Highlights of Budget 2021

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has tabled Budget 2021 at the Dewan Rakyat on November 6, which included many measures and initiatives targeted at assisting individuals in the current challenging conditions brought about by the COVID-19 pandemic.

Many of these measures are targeted at easing cash flow issues and addressing concerns around cost of living, as well as providing assistance for those who have seen their income or employment affected.

Here are some of the highlights from Malaysia’s highly anticipated Budget 2021 which carries the theme Teguh Kita, Menang Bersama (Stand United, We Shall Prevail).

Strategy 1: COVID-19 Pandemic & Public Health

Statutory government debt raised from 55% to 60% of GDP as per Akta Langkah-langkah Sementara Bagi Pembiayaan Kerajaan (Penyakit Koronavirus 2019) / Temporary Act for Government Expenditure
Ceiling of Kumpulan Wang COVID-19 raised by RM20 billion to RM65 billion to fund the Kita Prihatin initiative
RM1.8 billion for MCO enforcement and public health facilities including PPE, reagents and disposables
RM1 billion for COVID-19 3rd wave prevention
RM3+ billion for COVID-19 vaccines
Frontliners one-off payment of RM500 as appreciation
RM90m pneumococcal immunisation programme for children expected to benefit 500,000 children
Tax exemption for vaccination pneumococcal, influenza, and COVID-19 up to RM1,000 for self, spouse and children
Tax relief for medical expenses on serious diseases increased from RM6,000 to RM8,000 for self, spouse and children
Tax relief for full medical checkup ailments increased from RM500 to RM1,000 for self, spouse and children
Tax relief for parents/special needs child medical expenses and care increased from RM5,000 to RM8,000 for self, spouse and children
mySalam protection program extended to included heart stents and prosthetics
B40 given RM50 voucher for Tenang Protection Scheme for purchasing takaful and personal accident coverage

Strategy 2: Safeguarding the Welfare of Vulnerable Groups

Measure 1: Improving Financial Aid

OKU Incapable of Work assistance increased from RM250 to RM300
Older Persons, Carers of OKU, and chronically ill patient increased from RM350 to RM500
OKU workers incentive allowance increase from RM400 to RM450
Children in household poverty assistance increased from RM150 per child (age 7-18) / RM200 per child (age 6 below) up to RM1,000 per family
RM2.2 billion for BPN2.0
Bantuan Sara Hidup (BSH) replaced by Bantuan Prihatin Rakyat (BPR)
- Household income <RM2,500: RM1,200 (up to 1 child) / RM1,800 (2 or more children)
- Household income RM2,501 – RM4,000: RM800 (up to 1 child) / RM1,200 (2 or more children)
- Household income RM4,001 – RM5,000: RM500 (up to 1 child) / RM750 (2 or more children)
- Individuals age 21 below and income <RM2,500: RM350
B40 telecommunications credit for new phone/internet subscription: RM180

Measure 2: Alleviating the Rakyat’s Cost of Living

Individual tax relief for income RM50,001 – RM70,000 reduced by 1%
EPF employee contribution reduced from 11% to 9% from January to December 2021
EPF Account 1 withdrawal of RM500 monthly application open from January 2021 if you have lost your job
SOCSO EIS allowance for job hunting increased by 3 months (M1: 80% pay; M2-M6: 50% pay; M7-9: 30% pay)
Severance pay tax exemption for 2 tax assessment years increased from RM10,000 to RM20,000 for each year of service

Measure 3: Assistance to Farmers and Fishermen

RM1.7 billion subsidies, aid, and incentives for farmers and fishermen
Living allowance for fishermen increased from RM250 to RM350 per month
RM400 million to pay for FELDA settlers debt interest and new development

Strategy 3: Generating and Retaining Jobs

Measure 1: PenjanaKerjaya Initiative (Hiring Incentive)

