Revised Budget 2023: Full speech of Prime Minister Datuk Seri Anwar Ibrahim

TheEdge Sun, Feb 26, 2023 08:30am - 1 year View Original


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BUDGET 2023 SPEECH
by: YAB DATO’ SERI ANWAR IBRAHIM
PRIME MINISTER AND MINISTER OF FINANCE

Introducing
THE SUPPLY BILL (2023)

In Dewan Rakyat
Friday, 24 February 2023

THEME: BUDGET 2023: BUILDING MALAYSIA MADANI

Dato’ Speaker Sir,

I beg to move the Bill entitled “An Act to apply a sum from the Consolidated Fund for the service of the year 2023 and to appropriate that sum for the service of that year” be read a second time.

PREAMBLE

Bismillahirahmanirahim.
Assalamualaikum Warahmatullahi Wabarakatuh and good afternoon. 

1. Allah decreed in Surah Yusuf, verse 55:
ِِنىِى ََِِظٌ عَِلظٌۭ ۖ ْل ْ َرْض ِ ٱ عَلَى ٰ خَزَ آئِنِ جْعَْلنِى ٱ ََ الَ ق
Nabi Yusuf said, “Put me in charge of the store-houses of the land (Egypt), for I am truly reliable and adept.”

2. This story was recorded when the King of Egypt Raja Al-Aziz was worried about the seven years of economic downturn that was forecasted for the land, after many years of prosperity.

3. According to the great scholar Muhammad al-Tahir Ibn Ashur, this verse describes the situation when the Prophet Yusuf AS offered his service for the benefit of the ummah and the nation.

4. In an expected economic downturn, two major features become prerequisite to the success of budget management.

First: Trustworthiness, honesty, transparency in savings and spending.

During this chaotic time, the question that needs to be raised is how many are stricken with poverty and impoverishment. Are the funds channelled in the right manner to avoid leakages and wastage?

Second: Quick actions based on knowledge; will there be swift, smart and sensible actions in planning and organising the framework of the national budget.

5. Therefore, Budget 2023, which I formulate as Belanjawan MADANI, reflects the principles of accountability and pure value system that can address the current challenges including the highly uncertain global economic challenge.

ECONOMIC PERFORMANCE AND CHALLENGES

6. After listening to the rakyat’s grievances and your booming voices in this august Hall, I choose to lay before you a Budget that presents the hard facts and figures, and which does not attempt to delude the people with beguiling facts.

7. I will begin by laying out the facts and challenges that choke our economy, and the challenges that we and the country face. Do we have the political will to make the necessary leap and changes that can drive growth and eradicate greed among those in power?

First: The Government inherited a high debt burden

  • The national debt is projected to reach RM1.2 trillion or more than 60% of GDP for the year 2023. If debt and liabilities are calculated, it will reach RM1.5 trillion or 81% GDP. This year’s debt service ratio is RM46 billion or 16% of revenue. This has exceeded the maximum threshold of 15% that has been practised all this while.
  • The payment of RM46 billion is only for the payment of interest and not to service the principal. This august House needs to be reminded that the Government has been in deficit for the past 25 years and our debt has been on the rise. We have borrowed to develop Felda land; that should not be fretted. But taking on loans to fund mega projects that have no benefit invites the question of whether we are betraying the trust given to us, when the youths are then saddled with this debt. 

Second: Malaysia is experiencing a decline in governance

  • Corruption and embezzlement appear to have become systemic to the point of damaging the Government's ability to govern effectively, tarnishing the country's reputation. As a result:

o Malaysia’s Corruption Perception Index (CPI) 2022 ranking has plummeted to rank 61 when compared to rank 29 in 1998. Transparency International Malaysia attributed this decline to a failure in curbing political corruption. 
o The Auditor General's report for 2020 and 2021 recorded leakage of almost RM3 billion, which cover loss of public money, wastage, and irregular payments. For example, regarding the under-collection of import duties for vehicles, the Government suffered a loss of RM72 million due to weak duty import collection processes. 
o In addition, there exists leakages in the diesel subsidy implementation with almost RM10 billion worth of diesel subsidy estimated to be misappropriated last year.
o These are proofs of the various transgressions that have badly impacted the country. They must be stopped if we want this country to stride forward with strength and glory. We are the ones who determine whether the country’s future will stagnate, surge, or subjugate.

Third: The country needs to navigate the global economic uncertainty

  • The inflation rate continues to see pressure against global commodity prices that are still too high, and the food supply chain disruption due to the Russia-Ukraine war.
  • The International Monetary Fund (IMF) projects a slower global economic growth of 2.9% for 2023, compared to 3.4% in the previous year. Global trade is also projected to slow down at a rate of 2.4%, compared to 5.4% in 2022.
  • Malaysia's 2022 GDP recorded a growth of 8.7% owing to the low base of 2021 GDP following the effects of Covid-19. However, to portray a full picture of the country's economic performance, it needs to be considered alongside the quarterly growth rates, which showed a decrease in the first quarter (3.8%), the second quarter (3.5%), the third quarter (1.9%), and the fourth quarter (-2.6%).

Fourth: Investments have not recovered to pre-pandemic levels

  • Malaysia recorded investments of RM297.5 billion last year, which was 9.4% lower compared to RM328.5 billion in 2019. Malaysia's position in the World Competitiveness Ranking by the International Institute for Management Development (IMD) has also fallen to rank 32. We once were ranked 12 when investors had faith in our economic capabilities and the efficiency of our public service delivery.

Fifth: Economic challenges that affect the rakyat

  • Inflation rate in 2022 stood at 3.3% with a high food inflation rate of 5.8%. The inflation rate this year is expected to remain the same. However, this will rise if the global supply chain uncertainty remains unresolved.
  • The unemployment rate in 2022 was 3.6% compared to 3.3% pre-pandemic in 2019. Youth unemployment rate for those aged 25 years and below is still above 10%. Their average income is also low, around RM1,700 in 2021.

