PRIME Minister Datuk Seri Anwar Ibrahim announced a budget of RM421 billion - an increase from the RM393.8 billion in Budget 2024, making the 2025 budget the largest of all.
Operational expenditure accounts for RM335 billion, or 79.6%, while RM86 billion is allocated for development expenditure.
Anwar, who is also the Finance Minister, said in August 2024, the inflation rate was only 1.9%, among the lowest in the region, while unemployment also went down to 3.2%, which is the lowest since January 2020.
"Budget 2025 is not just for the government but also for the rakyat and will be guided by the principle of good governance.
"Past transgressions will not repeat itself," he said.
Anwar said the government will exempt essential food items from the Sales and Service Tax (SST), but it will remain for imported food items including salmon and avocados.
He also said the SST's scope will be widened to cover commercial services including fee-based services.
Targeted subsidies for RON95 petrol to be implemented mid-2025
He also said the government will proceed with rationalising the subsidy for RON95 petrol by the middle of 2025.
However, Anwar did not provide details of this plan beyond pledging that this would not affect 85 per cent of Malaysians.
He said the blanket subsidy currently benefits the “ultra-rich and foreigners” and these funds are better channelled for education, healthcare, public transportation, and to help the Orang Asli.
Anwar said the government will continue to bear subsidies of about RM12 billion, covering 85 per cent of the population.
The government also plans to gradually expand the tax base by introducing a 2 per cent tax on dividend income exceeding RM100,000 for individual shareholders, beginning in the 2025 assessment year.
He said this initiative aims to diversify income tax sources, ensuring that revenue is not solely reliant on contributions from wage earners, but also includes earnings from company owners and individuals with substantial shareholdings.
Education subsidies
On education subsidies, Anwar says the government plans to increase fees for children of the top 15 per cent (T15) studying in government boarding schools like science institutes - referring to MRSM - as well as in public higher education institutions.
He says currently, 30 per cent of students in these elite schools and public universities are from higher-income families.
"The savings will be used to improve infrastructure for boarding schools and public universities," he said.
Allocations for the development of Sabah and Sarawak continue to be a priority and are the highest among the states at RM6.7 billion and RM5.9 billion respectively.
Among projects in Sabah and Sarawak highlighted in the budget are RM7.4 billion for four work packages under Phase 2 Sabah-Sarawak Link-Road and RM253 million for expansion of Tawau and Miri airports.
There is also an allocation of RM1 billion for the Sarawak Cancer Centre.
Other highlights of the budget include:
* The Special Grant for Sarawak and Sabah will be doubled to RM600 million.
* Allocation for MACC next year has been increased to RM360 million from RM338 million this year.
* RM60 million for the judiciary to upgrade its infrastructure, including the e-Kehakiman system.
* Halal Development Corporation to merge with Matrade.
* RM20 million to strengthen the National Scam Response Centre.
* RM100 million for services like mobile clinics to cater to rural communities.
* RM150 million to mitigate flash floods.
* RM250 million was allocated for slope repairs nationwide.
* The government allocates RM20 million towards the role of the National Fraud Response Centre to increase its functions and effectiveness.
Anwar also touched on the sinkhole incident at Jalan Masjid India, Kuala Lumpur, which claimed the life of an Indian tourist.
He said the government is addressing the issue of soil erosion and has allocated RM21 million to tackle sinkholes in Kerian Laut, Perak, Kedah, and Perlis, and RM10 million for a geotechnical study on soil structure along main roads, especially in Kuala Lumpur’s golden triangle.
"The government will introduce a multi-level levy mechanism on foreign worker recruitments by early 2025.
"The revenue collected from this levy will be channelled back to the industry to steer business processes towards automation and mechanisation," Anwar said.
He also announced that the government would redistribute part of the proceeds from the sale of special number plates to support those in need.
This includes subsidising motorcycle licences for 15,000 underprivileged youths, providing flight tickets for 60,000 underprivileged university students from Sabah and Sarawak, and distributing helmets for free to 67,000 low-income families.
