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Last Friday (Oct 11) the new Pakatan Government announced its much-anticipated Budget 2020, a budget much hoped to be better thought out than its first due to time constraints from the new government.
This year, Prime Minister Tun Dr Mahathir Mohamad has said that many would be happy with the latest Budget, as almost everybody got something from this Budget.
But is that true?
According to Chinese daily Sinchew Daily’s survey, 1666 people are neutral on the Budget announcement.
595 people aren’t happy with the Budget 2020 announcement, 419 people are very happy, 129 people are satisfied with it while 79 people are very disappointed with the Budget.
That said, some of you will not be disappointed as there are a lot of incentives will affect you financially.
Let’s take a look at a few things that will affect you in 2020.
1. No GST but Digital Service Tax is coming soon.
I have good news and bad news. Which do you want first?
The good news is, the government does not plan to reintroduce the Goods and Services Tax. Before the announcement, some organisations such as The Malaysian Institute of Economic Research (MIER) had urged the government to reintroduce the GST.
Finance Minister Lim Guan Eng said, “we do not plan to reintroduce the GST even if trade tension persists.”
Here’s the bad news. The Digital Service Tax will come into effect starting 1 January 2020!
Nothing new about this, as the announcement was made in the previous Budget announcement. But if you are a subscriber of streaming services like Spotify and Netflix, be prepared to pay more for all your digital services.
Other services affected include digital software and games distribution companies such as Steam, as well as digital advertising offered by Google.
2. Thank Pakatan, we will pay less to travel in town.
Have you counted your transportation costs going to and from work?
If you are living in the Klang Valley region and travel daily to work, your monthly toll costs would more than likely exceed RM100. (If your costs do not exceed RM100, you’re one lucky person! My toll cost alone exceeded RM150. Thank goodness for the LRT)
Fret not now. Come 2020, you will be able to save more as the government is committed to enhancing the mobility of Malaysians by reducing transport costs.
Firstly, the government is granting an 18% discount on the toll rates on all highways owned by PLUS Malaysia Bhd.
Secondly, the government will take over four highways in the Klang Valley – Kesas, LDP, Sprint and Smart – tolls rates be 30% less during near-peak hours and free during off-peak hours.
Side thought, when I saw that announcement, the first thing that came to mind was to work overtime to skip the peak hours. I’ll get OT salary and my boss will be happy seeing me work harder. heheheh…
Thirdly, the government will also abolish toll for motorcycles using the first and second Penang bridges. The Sultan Abdul Halim Muadzam Shah Bridge, or colloquially known as the second Penang Bridge, will have its toll rate for cars reduced by RM1.50 to RM7.50.
Other than decreasing tolls rates, the government also will allocate petrol subsidy of RM30 per month for car owners and RM12 per month for motorcycle owners. However, this is only for eligible recipients of Bantuan Sara Hidup (BSH). Individuals who own more than two cars and two motorcycles are only eligible to receive the subsidy for one vehicle.
3. Budget for WOMEN – a lot of incentives coming soon.
As a woman, I would like to thank the government for placing a lot of thought and consideration into their proposals for women.
In recent years, the world has been promoting greater gender diversity in the workforce. The McKinsey Global Institute report 2016 estimates that improved gender diversity can add $12 trillion to the world GDP by 2025.
Not surprisingly, the participation rate of female labour force in Malaysia is still far lower than the government target of 60%, which continues to stagnate at around 55%.
A recent World Bank study concluded that if all barriers against Malaysian women are removed and women’s participation in our economy is increased, then the country’s income per capita could grow by 26%.
In order to increase the participation rate, the government has decided to give a RM500 monthly incentive for two years for women aged 30 to 50 who return to work after having stopped working for a year or more, a RM300 hiring incentive each month for two years for employers and extended income tax exemptions for women returning to work until 2023.
Another good news for women is that maternity leave will increase from 60 days to 90 days for the private sector. But take note that it will be effective from 2021. So if you have plans for children in 2021, you will be able to enjoy 3 months of maternity leave!
Thirdly, the government is looking to also encourage “women entrepreneurship”. Today, more than ever before, women are fleeing the workforce to become entrepreneurs. Women are starting businesses in the beauty business, healthcare, online retail and sales sectors.
I think it’s a great thing that the government has allocated funds and incentives for women entrepreneurs such as RM500million in government guarantee facility, RM200million funds from SME Bank to help them out.
By the way, the government didn’t forget the housewives. They can now opt-in for EPF contributions under the i-Suri initiative. In 2020, the i-Suri programme will be expanded whereby husbands can voluntarily elect to contribute 2% from his 11% EPF employee contribution to his wife’s EPF account.
