industry has generally welcomed much of Prime Minister Dato' Sri Mohd Najib Abdul Razak's Budget 2016, tabled Friday 23 October 2015, some commenters are raising concerns whether enough has been done to achieve high-income developed nation status by the year 2020.
Themed 'Prospering the Rakyat (people)', Najib, who is also the finance minister, outlined steps to offset challenges behind the country's increasing budget deficit and higher cost of living driven by factors including falling commodity prices and a weakened ringgit.
His speech to parliament included a total 2016 Budget allocation of RM267.2 (US$62.83) billion, an increase from a revised allocation of RM260.7 (US$6.30) billion for 2015. The initial allocation for 2015 was RM273.9 (US$64.40) billion.
In addition, Najib said GDP (gross domestic product) was expected to grow between 4.5 and 5.5 percent while economic analyst Dr Muhammad Abdul Khalid was reported in local media that the Performance Management Delivery Unit (Pemandu) said GDP needed to grow by 6 percent each year for Malaysia to achieve high-income developed nation status by the year 2020.
The government's economic report also released on the day noted that "plunging crude oil prices and unspecified domestic factors in justifying the sharper declines experienced by the ringgit relative to its peers.
From January to September 2015, the ringgit depreciated against the US dollar by 21.4 percent, the Japanese yen (by 21.1 percent), the pound sterling (by 19.3 percent) and the euro (by 15.1 percent). The ringgit also softened between 7.3 percent and 19.4 percent against other regional currencies, said the report.
Other key Budget 2016 proposals include:
- The recently implemented Goods and services tax (GST) is expected to increase government revenue by RM39 (US$9.17) billion, compared with RM27 (US$6.35) billion in the first eight months of 2015. Some basic goods will now be zero-rated, including over-the-counter drugs, baby milk, nuts-based food, noodles.
- For 2016, federal government revenue collection is projected at RM225.7 (US$53.07) billion, up RM3.2 billion (US$750 million) from 2015.
- Income tax increased from 25 percent to 26 percent for people earning between RM600,000 and RM1 million. Increased to 28 percent for those earning above RM1 million (US$240,000).
- Prepaid phone users will get GST rebate, which will be credited to their accounts. From Jan 1 next year.
- RM13.1 (US$3.79) billion is earmarked for education and training, health, housing and the well-being of the people.
- Develop Malaysian Vision Valley, 108,000 hectares from Nilai to Port Dickson, with forecast investments starting with RM5 billion (US$.18 million) in 2016.
- Execute Cyber City Centre in Cyberjaya with development valued at nearly RM11 (US$2.59) billion over a five-year period
- RM730 (US$54.08) million for the development of chemical industry, electronic and electrical machinery, aviation, medical equipment and services.
- Malaysia has agreed to the Trans-Pacific Partnership Agreement (TPPA) in principle, while it has inked 13 Free Trade Agreements (FTA).