KUALA LUMPUR, Oct 15 (Reuters) - Malaysian Prime Minister Najib Razak unveiled the country’s 2011 budget on Friday. Following are highlights of key budget measures and statements. ************************************************************
“The Government will not take the easy way out or sacrifice the nation’s long-term interests for short-term popularity. Rest assured, we will not leave a country laden with problems to the future generations.”
This Budget has taken into account the needs of the people. This Budget is possible due to the efficient and prudent financial management thus far.”
“Bursa Malaysia will launch sukuk and conventional bonds to meet retail investors demand for fixed income instruments in order to boost the bond market.”
“To further promote innovation in Islamic securities products, the Government proposes that expenses for the issuance of Islamic securities which adopt the principles of Murabahah and Bai Bithaman Ajil based on tawarru be given tax deduction.
This will strengthen Malaysia’s position as the leading sukuk market and promote transactions in Bursa Suq al-Sila, the worlds first syariah-compliant commodity trading platform. The Government proposes that takaful contributions for export credit be given double tax deduction.”
“The Securities Commission (SC) will offer three new stock broking licences to eligible local, foreign or joint venture companies to increase retail market participation.”
“The Government is very concerned with the rising transport cost borne by the rakyat. To alleviate the burden of highway users, I am pleased to inform that the toll rates in four highways owned by PLUS Expressway Berhad PLUE.KL will not be raised for the next five years, effective immediately.”
“To standardise the prices across areas, the Government introduced the Distribution of Essential Goods Programme for goods such as rice, cooking oil, sugar, flour, gas, petrol and diesel in 2010 with an allocation of RM100 million. For 2011, a sum of RM200 million is allocated for the programme.”
“In efforts to transform the country towards a developed nation, the Government will not neglect the rural population. Development projects and programmes to improve the quality of life of the rural population will be given priority.
A sum of RM6.9 billion is allocated to implement basic infrastructure such as water and electricity supply as well as rural roads.
Implement the housing assistance programme to provide comfortable houses for the poor and hardcore poor in rural areas with an allocation of RM300 million. This programme will involve the construction and repair of 12,000 houses nationwide, particularly in Sabah and Sarawak.
“Favourable housing loans at a 4 percent interest rate for a maximum of RM60,000 for low cost houses, government guaranteed down payments of 10 percent for houses below RM220,000 for first time buyers earning less that RM3000 a month, and 50 percent stamp duty exemption for first-time house buyers of houses not exceeding RM350,000. “
“The Government proposes that the rate of service tax be increased from 5 to 6 percent. The Government is confident that this measure will not unduly burden the rakyat as the increase in the tax rate is minimal. Moreover, the services tax is not imposed on all services.”
“Enhance productivity by encouraging replanting activity to replace aged trees with high quality new clones, through a fund of RM297 million.
“A sum of RM127 million is allocated to support domestic oleo derivatives companies as well as a sum of RM23.3 million to expand downstream palm oil industries including production of vitamins.”
OIL & GAS
“The Government will allocate RM146 million to support the sector. Among the projects to be implemented include the establishment of the Oil Field Services and Equipment Centre in Johor with private investment of RM6 billion over a period of 10 years.
To meet the increase in gas demand by industries, Petronas will implement a regasification project with an investment of RM3 billion in Melaka, which will be operational in 2012.”
GLICs will be allowed to increase investment in overseas markets to explore opportunities for better returns. For example, the Employees Provident Funds (EPF) investment overseas is currently at 7 percent and will be raised up to 20 percent of the total assets managed.
* Income per capita will increase 6.1 percent to 28,000 ringgit while incomes in terms of purchasing power parity to $16,000. These estimates are based on moderate inflation of 2 percent to 3 percent and low unemployment rate of 3.5 percent.
* Government to launch private pension fund by 2011.
To shift away from the Governments significant role in driving economic growth since the financial crisis in 1997/98, the 2011 budget includes a number of important initiatives designed to spur private sector investment, estimated to expand in 2011 by 12.5 percent to RM86 billion. Some projects include:
* The Kuala Lumpur International Financial District (KLIFD) commencing in 2011, in collaboration with Mubadala Development Company, of the Government of Abu Dhabi, at a value of RM26 billion.
* The Mass Rapid Transit (MRT) in Greater KL, beginning in 2011 with expected private investments of RM40 billion, to be completed by 2020.
* The Warisan Merdeka, an integrated development project comprising a 100-story tower, the tallest in Malaysia, to be completed by 2020 at a value of RM5 billion.
($1=3.082 Malaysian Ringgit)
Reporting by Royce Cheah, Razak Ahmad and Fong Min Hun; Editing by Niluksi Koswanage and Liau Y-Sing