CONTENT ( MALAYSIA BUDGET TO FACE THE CHALLENGE OF COVID 19)

 

ANOTHER BUDGET WITH LARGE ALLOCATION EXPECTED TO HELP MALAYSIA FACE THE CHALLENGE OF COVID-19 IN 2022

Minister of Finance statement that confident to prepare well budget to nation

While Malaysia is in the final stages of its 6R strategy (assertiveness, resilience, regeneration, recovery, empowerment and restructuring) to emerge from the COVID-19 pandemic and move into the endemic phase, all eyes will be on Budget 2022 and the benefits it offers. The government is expected to continue to focus on measures to protect lives and restore well-being, rebuild businesses and catalyse post-pandemic reforms.

As the first budget under the government of Prime Minister Datuk Seri Ismail Sabri Yaakob and the first since the launch of the 12th Malaysia Plan (12MP), Budget 2022 is expected to continue to feature expansion and be a catalyst for the implementation of the 12MP that will drive economic growth, inclusion and sustainability in medium term, based on the Sustainable Development Goals (SDGs) and the Vision for Shared Prosperity 2030 (WKB 2030).

According to the first Pre-Budget Statement issued by the Ministry of Finance (MoF) in August, the government will ensure the budget is comprehensive and inclusive, in line with the spirit of "Keluarga Malaysia", with no individuals or businesses left behind in receiving government assistance and support, especially those. which was severely affected by the prolonged Movement Control Order (PKP) in 2021.

The 2022 Budget, tabled in Parliament on Oct 29, 2021, will also ensure the continuity of the National Recovery Plan (VAT) in driving economic recovery, according to the MoF. To help the country recover from the health and economic crisis, analysts expect another budget with a large allocation this time, compared to RM322.5 billion announced in the previous budget (which was later revised to RM314.8 billion).

The healthcare sector is seen as the biggest beneficiary despite the Federal government debt rising to 61.2 per cent of Gross Domestic Product (GDP), with a statutory debt level of 56.8 per cent as of June 2021. The 2021 Budget was the largest in Malaysian history when it was announced last year.According to UOB Bank Economists Julia Goh and Loke Siew Ting, total government spending is projected to increase 2.9 per cent to RM338 billion in 2022, making it larger than the previous budget. The government is also expected to continue to assist the sectors worst affected by the pandemic such as tourism, retail and micro, small and medium enterprises (SMEs).

“This will be partially offset by an estimated revenue collection of RM230 billion, resulting in a fiscal shortfall of RM107.3 billion in 2022. The budget gap is equivalent to 6.5 per cent of GDP next year, smaller than the estimated seven per cent of GDP this year information in the note Continuous measures to upgrade the skills and retrain of workers can also be seen in addition to protecting and creating new employment opportunities for the people.

"Perhaps this budget announcement will provide more clarity on how the government plans to reduce the budget gap, based on the 12MP has shown a fiscal shortfall of 3.0 to 3.5 per cent of GDP by 2025, compared to the 2022 estimate of 6.5 to 7.0 per cent," said the Bank's chief economist. Islam, Mohd Afzanizam Abdul Rashid.

In terms of tax revenue, despite requests for the government to study to implement the extraordinary gains tax and capital gains tax or reintroduce the Goods and Services Tax (GST), experts expect no new taxes to be implemented in Budget 2022 due to the uncertain environment due to COVID- 19 at the domestic and global levels which could affect the stability of Malaysia's economic growth.

However, in its Pre-Budget Statement, the MoF stated the government is considering measures to increase tax revenue through increased tax compliance. Proposals in the study include the implementation of a Special Voluntary Disclosure Program (SVDP) for indirect taxes administered by the Royal Malaysian Customs Department (JKDM). It also proposed the introduction of a tax compliance certificate as a pre-requisite for tenderers participating in government procurement.

"Third, the implementation of tax identification numbers (TINs) and review of tax implementations identified as having elements of revenue leakage or harmful practices. A comprehensive review of the tax incentive framework was also conducted to ensure tax incentives offered to foreign and local investors remain relevant. with the current business landscape in addition to continuing to maintain the country's competitiveness in attracting quality investment.