Budget 2024: Strengthen national economy, accelerate business sector

KUALA LUMPUR: Based on the framework of the Madani Economy, the unity government has provided RM393.8 billion for Budget 2024 in an effort to strengthen the national economy, accelerate the business sector and at the same time achieve a balance of fiscal support and prudent spending despite the current global challenges.

With the expectation of higher government revenue than last year following more tax collection, the government once again presented an expansionary budget to pave the way for nation-building as it seeks to catapult Malaysia to be among the world's top 30 economies.

When presenting Budget 2024 today, Prime Minister Datuk Seri Anwar Ibrahim said the government allocated RM393.8 billion, or 19.9 percent of the gross domestic product (GDP), with three ministries - Finance, Education and Health being the main recipients.

"So Budget 2024 which I expressed as the Second Madani Budget conveys the determination and seriousness of the Unity Government to raise the economic level of the country and the people," he said.

With the theme of "Economic Reformation, People Empowerment", this is the second budget presented by Anwar, who is also the finance minister since the formation of the unity government in November 2022. Last February, Anwar presented a revised budget amounting to RM388.1 billion.

Meanwhile, of the RM393.8 billion allocated in the budget this time, he said as much as RM303.8 billion, or 77.1 percent will be channelled to operating expenditure (OE) while the remaining RM90 billion will be allocated to development expenditure (DE) with RM2 billion in contingency savings.

Anwar said Budget 2024 is divided into three main focuses, namely Best Governance for Service Agility, Restructuring the Economy to Accelerate Growth and Improve People's Living Standards.

He said the subsidy increase in 2023 was enabled through savings and increasing revenue. For 2023, the revised revenue estimate is RM303.2 billion instead of RM291.5 billion.

The total deficit is projected to be 5 percent to GDP as forecast.

"For next year the government expects GDP growth of between 4 and 5 per cent and with the Madani Economy reforms to be implemented, the government is confident of achieving growth close to 5 percent," he said.

According to Anwar, government revenue collection in 2024 is expected to see an increase from RM303.2 billion this year to RM307.6 billion while the fiscal deficit in 2024 is projected to decrease to 4.3 percent compared to the target of 5 percent this year and 5.6 percent in 2022.

He added that in the medium term, Malaysia will achieve a fiscal deficit of 3 percent or lower to GDP as the benchmark set in the Madani Economy framework.

Regarding taxes, Anwar said the tax revenue collected by the government is one of the lowest in Asean, that is only 11.8 percent to GDP compared to Singapore (12.6 per cent) and Thailand (16.4 per cent).

Accordingly, he said, starting next year, several taxation reform measures will be implemented to expand the national revenue base, while at the same time not burden the majority of the people.

"The government plans to increase the service tax rate to 8 per cent instead of 6 per cent. The government will also enforce the implementation of capital gains tax (CGT) for the disposal of unlisted shares by local companies based on net profit at a rate of 10 percent from March 1, 2024.

"The government is also considering the exemption of CGT on the disposal of shares related to certain activities such as approved initial public offerings, internal structuring and venture capital companies subject to set conditions," he said.

Next, he said, the government will also enact new legislation to implement the High Value Goods Tax at a rate of 5-10 percent on certain high value items such as jewelry and watches based on the threshold value of the goods.