8. These are honest and real snapshots of the economic situation that we inherited together. Therefore, Belanjawan MADANI needs to have the capability to muster the strength and energy to forge a new direction.

9. Ergo, I would like to use this opportunity to call upon political leaders, ministry leaders, civil servants, in addition to businesses and ordinary citizens to believe that our country is capable of making that leap, and be an example not only to our neighbouring countries in the region but the whole world too, and at the same time instil confidence among the rakyat.

10. As affirmed in Al-Quran, when Allah SWT proclaimed in Surah Hud, verse 88:
َُ نْ أُرِ ظدُ َِِّلا اْل ِْصَْل َ حَ مَا اسْتَطَعْتُ ۚ وَمَا تَوْ فِظقِي َِِّلا بِاللاـهِۚ عَلَظْهِ تَوَكاْلتُ وَ ِِلَظْهِ أُنِظب
I only intend to reform to the best of my ability. My success comes only through Allah. In Him I trust and to Him I turn.

11. We must admit that the culture of waste and corruption needs to be eradicated. Therefore, I choose to present a Budget framework that is based on the spirit of reform to set a new and fresh policy direction — and bury the preconception that we will defend the status quo and interests of the super-rich.

“The night has ended. Put out the lamp in the narrow corner stained with soot. 
A new morning dawns for everyone in the East, let its light illuminate our meaningful path.”
(Rabindranath Tagore)

12. The 2023 Budget will be the first step in laying the Malaysia MADANI Development framework. Today's presentation will focus on 12 main thrusts based on three pillars, namely: 

First: Inclusive and sustainable economic growth 
Second: Institutional reforms and good governance to restore confidence
Third: Social justice to bridge inequality

I. INCLUSIVE AND SUSTAINABLE ECONOMIC GROWTH

THRUST 1: FISCAL SUSTAINABILITY 

13. We are at a critical juncture in history. This administration is determined, based on the principle of accountability, to manage the fiscal position including the debt issues and at the same time continue to support inclusive and sustainable economic growth.

First: Expansionary Fiscal Policy

14. World Bank and Fitch analyses expect the country’s GDP to grow by 4% in 2023, factoring in the challenging global economic outlook.

15. The Government projects a moderate economic growth of around 4.5%, buoyed by the confidence of a strengthening domestic economy.

16. In fact, taking into account the efforts to implement improvements and reforms under this administration, I am confident that the country will exceed the projected GDP growth of 4.5%. This will certainly be driven by the comprehensive measures in Budget 2023 that will drive stronger sustainable growth, as well as renew international investors’ confidence to stimulate the national economy.

17. The Government expects revenue collection for 2023 to total RM291.5 billion compared to RM294.4 billion last year. This, however, does not consider additional revenue streams which will increase our yearly revenue to a higher level. 

18. This administration takes an expansionary fiscal approach in an effort to support economic growth, so that the spillover effects can be enjoyed by everyone.

19. Budget 2023 will allocate RM388.1 billion, with RM289.1 billion for operating expenditure, RM99 billion for development expenditure, which includes RM2 billion as contingency savings.

20. In line with the expansionary fiscal policy, development expenditure will be increased to RM97 billion compared to RM71.6 billion last year. This increase is to focus on programmes to eradicate poverty, as well as improve public infrastructure and rural facilities. Through improved Government procurement processes, we will ensure that this additional expenditure is fully utilised for the rakyat’s interests.

Second: Managing Debt Levels

21. Based on the principle of accountability, the Government will reduce the fiscal deficit in 2023 to 5% compared to 5.6% in 2022.

22. The Government is determined to achieve a sustainable fiscal deficit in the medium term with a target of 3.2% of GDP by 2025, subject to continued strong economic growth.

23. To curb the increase in debt, new loans must be lower and only taken for the purpose of development that brings benefit and impact to the rakyat.

24. The Fiscal Responsibility Bill will be presented to Parliament this year. This Bill is to ensure greater transparency and accountable management of the economy to prevent the possibility of continued transgressions in the future.

Third: Expanding the Government Revenue Base

25. Allah SWT decreed in surah Al-Hasyr, verse 7:
ْ ْ دُ وَْلةً ۢ باي ْ نا اْل ْ اغْ نِياۤاءِ مِ نْكُم ك َيْ َل ا ايكُ وْ نا
“... Whatever (from the possessions of the townspeople) Allah has bestowed on His Messenger belongs to Allah, and to the Messenger, and to his kinsfolk, and to the orphans, and to the needy, and to the wayfarer so that it may not merely circulate between the rich among you.”

26. Taking lessons from this verse, the Government is committed to upholding social justice. Fair revenue distribution does not mean equal treatment across the board but instead, based on needs.

27. The Department of Statistics reported that the top 20% group (T20) own 47% or nearly half of total household income. Whereas from the angle of EPF funds, the T20 group owns 80% of total EPF savings.

28. Considering that the income and wealth of the nation are concentrated amongst the elite and the super-wealthy, it would be reasonable for the distribution of our national resources to prioritise the low- and middle-income groups.

29. The Government will therefore take a progressive approach in the context of targeted subsidy or tax structure, to protect the less fortunate and seek the understanding of the more affluent rakyat to share this responsibility together.

30. Among the measures that have been introduced include:

  • Distribution of ASB dividends that prioritises those in need. 87% of members with units held below RM30,000 were given a dividend of 5.1 sen per unit. While units held above RM30,000 received a distribution of 4.6 sen per unit.
  • In addition, electricity tariffs have been maintained for all domestic users and SME businesses but increased for all large companies except for those in the food and agriculture sectors.

31. The Government has no plans to implement wide-based consumption taxes, such as Goods and Services Tax (GST). Given the current situation where the majority of the rakyat are still struggling, food inflation exceeding 5%, and low wages, it is evident that now is not a suitable time to introduce and implement such a tax.

