Malaysia Budget 2009

Malaysia Budget 2009 fully quoted from
http://thestar.com.my/news/story.asp?file=/2008/8/29/budget2009/20080829161149&sec=budget2009

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Enhancing Health Services

* Excise duty specific on cigarettes increased by three sen from 15
sen per stick to 18 sen per stick. With this, the duty for a 20-stick
pack of cigarettes is now increased by 60 sen.

Social Safety Net

* Eligibility criteria for welfare assistance under the Welfare
Department, increased from a monthly household income of RM400 to
RM720 for Peninsular Malaysia, RM830 for Sarawak and RM960 for Sabah.

* Government pensioners who had served at least 25 years upon
retirement, will receive a pension of not less than RM720 per month,
effective Jan 1 2009.

* The Government will now also set up a Special fund of RM25mil set up
to channel financial assistance to victims of calamities such as
floods and fire.

Eradicating Poverty

* Programmes to enhance income, as well as provide skills and career
development training under the Skim Pembangunan Kesejahteraan Rakyat
to be continued. In addition, Program Lonjakan Mega Luar Bandar is
being implemented in Pulau Banggi, Sabah and Tanjung Gahai, in Kuala
Lipis, Pahang.

* In 2009, RM50mil is allocated to build 1,400 new houses and repair
1,000 houses under the Housing Assistance Programme. Priority will be
given to senior citizens, the disabled and single parents with many
dependents as well as victims of natural disasters.

* RM580mil and RM420mil allocated for Sabah and Sarawak respectively
to increase income and enhance quality of life of Malaysians there by
improving basic amenities, such as electricity, water and rural roads.

* Households which incur monthly electricity bills of RM20 or less,
will not have to pay for electricity, for the period from 1 October
2008 to end of 2009.

* The current tax rebate of RM350 per person be increased to RM400 for
those with taxable income of RM35,000 and below.

* All interest income from savings for individuals be tax exempt.

* Reduce import duties on various consumer durables from between 10%
and 60% to between 5% and 30%. These include blender, rice cooker,
microwave oven and electric kettle.

Full import duty exemption on several food items, which currently
attract import duties of between 2% and 20%. These include vermicelli,
biscuits, fruit juices and canned sweet corn.

* Reduce the road tax on private passenger vehicles with diesel
engines to be the same as those with petrol engines, effective 1
September 2008.

Enhancing The Welfare Of Employees

* Travel allowance for commuting to work provided by employers be
given full tax deduction, while the employees receiving such an
allowance be given tax exemption of up to RM2,400 per year.

* Tax exemption be given to employees on:

- Interest subsidies on housing, motor vehicles and education loans.
The tax exemption will be limited to total loans up to RM300,000;

- Mobile phones, as well as telephone and internet bills paid by the employer;

- Staff discounts of up to RM1,000 a year on company traded goods;

- Staff discounts on services rendered by the company, such as private
schools providing free education to children of their employees; and

- Childcare allowance of up to RM2,400 per year.

* Tax exemption on medical benefits provided by employers to include
expenses on maternity and traditional medicine, namely acupuncture and
ayurvedic.

* Effective Jan 1 2009, civil servants with a monthly household income
of RM3,000 eligible for a subsidy of RM180 per month.

Improving Public Transportation

* A sum of RM35bil will be expended during the period 2009 to 2014 to
improve public transportation.

* The existing LRT system in the Klang Valley will be extended by
30km, that is 15km respectively, for Kelana Jaya and Ampang lines.
Upon completion in 2011, the extensions are expected to benefit 2.6
million residents in the Subang Jaya-USJ and Kinrara-Puchong areas,
compared with 1.9 million currently.

* A new LRT line will be built along a 42km route from Kota Damansara
to Cheras; to be completed in 2014.

* The commuter rail services of Keretapi Tanah Melayu Berhad (KTMB)
will be upgraded. Rehabilitation works are being undertaken on the
existing 20 Electric Multiple Units (EMUs) and are expected to be
completed in 2009. An additional 13 new units of EMUs will be acquired
and be operational by 2011.

* To reduce the operating costs of public transport operators:

- government will provide a soft loan facility of RM3bil under the
Public Transportation Fund, administered by Bank Pembangunan Malaysia
Berhad (BPMB), to finance the acquisition of buses and rail assets;
and

- reduce toll charges by 50% for all buses, except at border entry
points, namely Johor Causeway, Second Link and Bukit Kayu Hitam, for a
period of two years, effective Sept 15 2008.

* Road tax will also be reduce to RM20 a year for all bus, taxi, car
rental and limousine operators.

Food Security

* Sum of RM5.6bil is provided under the National Food Security Policy,
for the period 2008 to 2010. This allocation is to provide incentives
to agriculture entrepreneurs to reduce production costs and encourage
higher agriculture output.

* RM300mil allocated to increase fish landings. Of this, RM180mil is
in the form of cost of living allowance to fishermen and fishing boat
owners, as well as RM120mil as incentive for fish landings.

* RM1bil allocation as incentives for 220,000 padi farmers throughout
the country to increase padi production.

Generating Income Through Micro Credit

* RM160mil allocated to provide better education opportunities as well
as improve health and basic amenities for the Orang Asli.