RM3.7 billion for JanaKerja Scheme to provide 500,000 new job opportunities including skills upgrading and retraining
Recruitment of workers under SOCSO 6 months incentives:
- Workers earning >RM1500 incentive increased from RM800/mth to 40% of monthly salary (limited to RM4000/mth)
- Employers 20% additional incentive to hire OKU, long-term unemployed and terminated workers
- Sectors with high reliance on foreign workers (e.g. construction and plantation sector) special incentive 60% of monthly salary to hire local workers replacing foreign workers (40% channeled directly to employers and 20% to local workers)
Training claims for employees hired under PenjanaKerjaya raised from RM4000 to RM7000 for high-skilled or professional certificate programme

Measure 2: Reskilling and Upskilling

RM150 million for KPT-PACE for fresh graduates given RM3,000 for professional certification programme
RM100 million for HRDF for programmes with private employers
RM100 million for MDEC for ICT talent transition
RM100 million for IRDA and SEDIA for skills development affected by closed borders and drop in foreign tourists
RM30 million for PERHEBAT for army veterans
Tax relief RM1,000 for approved skills upgrading programmes

Measure 3: MySTEP (Shorterm Employment Programme)

RM700 million for short term contractual employment in public service and GLCs

Measure 4: Targeted Wage Subsidy

RM1.5 billion targeted wage subsidies extension for tourism and retail sectors of RM600 per employee with pay RM4,000 below for up to 500 employees

Measure 5: Social Protection

EPF withdrawal from Account 2 to purchase life insurance and takaful and critical illnesses coverage
Tax relief for PRS extended until 2025
RM24 million for SOCSO payments to army volunteers, reserve police force, religious teachers, contracted public servants, and delivery riders

Strategy 4: Prioritizing the Inclusiveness Agenda

Measure 1: Empowering the Bumiputera

RM11 billion for Bumiputera development to reduce inequality including:
- RM6.5 billion for education through institutions such as MARA and UiTM
- RM510 million for SME and Micro SMEs through TEKUN and PUNB
- RM800 million for development of Bank Pembangunan Malaysia and SME Bank
- RM2 billion for SME through SJPP
- RM1.3 billion for development programmes including Dana Kemakmuran Bumiputera and other projects

Measure 2: Upholding Islam Tenets

RM1.4 billion for Islamic development through PM’s department
Waqf through PNB’s ASNB qualifying for tax relief which will be channeled to national waqf projects
A one-off special payment of RM500 to religious reachers

Measure 3: Enhancing the Role of Women

RM95 million micro credit through TEKUN, MARA and AgroBank
RM50 million for Islamic financing through Ar-Rahnu BizNita
RM21 million for local social support centers providing support for women facing domestic violence, divorce, and abuse
RM30 million for child care centers at government buildings, especially hospitals
RM20 million for child care centers at private employer’s premises
RM10 million for cervical cancer screening program and mammogram test subsidy incentive

Measure 4: Community-based Initiatives

RM177 million for Chinese community improvement of education facilities, housing, and new village development
RM100 million for Indian community socioeconomic empowerment through Indian Community Transformation Unit (MITRA)
RM15 million to Cultural Economy Development Agency (CENDANA) for the implementation of various art and cultural programmes
RM158 million for Orang Asli socialeconomic empowerment including new kindergartens and protection of Native Customary Rights
OKU tax relief increased from RM3,500 to RM5,000
Tax deduction for employers hiring senior citizens until 2025

Measure 5: Enhancing Rural Infrastructure

RM2.7 billion allocation for rural infrastructure:
- RM1.3 billion for rural roads
- RM632 million for clean water
- RM250 million for electricity
- RM355 million for poor to build or repair homes
- RM121 million for lights
Mobile banking services in Sabah and Sarawak