32. The Government is taking a more progressive approach as a new step to expand the tax base to those with means.

  • The Government plans to introduce a Luxury Goods Tax beginning this year with a certain limit according to the type of luxury good. Among others, these include luxury watches and luxury fashion items.
  • In line with international best practices, the Government will study the introduction of a Capital Gains Tax for the disposal of unlisted shares by companies beginning 2024 at a lower rate. The Government will hold consultation sessions with relevant parties to examine the details of this proposal.

33. The Government plans to impose an excise duty on liquid or gel products containing nicotine used for electronic cigarettes and vapes. Although nicotine-containing vape products are still illegal under the law, in reality they are widely sold and estimated to be worth over RM2 billion. It would be better if its use is regulated and taxed.

34. The Government supports the Generational Endgame (GEG) initiative and agrees that half of the excise duty collected from this will be re-allocated to the Ministry of Health to improve the quality of health services.

35. To reduce leakages, Government enforcement agencies in collaboration with the industry will intensify enforcement efforts to curb the leakage of proceeds and subsidies due to smuggling syndicates such as diesel, alcohol, and cigarettes.

36. The Inland Revenue Board (LHDN) and Royal Malaysian Customs Department (JKDM) will reintroduce a voluntary disclosure programme. Through this programme, a 100% penalty waiver will be granted for voluntary disclosures from 1 June 2023 to 31 May 2024.

THRUST 2: FULFILLING THE PEOPLE’S ECONOMIC NEEDS

Dato’ Speaker Sir,

37. I share an excerpt of the letter sent by Saidina Ali Abi Talib to the Governor candidate for Egypt, Malik Ashtar, as a lesson for all of us:
فربما حدث من األمور ما اذا عولت فيه عليهم من بعد احتملوه طيبة أنفسهم 
بالعب ر يعوز أهلها إلش ر اف أنفس الوالة عىل الجمع وسوء ظنهم بالبقاء وقلة انتفاعهم به فإن العمران محتمل ما حملته، وإنما يؤت ى خراب األرض من إعواز أهلها وإنما

"...and the circumstances may so be that you may have to ask for their assistance, and they will bear it happily. With their prosperity, they will certainly be able to bear whatever you load on it. Yet the ruin of the land is caused by rulers who are bent feverishly on accumulating wealth at all costs"

38. The Government is cognisant that there are still businesses that have been affected by the pandemic especially micro, small and medium enterprises (MSMEs). Belanjawan MADANI will ensure local MSMEs are again competitive and able to increase their business capacity. Various facilities including tax cuts and financing are made available to support these businesses.

First: Reduction in Tax Rate

39. I am pleased to announce that the Government agrees that from assessment year 2023, the MSMEs’ rate on taxable income for the first RM150,000 will be reduced from 17% to 15%. This reduction in tax rate is expected to provide savings of up to RM3,000 to 150,000 MSME taxpayers.

Second: Facilitating Hawkers and Small Traders

40. I often emphasise the futility of having large buildings, while the plight of the rakyat eking out a living on small scale business activities is ignored. The rakyat’s economy must be dignified, their needs met. This nation is already famous for its mega projects and landmarks, but I also want the nation to be known for small business facilities that are excellent, clean and visually appealing.

41. To manifest this intention, the Government will provide RM50 million to build and upgrade 3,000 stalls and kiosks as facilities for small hawkers at key locations across the country

42. In addition, RM176 million will be provided to upgrade business premises and facilities among those under MARA, DBKL, Perbadanan Usahawan Nasional Berhad (PUNB) dan Urban Development Authority (UDA).

Third: Providing Financing and Guarantee Facilities

43. Government agencies will continue to provide various financing facilities and guarantees for the benefit of MSME entrepreneurs with a total value of up to RM40 billion.

44. Micro entrepreneurs and small businesses will be provided with access to financing through agencies such as Bank Negara Malaysia (BNM), BSN, and TEKUN with available funds totalling RM1.7 billion.

  • Of that, RM300 million is specified to support micro businesses owned by women and youth entrepreneurs.
  • BSN is providing more than RM1 billion with a focus on MSMEs and hawkers
  • TEKUN also provides RM330 million, including RM10 million to support youth from underprivileged backgrounds to generate income through business. They will be given capital to venture into delivery services using motorcycles. 
  • The Government will also fund the driving test fee for B40 youth for class B2 motorcycle licences, as well as taxi, bus and e-hailing licences.

45. For small and medium enterprises (SMEs), almost RM10 billion is provided by Bank Negara Malaysia (BNM), among others to reduce SMEs’ financial burden and encourage their business development.

46. Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will guarantee up to RM20 billion in SME loans where key sectors such as high technology, agriculture, and manufacturing are provided with a government guarantee of up to 90%. Guarantees will also be expanded to financing by non-banking financial institutions such as credit leasing companies and cooperatives to specifically benefit small businesses.

THRUST 3: FACING DISASTERS

First: Readiness in Facing Disasters

47. I have stressed that direct procurements done in haste without proper scrutiny will only waste the rakyat’s money, especially in relation to the Flood Mitigation Projects. Particularly when these projects are of utmost importance and will incur huge costs. The reckless approval done by the past government has been cancelled and is currently under the investigation and action of the Malaysia Anti-Corruption Commission (MACC) and Attorney General Chamber.

48. To ensure that the Flood Mitigation Projects really achieve their goals, projects that are rakyat centric and have high impact must go through the tender process to ensure the best value and savings to the Government.

49. For example, the country is expected to save RM2 billion from the RM15 billion allocated previously for flood mitigation projects. Therefore, procurements must undergo the tender process.

50. This year, six flood mitigation projects will be retendered without delay latest by June 2023, including: 

  • Flood Mitigation Plan at Sungai Johor, Kota Tinggi, Johor; 
  • Construction of dual-function reservoirs for flood mitigation and to serve as raw water storage at Sungai Rasau and Sungai Klang, Selangor; and
  • Sungai Golok Integrated River Basin Management Project Phase 3, Kelantan.

