Budget 2022 resonates with priorities outlined in 12MP - Mustapa

He said despite the challenging economic environment with gross domestic product growth (GDP) estimated to grow 3.0-4.0 per cent this year and 5.5-6.5 per cent next year, as well as a fiscal deficit of 6.5 per cent this year, the government managed to announced the highest budget ever.

"From the perspective of the minister responsible for development, the ministry is happy because the allocation for development has been increased by 22 per cent to RM75 billion next year from RM61 billion this year.

"It is also in line with the ministry's priority in the 12MP to allocate 50 per cent of the total basic development expenditure to the six poorest states comprising Sabah, Sarawak, Kelantan Terengganu, Kedah, and Perlis to bridge the gap between less developed and developed states and cities.

"The allocation for the six less developed states accounted for 52.6 per cent. Sabah is allocated RM5.2 billion and Sarawak RM4.4 billion for development," he told a press conference at the Parliament building today after the presentation of the budget.

Mustapa said with the huge allocation, he was confident that with hard work, the gap between the less developed and developed states could be bridged.

On the allocation given to micro, small and medium enterprises (MSMEs), he said in the 12MP, MSMEs were targeted to contribute 45 per cent of the country's GDP and 25 per cent of the country's exports by 2025, which needed to be strengthened

"Hence, the proposed allocation of RM40 billion for 'Semarak Niaga Keluarga Malaysia' is a welcome announcement.

"A total of RM40 billion is allocated for MSMEs of which RM1.8 billion is set aside for micro and informal businesses which will be injected through various methods, including equity injection, as well as allocation through TEKUN, Agrobank, BSN and others," he said.

Mustapa said the government was concerned about the problem of MSMEs which were severely affected by the economic crisis even though there were now signs of recovery as the economy reopened.

"The government, through various engagements, is clear about the problem faced by MSMEs in getting access to financing, and with new methods being planned to expand access to credit we are confident that the recovery that has been seen in MSMEs can be further strengthened," he said.

Mustapa said the budget was the result of a fairly extensive engagement never before known in the history of the country undertaken by Finance Minister by meeting various parties, including Opposition MPs.

On Cukai Kemakmuran (the Prosperity Tax) proposed by Finance Minister, Mustapa said all the government's tax measures were expected to generate a revenue increase of more than RM5 billion.

Even though there is a proposal for the government to impose a Windfall Tax on companies that had made excessive profits during the pandemic, the government is of the view that such move will also affect the country's investment climate.

Hence, Mustapa said the Prosperity Tax, which is a one-off tax, is fairer as it does not cover only certain companies instead all companies with taxable income in excess of RM100 million.

"This contribution is quite large from companies that enjoy taxable income of more than RM100 million.

"This is fairer in that we face the problem of a country that needs financial resources. So, it is meant for companies that are able to contribute and it is only one-off and not continuous, besides it will not affect the investment climate," he added.