A Behemoth Budget For Unprecedented Times

Yesterday, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz unveiled the largest Budget in Malaysian history. At a whopping RM322.5 billion, Budget 2021 allocated RM236.5 billion for operating expense, RM69 billion for development expenditure, and RM17 billion for the Covid-19 fund.

The Budget focuses on three main goals: the rakyat’s wellbeing, business continuity and economic resilience.

Therefore, there is no surprise that there are many goodies for the B40 and the M40 group. The B40 group will see an increase in cash handouts next year, with the government allocating RM6.5 billion to the Bantuan Prihatin Rakyat scheme, while the M40 group will see an expansion of many personal reliefs.

There is a push for investment promotions, with some relaxation to existing incentives as well as new ones introduced. It is positive that the speech mentioned the government is in the midst of a comprehensive study of the existing incentive structure to provide a competitive, transparent and more attractive tax incentive framework.

Nevertheless, some say that more could have been done in certain areas of the Budget. Medical experts found the 2021 healthcare budget bittersweet, as attempts were made to improve conditions for the sector and front liners, but not to the degree expected. The healthcare budget has been increased to RM31.9 billion for 2021 from RM30.6 billion in 2020.

Another measure that came under fire is the unprecedented move to allow contributors of the Employees Provident Fund (EPF) to withdraw from their Account 1, where even the EPF admits it to be a tough decision.

“Allowing members access to their EPF retirement savings other than what is provided for under the EPF Act 1991 is unprecedented and has never been done before. Account 1 (70% of savings) has always been designated for retirement while Account 2 (30% of savings) is meant for discretionary withdrawals,” the pension fund’s chief executive officer Tunku Alizakri Alias says in a statement.

Source: The Edge Markets

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