51. The performance of our rescue team in Türkiye was outstanding and brought us pride. We hope this achievement can be translated into better disaster management and disaster readiness at the national level. As preparation for natural disasters:

  • NADMA will be provided with RM150 million among others for required assets, warning systems and disaster relief to affected rakyat.
  • Malaysian Armed Forces, Fire and Rescue Department and RELA will also be provided RM50 million for assets and equipment for natural disaster preparation.
  • The role of community will also be strengthened as they are amongst the first front liners when disasters occur. The Government will allocate RM20 million under Pertubuhan Prihatin Komuniti Grant to benefit 2,000 resident associations.

Second: Instilling Green Practices

52. Allah SWT decreed in Surah Ar-Rum, verse 41:
ظَرْ جِعُوْ نَ لَعَلاهٌُْۭ عَمِ لُوْ ا الاذِيْ بَعْضَ ِلظُذِظْقَهٌُْۭ النااس ِ اَظْدِى كَسَبَتْ بِمَا وَ الْبََْرِ الْبَرِى فِى الَِْسَادُ ٌَهَرَ
Corruption has spread on land and sea as a result of what people’s hands have done; so that Allah may cause them to taste (the consequences of) some of their deeds and perhaps they might return (to the Right Path). Surah Ar-Rum (Verse 41)

53. Unbridled greed that plunders the earth’s riches and unchecked logging are amongst the main culprits leading to major natural disasters. Aside from pursuing economic development, it is important to shape a quality of life that is sustainable and balances the relationship between humans and nature.

54. The Administration’s promise is to join hands with all parties to protect the country’s natural treasure, towards a greener future for all. This includes preserving nature’s biodiversity and forest management while at the same time reducing the state government’s dependence on timber revenue.

  • Ecological Fiscal Transfer for Biodiversity Conservation (EFT) allocation to state governments will be increased to RM150 million per year compared to RM70 million last year. EFT allocation to states will take into consideration new addition of gazetted protected areas including for tiger habitats and reforestation efforts of degraded areas.
  • At the same time, RM38 million is allocated to protect wildlife like tigers and elephants and their forest habitats.
  • The Government will increase the number of rangers who patrol these forest areas to 1,500 rangers with priority given to the local orang asli community, as well as police and army veterans, through an allocation of RM50 million.

55. The Government will continue to encourage green practices in business operations.

  • BNM will provide up to RM2 billion financing facility to support sustainable technology startups and help SMEs implement low carbon practices.
  • Khazanah will provide RM150 million to spur the development of environmentally friendly projects including supporting the carbon market and reforestation.
  • In addition, the Green Technology Financing Scheme (GTFS) will also be enhanced with the guarantee value increased to RM3 billion until 2025.

THRUST 4: ACHIEVING HIGH IMPACT INVESTMENTS

First: Facilitating Investments

56. It is worrying to note that the country’s innovation level is still low while investment value has yet to recover to pre-pandemic levels. New initiatives are needed to boost the ecosystem, as well as attract more meaningful investments that will catalyse economic growth and job opportunities with respectable wage.

57. To stimulate investment in high-impact and high-technology sectors, in line with the New Investment Policy:

  • Invest Malaysia Council and National Committee on Investment (NCI) will oversee the efforts to expedite approvals for high potential investment projects. Meanwhile, PEMUDAH’s role will be empowered as a national unit to enhance the investment climate and business landscape.
  • The Government will improve the ease of doing business by reducing bureaucracy including incentivising Local Councils that facilitate the implementation of approved investments to ensure investment processes can be accelerated.

58. A Bank Negara Malaysia study shows that the benefits from foreign direct investments (FDI) have been narrowing following higher incentives against low value-added investments. Malaysia has more than 100 types of incentives and more than 30 investment promotion agencies (IPAs). With changes in global trends following technological advancements and climate change, an evolution of Malaysia’s incentives is needed to support economic activities. 

59. Advancing forward, the New Industrial Master Plan (NIMP) 2030 will be announced in the third quarter of 2023 to outline the future development of the industrial sector, focused on high quality activities and the employment of local talents. 

  • In line with the Plan, investment promotion agencies and investment incentives will be restructured towards tiered tax rates based on outcomes such as creating high-value jobs, embedding local firms into the supply chains, and creating new industrial clusters.
  • Incentive monitoring for investments will also be strengthened to ensure the country and rakyat will fully reap the expected benefits from these investments.

60. Among the main issues facing foreign investors is the lack of local talent that enable them to invest and operate in Malaysia. At the same time, we are providing scholarships to more than 1,000 engineering students every year to study in Japan, Korea, France, and Germany. 

  • To solve this, the Government will coordinate international cooperation with foreign multinationals to provide internship opportunities in the students’ countries of study. These students are also allowed to serve their scholarship bonds with the said companies.

Second: Investments in Key Sectors

61. Malaysia has a huge potential in electrical and electronics (E&E) and aerospace sectors. The Government therefore plans to:

  • extend the tax incentive given to manufacturing companies that relocate to Malaysia and the tax rate of 15% for C-Suite until 2024 to attract companies that were affected by Covid-19 to operate in Malaysia; and
  • extend the income tax incentives and investment tax allowances for the aerospace sector until 31 December 2025 to encourage the expansion of existing companies and attract new investments.

62. Bank Pembangunan Malaysia Bhd will allocate up to RM6 billion for strategic financing specifically to encourage the sustainable agenda and automation, aside from equity support and revolving working capital for high potential companies that are still affected by Covid-19.

63. The Government will mandate Tun Razak Exchange (TRX) as Malaysia’s global financial hub. TRX needs to attract the global financial industry to become the main destination for high-value FDI that will strengthen our business ecosystem.

64. The Government also plans to boost the growth of Iskandar Malaysia in Johor through the introduction of special financial zone with a competitive incentive package to attract international investors and knowledge workers to be based in Malaysia.

