Hornbill Unleashed

October 20, 2016

What to watch for – Malaysia’s 2017 budget

Filed under: Politics — Hornbill Unleashed @ 9:02 PM

Malaysia’s Prime Minister Najib Razak presents the government’s 2017 budget on October 21. Below are some items that could feature in the coming year’s budget, according to analysts’ research notes and Malaysian media reports.

RHB foresees a RM100 hike in cash handouts (BR1M) for low-income households, bumping up the allocation to about 6.6 billion ringgit next year in a bid to stimulate consumer spending. For 2016, it was increased by RM500 to RM1,000 per household.


The government will likely maintain the goods and services tax introduced in April 2015, at 6 percent to avoid any disruption to household expenses and cost of doing business, says asset management firm Affin Hwang.

Corporate tax

Affin Hwang thinks a 1 percentage point cut to corporate tax, effective in 2018, will be announced. The rate was cut by 1 percentage point this year to 24 percent.

Personal income tax

There will likely be no cut to personal income tax rates, though there may be more provisions for tax relief next year, according to Maybank Investment Bank.

BIMB Securities said the government may increase tax income relief for “lower middle income” individuals. It says the size of the tax deductions they can claim for themselves and for children below aged 18 may be increased to RM2,500 from RM2,000. Relief for a taxpayer whose spouse has no income may be increased to RM4,500 from RM4,000, BIMB said.


Prime Minister Najib Razak has said the 2017 budget will also focus on industries reeling from the sluggish global economy.

Infrastructure projects

Budget 2017 will likely firm up details of major infrastructure projects that have yet to take off to maintain momentum in the sector to support growth, says Maybank IB. These would include highway and public transport projects in the peninsula and Sabah, and a timeline for the implementation of the Kuala Lumpur-Singapore High Speed Rail project.

Subsidy cuts

Further cuts may be made to subsidies for daily necessities such as flour, cooking oil and cooking gas, according to RHB, though these will likely be at a gradual and moderate pace.

First-time housebuyers

First-time housebuyers may have more funds to use for downpayments on properties through the Employees Providence Fund (EPF), says Affin Hwang. Second Finance Minister Johari Abdul Ghani said the government is studying a proposal to increase the allocation for funds available for low-cost housing purchases under the EPF to 40 percent from 30 percent of a savings account.

RHB expects the First House Deposit Financing scheme to be extended to more buyers. It was introduced this year with an allocation of 200 million ringgit, aimed at helping up to 30,000 first-time house buyers with downpayments.

BIMB Securities expects the government to relax loan assessment methods to boost home ownership.

Support for small business

A cabinet minister has said there might be more incentives for small and medium enterprises (SMEs). He said SMEs contributed 35.9 percent to GDP in 2015, and account for over 98 percent of all businesses nationwide.

Car excise duty cuts

Chinese newspaper Sin Chew Daily said the government is mulling an exemption for first-time car buyers from excise duties for local and imported small car models assembled in Malaysia, with projected savings of up to RM2,000.

Source : Reuters@FMT Reporters Online


1 Comment »

  1. “Urging Malaysians to be more prudent in managing their household expenses, Prime Minister Najib Abdul Razak suggested a gastronomic change.”

    Holy cow! Previously Najib asked us to take cheap ‘kangkong’, until both the legs swells. Now MO1 asked us to spend less on food so that he and Mama Rosie can continue merry making and fly private! Najib and Rosmah should take their own advise and cut down on their extravagant jet-set lifestyle, luxurious holidays and shopping, anti-aging hormonal treatment, wagyu beef diet, designer jewellery and handbags, etc. After all, it is rakyat’s money. Najib shd advise his Rosmah to be prudent & buy locally made handbag.

    Comment by Zuan — October 21, 2016 @ 5:26 PM | Reply

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