Measure 6: Youth and Sports Development

Apprenticeship program incentive of RM1,000 for employers hiring fresh graduates for 3 months and RM4,000 grant application for development programmes
RM50 e-wallet credit via eBelia (eYouth) programme for youths age 18-20
RM19 million for Healthy Malaysia National Agenda for healthier lifestyle and reduce the risk of diabetes, hypertension, and obesity
RM103 million for upgrading and maintenance of sports facilities including RM15m for e-Sports development
Lifestyle tax relief increased from RM2,500 to RM3,000 and expanded to include sports competitions entrance fees and e-newspapers

Strategy 5: Ensuring the Well-being of the Rakyat

Measure 1: Digital Connectivity

RM500 million for Jalinan Digital Negara (JENDELA) for connectivity in schools
RM150 for laptop computers as Tabung CERDIK pioneer project funded by GLC and GLIC

Measure 2: Access to Quality Education

RM50.4 billion to Ministry of Education, which is the highest allocation at 15.6% of budget
RM420 million for daily milk supplement scheme
RM800 million for upgrade and maintenance of government schools and government-assisted schools
RM50 million for stable internet connection in universities through MYREN (Malaysian Research & Education Network) broadband access upgrade from 500bps to 10Gbps
RM100 million loans for higher education students with PTPTN loan for laptop loan purchase through Skim BSN MyRinggit-i COMSIS
SSPN-i RM8,000 annual tax relief extended to year 2022

Measure 3: Increasing Home Ownership

Full stamp duty exemption for 1st home purchase below RM500,000 with purchase date between 1 January 2021 until 31 December 2025
Stamp duty exemption for abandoned properties transferred for new contractor and original home buyer with purchase date between 1 January 2021 until 31 December 2025
RM1.2 billion for affordable and low-cost housing
Rent-to-own schemes until 2022 for PR1MA developments

Measure 4: Public Transport

My30 unlimited travel pass extended to Penang and Kuantan
RM5 monthly unlimited travel pass for OKU

Measure 5: Defending the Nation’s Sovereignty and Security

RM16 billion allocation to Ministry of Defense
RM17 billion allocation to Ministry of Home Affairs
RM2.3 billion to upgrade military assets
RM27 million to upgrade cyber-security

Other Notable Budget 2021 Highlights

Business Continuity and Economic Resilience

RM500 million High Technology Fund provide by BNM to support high technology and innovative companies
Special tax rates of 0%-10% for 10 years through PENJANA extended 1 year until 31 December 2022
RM100 million to maintain the infrastructure of industrial parks
RM20 million for Malaysia Techlympics and Science Space programmes to create expertise in AI and robotics among youth
RM25 million for Micro Franchise Development and Affordable Franchise programmes, and Buy Made in Malaysia programme
RM150 million to implement Shop Malaysia Online initiative to encourage online spending
RM50 million for training and placement for employees of airline companies
RM150 million for SME Digitalisation Grant Scheme and Automation Grant and eligibility relaxed
RM50 million allocated for P2P financing platforms especially invoice financing on matching investments basis
RM30 million allocated for ECF financing on matching grant basis and 50% income tax exemption (max RM50,000)
HRDF levy exemption for 6 months for tourism sector and companies affected by COVID-19 from January 2021
Freezing on new import licensed for cigarettes and tightening renewal of import license
Taxes will be imposed on all cigarettes and tobacco products (no more duty-free)
Excise duty of 10% on all e-cigarettes and vaping products, and RM0.40 per mm on e-cigarette liquids
Continuation of High-Speed Rail Project (HSR) subject to further discussion with Singapore
Construction of 2nd phase Klang 3rd bridge, Central Spine Project, bridge across Sungai Marang, upgrading Federal Road connecting Gerik, Perak to Kulim, upgrading Pulau Indah, Klang Ringroad, Construction Pan Borneo Highway Sabah, and Cameron Highlands Bypass road
e-Rebate of RM200 for locally made air-conditioner or fridge through SAVE 2.0 program
RM600 special finance aid for public servants grade 56 below and RM300 for pensioners and veterans with no pensions