65. To support and attract inbound investors, business owners as well as tourists, the Government plans to expand and increase the capacity of Penang International Airport and Subang International Airport. This expansion plan, which will be led by MAHB, is expected to translate into economic benefits at much lower costs, compared to the previous proposal to build a new airport in Kulim which was expected to cost RM7 billion.

66. Focus will also be given to support the development of Sanglang Port in Perlis to handle petroleum cargo and bulk cargo which will give value add to the Perlis local economy. At the same time, the Government will build new coastal erosion structures between Kuala Sanglang, Perlis to Kuala Jerlun in Kubang Pasu, Kedah.

67. To support the growth of international trade, the Government supports the proposal to develop a new mega-port in Carey Island by the private sector. The project is expected to bolster Klang Port as a major shipping hub for the Asia Pacific region.

Third: Economy and Islamic Finance

68. Plenty of our family members used to save money under their pillows. From there, I realised the importance of an Islamic bank that operates on the principle of social justice, zero riba’ to convince not only Muslims but also non-Muslims to invest and save in this banking system that is now used globally.

69. Alhamdulillah, Malaysia continues to lead the global Islamic finance sector since it was introduced four decades ago with the operationalisation of Bank Islam in 1983. We also maintained our top ranking in the global sukuk market and lead in Islamic finance expertise.

70. Despite these grand achievements, the Islamic finance sector has still not reached its full potential based on values to fulfil contemporary economic and social needs

  • Today’s Islamic finance ecosystem has yet to match the idealism of Islamic finance vanguards such as Professor Dr Muhammad Nejatullah Siddiqi who emphasised the concept of justice and morality, in accordance to maqasid al-syariah. He for example said, “More than anything else, Islamic banking and finance, a sub-culture of Islamic economics, has been a quest for justice and morality into the ordinary business of life”.
  • The late Sheikh Yusuf al-Qaradhawi during his visit to Malaysia in 2009 also expressed his interest that the implementation of Islamic finance to instead be drafted with new initiatives that are more impactful towards the rakyat’s socioeconomic growth based on social justice.
  • Therefore, new initiatives are needed to empower the Islamic finance system by emphasising the principle of driving growth, wider participation, and equitable wealth distribution — and not only focusing on company and conglomerate profits.
  • This is clearly stated by Sir Ronald Cohen in his work Impact: Reshaping Capitalism to Drive Real Change that showcases successful companies that run on the basis of social impact and not purely on profit.

71. The Ministry of Finance, Bank Negara Malaysia and Securities Commission Malaysia emphasise improving Islamic financing offerings that are based on equity with risk-sharing concepts such as Mudarabah and Musyarakah.

72. BNM has also introduced the Climate Risk Management and Scenario Analysis, Towards A Greener Financial System and Financial Inclusion Framework 2023-2026. At the global level, the General Council for Islamic Banks and Financial Institutions (CIBAFI) have also published the Sustainability Guide for Islamic Financial Institutions.

73. With regards to EPF syariah savings, which has been introduced since 2017, syariah savings assets are currently invested alongside syariah-compliant assets
in conventional savings. From 2024, syariah savings assets will be fully separated to give competitive returns to the 1.25 million members who own syariah accounts.

74. In line with the MADANI framework, waqf method is one of the redistributive mechanisms that contribute to universal prosperity.

  • The success of the Bank Islam Tower development in Kuala Lumpur’s golden triangle on the waqf of Ahmad Dawjee Dadabhoy, which is of high value, demonstrates the waqf sector’s potential in the development agenda.
  • Similarly, Waqf Seetee Aisyah and Waqf Simpang Enam in Penang can be used as reference points in developing local socioeconomic centres.
  • In fact, Wakaf FELDA proves that there is a paradigm shift on the part of settlers, whereby they are no longer simply aid recipients but have started sharing their rizq with the accumulated waqf exceeding RM27 million despite the waqf fund being recently launched in 2021.

75. So far, only around 3,500 hectares or 12% of registered waqf land have been successfully developed. Fresh efforts in developing waqf land and assets need to be continuously explored. 

76. I am pleased to inform that the Government has received a private commitment to establish Wakaf MADANI comprising assets worth more than RM1 billion. These assets, which comprise land, mosque, building, health and education facilities, will be optimised for the benefit of the poor, low-income earners, and other vulnerable groups. 

II. INSTITUTIONAL REFORMS AND GOOD GOVERNANCE TO RESTORE CONFIDENCE

THRUST 5: PUBLIC SECTOR REFORM

Dato' Speaker Sir,

77. I want to prove that there is a Malay who uses his power to protect and fight for the rakyat of this country. I want to prove that a Muslim will be respected and trusted because his principles uphold justice and truth.

78. The Unity Government will resolutely implement institutional reforms and good governance to eliminate the chances of creating systemic corruption and malpractices.

79. All Government agencies, including IRB, MACC, and the Royal Malaysian Police (RMP), are actively investigating corruption, including names linked to the Pandora Papers. These agencies will also continue to probe extraordinary wealth to stop the ills of corruption from spreading.

80. The rakyat is impatient for change; I too am impatient to implement reforms to ensure Government services are expedited, simplified, and transparent.

First: Transparency In Government Procurement

81. Implementation of Government procurement, for example, must be transparent and open, based on good governance practices. There should be no waste of public money and flouting of laws using the direct negotiation method.

82. The fact is, the RM15 billion flood mitigation projects, the RM7 billion Janawibawa and other projects made through direct negotiations have been cancelled.

83. Once some of them are re-tendered transparently, the country is expected to save up to RM3 billion. These major savings can be reallocated for projects that benefit the rakyat.

84. The Government in 2019 had proposed to table the Government Procurement Act in this august House, however it was postponed during the previous administration. This Unity Government intends to expedite the tabling of this Act.

85. All this while, there have been people who become suspicious, afraid, and feel pressured when asked to disclose information. The Government intends to amend and table the Whistleblower Protection Act this year to provide protection to informants, in order to ensure that the effort to combat corruption and misconduct becomes effective.