Other highlights are:
* Visit Malaysia Year 2026 will get close to RM550 million for tourism promotion.
* RM110 million will be provided to enhance tourism areas, foster eco-tourism collaborations, and support Unesco nominations.
* Singles will get RM600 each.
* 4.1 million households will get RM100 in cash aid a month, compared with 700,000 households this year. The cash will be credited into the MyKad of recipients from April 2025, and can only be spent on essential goods.
* RM13 billion for Rahmah cash aid initiatives, compared with RM10 billion this year. This increase will benefit 60% of the adult population.
Anwar also revealed that national carmaker Perodua is on track to release an EV that costs less than RM100,000 next year.
The RM2,400 incentive for electric motorbike purchases will also be extended next year.
Other highlights - Minimum wage increased
* Minimum wage raised from RM1,500 to RM1,700 per month, effective Feb 1, 2025.
The national minimum wage will be increased from RM1,500 to RM1,700 beginning February next year.
The prime minister said the country’s economic reforms could not be considered successful until Malaysians begin enjoying higher incomes.
“Therefore, the government has agreed to increase the minimum wage from RM1,500 to RM1,700, effective Feb 1, 2025,” he said.
* Government to make it mandatory for foreign workers to contribute to EPF. This will be done in stages.
* Tax exemption on foreign-sourced income extended until Dec 31, 2036.
* Individual income tax relief for education and medical insurance premiums raised to RM4,000.
* Enforcement of the new wage will be postponed for employers with fewer than five employees for six months (starting Aug 1, 2025).
* Government allocates RM100 million for maintenance and upgrading of 'warung' and wet markets across the country.
* The government allocates RM130 million to the Indian community to preserve their human capital, and social and community welfare by implementing various programmes including business financing
Excise duty on sugary drinks
Meanwhile, excise duties on sugary drinks will go up gradually, starting with a 40 sen increase on Jan 1 next year.
The additional funds will be used to fund public health, including diabetes treatment centres.
Anwar also announced that RM4 billion will be allocated for scholarships, while tax reliefs for parents contributing to the National Education Savings Scheme (SSPN) will also be extended for another three years.
"The government is allocating RM2 billion for food aid to students in boarding schools, while the Supplementary Food Programme (RMT) will also get RM870 million and will benefit 860,000 students.
"Early Schooling Aid to all students from Standard One to Form Five, regardless of parents, will also continue next year," he said.
On the issue of treatment at the National Heart Institute (IJN), Anwar said civil servants, especially retirees above the age of 65 who are undergoing treatment at the National Heart Institute (IJN), can continue with their treatment.
EPF savings
On EPF savings, Anwar said EPF is looking into methods to transfer savings between next-of-kin.
"All migrant workers are also required to become EPF contributors, while tax reliefs on premiums for private retirement schemes are also being extended to 2030," he added.
First-time house owners
To encourage first-home ownership, tax relief of up to RM7,000 ringgit will be given for homes costing up to RM500,000 while RM5,000 in tax relief for homes costing between RM500,000 to RM750,000. The exemption can be claimed for three consecutive assessment years and applies on the sale and purchase agreement completed between January 1, 2025 to December 31, 2027.
Other highlights include:
* The government plans to provide additional tax deductions of up to 50 per cent for salaries paid for up to 12 months, to employers who re-employ women.
* RM5.8 billion to maintain and repair assets of armed forces.
* RM21.2 billion for the defence ministry, an RM1.4 billion increase.
* RM19.5 billion for the home ministry.
* RM500 special cash aid for civil servants grade 56 and below.
* Aid for army veterans raised from RM300 to RM500.
* Tax relief to treat autistic children will be increased to RM6,000 from RM4,000.
* Anwar confirms that a pilot programme for National Service 3.0 will be implemented, with an RM50 million allocation. - October 18, 2024