4. Haven’t begun using e-wallets? It’s time now.
E-wallets have been mushrooming in Malaysia over the last couple of years and with over 40 e-wallet licenses issued by Bank Negara Malaysia thus far, it doesn’t look like they’re set to slow down any time soon.
Having said that, the overall adoption of e-wallets remains low at only 8%, based on a survey report by Nielsen in January this year.
To significantly increase the number of Malaysians to using e-wallets, the government will offer a one-time RM30 digital stimulus to qualified Malaysians aged 18 and above with an annual income of less than RM100,000. All you need is to own an identity-verified e-wallet account with selected service providers.
With this stimulus, we can expect more people using e-wallets in 2020.
You can also read: Top 5 Digital Wallets In Malaysia
5. Government helping you buy your first home.
Buying a home takes years of planning and also, years of commitment. Frankly speaking, many Malaysians can’t afford a home in the city.
According to Bank Negara Malaysia, those earning an average Malaysian income can only afford to buy homes that are around RM300,000. If we follow this guideline, most Malaysians should not and cannot afford to buy homes.
That’s why the government will collaborate with financial institutions in introducing the Rent To Own (RTO) financing scheme. It aims to assist those who are unable to pay a 10% deposit and to secure access to home purchasing financing.
For your information, the RTO scheme is open to the purchase of a first home worth up to RM500,000. Under this programme, the applicant will rent a house for a period of up to 5 years. Then, after the first year, he/she will be given the option to purchase the relevant residential house at a fixed price when the rental agreement is signed. On top of this, the government will provide stamp duty exemptions as well.
Aside from RTO scheme, the government will also extend the youth housing scheme conducted by Bank Simpanan Nasional from 1 January 2020 until 31 December 2021.
The scheme also offers a 10% loan guarantee through Cagamas to enable the borrower to obtain full financing and assistance of a monthly instalment of RM200 per month for the first two years, limited to 10,000 units of houses.
Click here to watch: 2 Secrets You Must Know When Viewing A Property.
6. Unemployed graduates will get an incentive for securing a job.
There were more than half a million unemployed Malaysians in 2018, of which roughly 140,000 are graduates. Additionally, of those unemployed, about 290,000 of them were youths up to 24 years old.
Recognising this challenge, the government has launched the [email protected] initiative in the Budget 2020. Unemployed graduates of more than 12 months will receive a wage incentive of RM500 per month when they secure work for a duration of 2 years while their employers also will receive a hiring incentive up to RM300 per month for each new hire for 2 years.
However, the market has mixed reactions for this initiative as some think that employment mismatch is a key issue for fresh graduates are unemployed in Malaysia. It’s more important to address the challenge by developing a better and effective education system.
7. Newlywed and parents will save more money.
One of the biggest surprises in Budget 2020 is the ability for couples to withdraw money from their Employees Provident Fund (EPF) to fund the procedure of in-vitro fertilisation (IVF).
Today, the fertility rate in Malaysia has fallen alarmingly from 4.9 children per woman in the 1970s to 1.9 children per woman, which is below replacement level.
With this new initiative, it will help couples lower the cost of fertility treatment.
Another pleasant surprise in the Budget 2020 is the announcement of an initial allocation of RM60 million to provide compulsory pneumococcal vaccination for all children under the age of two years old beginning next year. This vaccination can help young parents save over RM1,000!
According to the Health Ministry, pneumococcal diseases are one of the most widespread vaccine-preventable diseases in Malaysia.
Currently, families who can afford it at private clinics or hospitals pay RM300 for each jab and over RM1,000 for the full course, he said on Saturday (Oct 12).
8. You can withdraw EPF to get a professional certification.
Want to study and get a professional certification, but don’t have enough money to do that? This new initiative will able to help you.
In line with the country’s aspirations towards the Fourth Industrial Revolution (IR4.0), the Employees Provident Fund (EPF) will allow education withdrawals for professional certificate programmes under Budget 2020. This is an effort to promote adult learning.
Additionally, EPF is looking to expand this withdrawal to include members’ parents and spouse.
The latest Budget may not be as exciting as last year. It could be because of the allocation for Budget 2020 (RM297 billion) is lesser than Budget 2019 (RM314.5 billion), but they are trying to take care of everyone, especially the underserved.
Rather, an analysis by news portal MalaysiaKini states that it “just seems so because Budget 2019 was extra-high due to a one-off allocation made to fund GST and other tax refunds.” Also, this was mostly funded by an RM30 billion one-off special dividend payout from Petronas.
So, were you satisfied with the announcement? What do you think of it?
Share your comments with us. 🙂