Second: Accelerating People's Infrastructure Projects

86. It is unthinkable that the rakyat continues to face the issue of dilapidated schools and clinics in this day. I do not want this to persist. If the project is delayed due to adherence to procedures, what is the point of being the Government if we cannot facilitate? This needs to be resolved this year.

  • The Government aims to urgently repair 400 dilapidated clinics and 380 dilapidated schools with an allocation of RM1.2 billion
  • To expedite the project implementation, the quotation threshold for the procurement of repair works for dilapidated schools and clinics will be increased to RM1 million compared to RM500,000 previously, while ballot procurement will be increased to RM200,000 from RM100,000 previously.

87. On the same topic, the issue of increasing road accidents must also be addressed immediately. Especially if they are caused by weaknesses in Government procedures in resolving road safety issues.

  • The Government is providing RM2.7 billion to maintain and upgrade Federal roads. At the same time, a budget of RM300 million has been allocated exclusively for G1 to G4 contractors to carry out minor maintenance works.
  • RM1.5 billion has been allocated for the upgrading and construction of inter-village roads and rural roads
  • On the issue of potholes, District Engineers’ services will be mobilised to expedite road paving of federal roads disrepair and other immediate repairs based on complaints received from the rakyat. The Government will allocate RM100,000 for each district.
  • RM50 million will be provided for the immediate installation of streetlights, particularly in areas with accident-prone areas.
  • The Government will increase the MARRIS grant to RM5.2 billion, which is meant for maintaining state roads. The Federal Government has provided flexibility including the usage of MARRIS for the repair and replacement of roads, bridges, and drains that have been damaged by disasters.

Third: Encourage Ministries and Agencies to Innovate

88. We can no longer tolerate outdated work cultures, unreasonable regulations, and delaying procedures. There are still many Government services that utilise agents, which has led to the systemic practice of corruption. 

89. Government services must be agile in adapting to technology and digital means to reduce bureaucracy. A mindset shift is also required to enable the public service to best serve the rakyat, without being confined to each respective ministry or agency. 

  • A Special Task Force on Agency Reform (STAR) chaired by the Chief Secretary to the Government has been established to drive this aspiration.
  • Funds will be provided to implement pilot projects that can improve the delivery of Government services to the rakyat under STAR. Successful ministries will be given full allocation for project implementation at the national level.
  • To ensure effective cloud computing services in the public sector, MAMPU has taken a strategic step by upgrading the MyGovCloud service. This service is able to function in a hybrid mode, combining public cloud services by cloud service providers appointed by the Government. 
  • The Government will make sure that more data centres can be set up in Malaysia by providing reasonable tax incentives and security infrastructure, green energy facilities, and locations for these centres.

Fourth: Dealing with Rakyat's Issues

90. Online fraud or scams have become critical. In 2022 alone, more than 25,000 of such crimes were recorded with a loss of RM850 million. Although the Government has established the National Scam Response Centre (NSRC), there is a lack of consistent policy in managing this issue due to differing guidelines amongst the banking institutions. In order to strengthen the role of NSRC, a total of RM10 million has been allocated as an operational grant.

91. Bank Negara will also enforce a "kill switch" policy to all banking institutions, to enable users to freeze their accounts immediately, including ATM cards, to prevent unauthorised use.

92. People who are declared bankruptare entitled to a second chance. As of January, more than 260,000 bankruptcy cases have been recorded involving majority of Malay youths, who have the potential to contribute back to the national economy.

  • The Government will amend the Insolvency Act 1967 so that bankruptcy cases can be automatically discharged quickly.
  • While waiting for the amendment of the Act, minor cases involving debts of less than RM50,000 that fulfil the criteria will be immediately discharged beginning 1 March 2023.
  • The Government expects 130,000 rakyat to be released from their bankruptcy status with the passing of this amendment.

93. Prisoners also deserve a new lease in life. To ensure their successful reintegration into society, ex-prisoners will continue to receive adequate training through the Skill for Inmate Programme. Employers are also encouraged to employ ex-prisoners, including former residents of Henry Gurney School and JKM protection and rehabilitation institutions, and are eligible for additional tax deductions. The Agro Penjara programme, which involves prisoners in agricultural activities on a 70-hectare prison land, will be further strengthened with an allocation of RM10 million.

94. The Unity Government is proactive about the safety of our society, especially women and children. However, problems involving women and children are still 
at a worrying level. 

  • D11 of the Royal Malaysian Police will be more aggressive in investigating sexual abuse cases, women and children. A special team under Unit D11 will be established exclusively to combat child pornography and will cooperate with various agencies to apprehend the perpetrators involved.
  • The Ministry of Women, Family, and Community Development will also establish a Children Development Department under the Social Welfare Department to provide more comprehensive support to children.

95. Companies that provide consumer credit services such as factoring companies and Buy Now Pay Later services need to be regulated to protect the rights of consumers. To ensure fair treatment and protect the rights of the rakyat and businesses, the Government will enact the Consumer Credit Act that is expected to be tabled this year, and establish a Consumer Credit Monitoring Board to regulate credit businesses.

96. To help the underprivileged in obtaining fair and impartial representation, the Legal Aid Department will raise the eligibility limit for total legal aid from RM30,000 to RM50,000. The scope of the Legal Aid Department will also be expanded to cover civil and Syariah cases. Moving forward, the Government will closely examine an initiative to enact a special Act to provide free legal aid for criminal cases so that the underprivileged too have access to justice.

Fifth: Institutional Reform

97. The Government is pursuing efforts to reform public service institutions that are seen to have overlapping jurisdictions and almost similar functions. This effort also includes the possibility of full independence and separation from remunerations for Federal Statutory Bodies that are self-sustaining. This effort is important to reduce dependency on the Federal Government.

98. Centralising government bodies with similar functions aims to make them more effective in carrying out their mandates. 