* A monthly allowance of RM150 to disabled who are unable to work. In
addition, the monthly allowance for disabled students in special
education schools, will also be increased from RM50 to RM150, while
teaching assistants in these schools will be provided incentive
payments of RM200 per month.

* In 2009, an allocation of RM330mil is provided to Jabatan Perumahan
Negara to complete 4,400 units of Program Perumahan Rakyat (PPR)
Disewa, 1,500 units of PPR Bersepadu and 600 units of PPR Dimiliki. In
addition, Syarikat Perumahan Negara Berhad will build 33,000 low cost
houses.

* For civil servants, tenure of new housing loans extended from 25
years to 30 years. They will also be provided housing loan facility
for renovation works on houses not purchased through Government
housing loan.

* For medium cost houses of up to RM250,000, a 50% stamp duty
exemption is extended to the loan agreement on top of the 50% stamp
duty exemption on the instrument of transfer.

* For companies contributing to charitable institutions, the limit of
tax deduction be increased from 7% to 10% of aggregate income.

Improving Public Amenities

* Allocation of RM3bil to intensify efforts to further develop Sabah
and Sarawak for infrastructure projects, including 266 km of federal
and rural roads, benefiting more than 550,000 residents.

* An allocation of RM3.3bil is provided for Sarawak to implement
various projects, including the construction of 230 km of federal and
rural roads, benefiting more than 350,000 residents.

Second Strategy: Developing Quality Human Capital

* A sum of RM70mil is allocated in 2009 to train 5,600 nurses in
training colleges under the Ministry of Health, with 2,000 in
recognised private training colleges.

* To meet the need for new schools and replace dilapidated schools,
110 primary and 181 secondary schools will be built. In addition, to
ensure that existing schools are well maintained, an allocation of
RM615mil is provided.

* RM14.1bil to improve quality of learning at institutions of higher
learning. Of this, RM8bil is for Operating Expenditure for public
institutions of higher learning, RM627mil for polytechnics and
community colleges as well as RM37mil for the Malaysian Qualification
Agency.

Culture of Excellence

* The highest marginal tax rate for individuals be reduced from 28% to
27%, effective the year of assessment 2009. In addition, the marginal
tax rate of 13% will also be reduced to 12%, which will benefit the
middle income group.

* Recruitment costs, such as payments to employment agencies and
participation in job fairs, be tax deductible.

Third Strategy: Strengthening The Nation's Resilience

* To encourage private sector activities, tax treatment on group
relief be enhanced by allowing losses for the purpose of offsetting be
increased from 50% to 70%.

* An additional RM300mil under the Strategic Investment Fund to
further strengthen private investment in Iskandar Malaysia.

Promoting Tourism

* New investments by 4-star and 5-star hotel operators in Sabah and
Sarawak be given Pioneer Status with 100% income tax exemption or
Investment Tax Allowance of 100% for 5 years.

* RM50mil for conservation works of heritage sites in Malacca and
Penang to support activities undertaken by non-governmental
organisations (NGOs) and private sector.

Promoting Venture Capital Companies

* Venture capital companies that invest at least 30% of their funds in
start-up, early stage financing or seed capital be eligible for a
5-year tax exemption.

Promoting Small and Medium Enterprises

* All SME assets in the form of plant and machinery acquired in the
years of assessment 2009 and 2010 be given Accelerated Capital
Allowance to be claimed within one year. In addition, SMEs are allowed
to claim full Capital Allowance on all small value assets within one
year.

National Energy Plan

* Exemption of import duty and sales tax on solar photovoltaic system
equipment, import duty and sales tax on intermediate goods such as
High Efficiency Motors and insulation materials; sales tax on locally
manufactured solar heating system equipment; sales tax on locally
manufactured energy efficient consumers goods such as refrigerators,
air-conditioners, lightings, fans and televisions; and 100% import
duty and 50% excise duty on new hybrid CBU cars, with engine capacity
below 2,000 cc, be given to franchise importers. This exemption is
given for a period of two years to prepare for the local assembly of
such cars.

Towards A Vibrant Capital Market

* Tax exemption be given on fees received by domestic intermediaries,
which successfully list foreign companies and foreign investment
products in Bursa Malaysia. This measure will also enable domestic
investors to acquire shares of foreign companies listed in the local
exchange.

* Current tax rate on dividends received by foreign institutional
investors from Real Estate Investment Trusts (REIT) be reduced from
20% to 10%. Recognising that REITs is an attractive investment product
for individuals as well, the Government also proposes a reduction in
tax rate from 15% to 10%.

Ensuring Public Safety

* RM5.4bil is allocated in the 2009 Budget to enhance the capacity of
the Royal Malaysian Police (PDRM). Of this, RM4.8bil is for Operating
Expenditure and RM600mil for Development Expenditure.

* RM220mil is allocated in 2009 for the construction of police
headquarters and stations nationwide.

* For the period 2008 to 2010, a total of 22,800 constables and 3,000
inspectors will be recruited. In addition, the special incentive
allowance for PDRM personnel will be increased from RM100 to RM200
monthly, effective Jan 1 2009.

* All business premises installed with security control equipment be
given Accelerated Capital Allowance, which is fully claimable within
one year.

Civil Service

* A bonus of one-month salary, subject to a minimum of RM1,000 for
2008. The bonus will be paid in two instalments, namely in September
and December 2008.