  • For example, the Government proposes the restructuring of Bumiputera investment institutions by combining Yayasan Pelaburan Bumiputera, Yayasan Amanah Hartanah Bumiputera as well as Yayasan Ekuiti Nasional in the near future.
  • The Government is also studying the need to restructure all agencies that oversee and coordinate the startup and innovation ecosystem. This is important to effectively coordinate efforts to develop local startup companies, from the seed stage to successful listing on Bursa Malaysia.
  • One main thing that should be paid attention to is that Government agencies should return to their raison d’etre. A new holistic direction is necessary to examine the possibility of winding up any unprofitable subsidiary companies that are not aligned with their original purposes of establishment, such as the setting up of travel agencies, security guards, and IT companies. The Government is considering the possibility of prohibiting companies and federal statutory bodies from continuing such practices.
  • A review needs to also be done on the remuneration package of chief executives and top management of companies and statutory bodies to a more reasonable rate.

THRUST 6: EMPOWERING PUBLIC-PRIVATE PARTNERSHIP

99. We must forge partnerships that leverage on each other’s strengths, where the Government facilitates, while the private sector drives economic growth, invests, and creates jobs.

First: Partnership with Industry for the Implementation of TVET

100. Not only is youth unemployment high, in fact, we are also trapped in an underemployment situation whereby people are not paid salaries that are commensurate with their qualifications.

101. The data indicates that 90% of TVET graduates get a job, but 90% earn a low income of only around RM2,000 per month. This is despite the Government spending up to RM6.7 billion for TVET. This is unacceptable and reforms must be implemented to ensure that 90% of TVET graduates receive a salary of more than RM2,000.

102. An initiative that should be emulated is the collaboration between the Penang state government and the electrical & electronic industry players that successfully provide jobs with respectable wages for TVET graduates. Companies such as Intel, Motorola, and Inari have benefitted from the Penang Skills Development Centre to organise training programmes based on their needs.

103. The Government intends to emulate and pilot this model involving Federal TVET institutions with a target involvement of 50 companies, especially among GLCs.

  •  These leading companies will partially or fully manage the operations of TVET institutions such as community colleges, industrial training institutes (ILP), and National Youth Skills Institutes (IKBN) to provide training programmes that meet their needs. For example:

o PETRONAS to lead the oil & gas cluster in Pengerang, Kimanis, Batu Rakit, and Miri;
o DRB Hicom for the automotive cluster in Pekan; 
o Sunway for the hospitality cluster; and 
o MRCB for the construction cluster.

  • This reform can harness Government resources more effectively to produce TVET graduates that match industry needs. Public-private partnerships through the new approach like this will continue to be explored for other areas or Government services.

104. To strengthen industry cooperation, the National Dual Training Scheme (SLDN) was bolstered with an allocation of RM50 million to benefit more than 8,000 trainees. The Academy in Factory programme will be carried out to provide on-the-job training opportunities to more than 50,000 trainees.

Second: Incentives to Provide Jobs with Meaningful Income

105. The Government will continue to encourage the private sector to pay higher wages.

  • SOCSO will provide an incentive of RM600 monthly for three months as an addition to the salary offered for employers who hire TVET graduatesThis is estimated to help 17,000 graduates. RM45 million is provided for this purpose.
  • SOCSO will also provide incentives for employers to employ vulnerable groups such as persons with disabilities, ex-convicts, the homeless, and chronically unemployed for up to RM600 monthly for up to three months.

106. The Government also encourages the youth to improve their capability and skills to earn a more meaningful salary.

  • The Government will cover up to RM4,000 in training fees for gig workers to undergo micro credentials upskilling programme. PERKESO also provides an allowance of RM300 for three months as a replacement income for active gig workers undergoing training programmes. Overall, RM40 million is allocated to benefit 30,000 gig workers.
  • The Human Resource Development Corporation (HRDCorp) with a fund of RM1 billion will be utilised to implement skills training programmes for employees of registered employers who have accumulated levies.

107. To help address youth unemployment, GLCs will offer 35,000 career opportunities to school leavers and graduates

108. The palm oil sector has suffered a RM20 billion revenue loss due to policy that limits the employment of workers, especially foreign workers. With the recent amnesty policy, this issue has been almost resolved without involving agents who make high profits. 

109. Most high-risk sectors are still reliant on foreign workers. This is due to these sectors offering low wages and worker welfare is not guaranteed.

110. Sime Darby Plantation’s experience has shown that local workers are willing to work in oil palm plantations if the salary is at least RM3,000 and have agile working environment, assisted by mechanisation and automation. They target to employ 100% local workers by the end of 2027.

111. Therefore, the Government will provide RM50 million in matching grants to encourage automation in the plantation sector through the use of robotics and Artificial Intelligence (AI) that can employ skilled local workers.

112. Regarding the issue of the oil palm industry, we hold the anti-palm oil movement in contempt, which is still actively perpetrated by international NGOs. It is important for us to act consistently to defend and expand the country's palm industry market. RM80 million is provided to improve the sustainability of the oil palm industry and intensify efforts to counter Anti-Palm Oil Campaigns.

Dato’ Speaker Sir,

113. The Unity Government is sensitive to women’s needs, especially those who have to stop working after their maternity leave to look after their children because the cost of childcare is high.

  • To support women to return to work, SOCSO will amend its Act to allow for a grant equal to 80% of the insured employee's salary. It is estimated that over 130,000 women returning to work after childbirth will benefit from this grant, involving a total fund of RM290 million per year.
  • I urge employers to play their role to establish childcare facilities within their offices. The Government will also streamline the guidelines for childcare centres in the workplace, including permitting them to be set up on higher office floors.
  • The government is proposing to extend the tax relief for childcare centres fees. With this extension, employers are also encouraged to utilise the existing tax incentive on the cost of providing childcare centre in offices. If the response is lacklustre, the Government will examine the need to mandate the establishment of such facilities to support working mothers.
  • At the same time, the Government will facilitate the registration process and restart the legalisation programme of unregistered nurseries and childcare centres nationwide. A total of RM15 million is provided as a soft loan to help entrepreneurs.
  • For civil servants, the Government will provide a monthly nursery fee subsidy of RM180 and raise the eligibility monthly income limit for eligible households from RM5,000 to RM7,000.
  • To expand access to early childhood education, the Government will continue to build 80 KEMAS nurseries and childcare centres, including 13 new projects.

Third: Matching Fund to Boost the Tourism Sector

114. Our country is rich with an abundance of natural treasures, mesmerising beaches, and diverse flora and fauna. These advantages have the potential to generate significant income through tourism activities in resort islands or heritage areas. To boost this sector, the year 2025 has been announced as Visit Malaysia Year with a target of 23.5 million international tourist arrivals and projected revenue of up to RM76.8 billion.

115. The Government will allocate RM250 million to promote tourism including providing RM115 million matching grant fund to collaborate with the tourism and culture industry.

  • These matching grants are, among others, to encourage tourism promotional activities and organisation of major events such as international sports and cultural events.
  • These matching grants will also be used to promote charter flights to Malaysia.

116. In relation to tourism, traffic congestion has adversely impacted numerous prominent tourist destinations. The Government will implement the following projects:

  • build new roads from Habu to Tanah Rata, Cameron Highlands with a cost of RM480 million.
  • upgrade Jalan Tun Hamzah up to the intersection of Semabok Lebuh AMJ Central Melaka District with a cost of RM300 million; and
  • build Sungai Sepang road and bridge to connect Bukit Pelandok, Port Dickson and Sungai Pelek, Sepang with a project cost of RM160 million; and
  • Improve the highway facilities to Pengerang by constructing an overtaking lane on the Senai Desaru Expressway. The Government also agreed to execute in phases the upgrading project of North-South Highway from Yong Peng Utara to Senai Utara — Fasa 1, Johor Bahru, from four to six lanes with the cost of RM525 million.

THRUST 7: PRIORITISING THE DIGITAL AGENDA

First: Internet Connectivity for the People

117. All rakyat have the right to stable Internet access, because it has become a basic necessity in daily life.

118. The Government will accelerate the implementation of the JENDELA project as a national effort to provide access to the Internet. For the year 2023, RM725 million is provided to implement digital connectivity projects at 47 industrial areas and around 3,700 schools.

119. The previous administration has spearheaded the 5G initiative through Digital Nasional Bhd (DNB). By the end of 2022, DNB had achieved 50% coverage of populated areas and is expected to reach 80% coverage by the end of 2023. The Unity Government is now taking an approach where DNB is managed with transparency and inclusivity so that all the industry players will participate. Ultimately, what is important is to achieve comprehensive 5G coverage at an affordable price for the rakyat.

Second: Digitalisation of Business

120. Rakyat’s businesses should also quickly adapt to digital technology so that they can expand the market for their products and services.

  • The Government will strengthen the role of the Digital Economy Centre (PEDi) to help small entrepreneurs with ICT and e-commerce knowledge. Before the end of 2023, the Government will ensure that there is at least one PEDi facility in each DUN (1DUN 1PEDi).
  • To support business automation and digitalisation activities, a total of RM100 million is allocated under the SME Digitalisation Grant Scheme, which includes small hawkers. A matching grant of up to RM5,000 will be paid to SMEs that subscribe to business digitalisation applications such as POS sales systems, accounting, or inventory management.
  • A financing fund of RM1 billion is allocated under BNM to support MSMEs to automate their business processes and digitalise their operations.

THRUST 8: STRENGTHENING THE ROLE OF GOVERNMENT-LINKED COMPANIES AND AGENCIES

121. GLC and GLICs play a huge role as the driving force behind the country’s economy. This year, the cumulative investment value of government-linked companies is estimated to reach RM50 billion. The investment focus includes venture capital in highly innovative startup companies.

First: Highly Innovative Start-Ups

122. I had the opportunity to meet several high-growth innovative companies, some of which have successfully listed on Bursa Malaysia and penetrated the global market.

  • To emulate this success, GLCs such as Khazanah and EPF will invest up to RM1.5 billion in innovative and high-growth local startup companies with investment value of RM1.5 billion.
  • The Government plans to extend the tax deduction of up to RM1.5 million on expenses incurred for listings on the ACE and LEAP Markets until the year of assessment 2025. The tax deduction is also expanded to include the cost of listing technology-based companies on Bursa Malaysia’s Main Market.

123. Government agencies will continue to expand capital funding opportunities and attract local talents in highly innovative sectors

  • RM40 million is allocated under the Malaysia Coinvestment Fund (MyCIF) as a matching fund to support alternative funding methods. This will make the available accumulated funds under MyCIF amount to RM300 million.
  • The Securities Commission Malaysia will also facilitate the creation of more secondary markets for private market instruments to increase liquidity and enable better price discovery. To encourage the listing of local high-growth technology companies, the Government will allow the issuance of dual-class shares.

Second: Corporate Social Responsibility

124. GLC and GLIC companies also contribute to the implementation of various programmes for the welfare of the rakyat and the country. These include: 

  • a corporate social contribution of up to RM250 million to focus on helping the hardcore poor in every possible way, to improve their quality of life.
  • In addition, to preserve national heritage, Khazanah Nasional Bhd will lead the formation of the National Heritage Fund, which has an estimated cost of RM700 million and aims to attract private participation in restoring national heritage buildings. This includes the redevelopment of Bangunan Sultan Abdul Samad and Carcosa Sri Negara, in collaboration with ThinkCity.
  • ThinkCity will also work with DBKL to participate in efforts to give meaning to life in the city through beautification projects of focal locations, as well as raising the potential of historical and cultural assets. RM30 million is also provided to increase the liveability of public housing in Kuala Lumpur.
  • On the same matter, the Government will also channel an allocation of RM50 million each to the states of Melaka and Penang to continue to preserve world heritage sites recognised by UNESCO.

III. SOCIAL JUSTICE TO BRIDGE INEQUALITY

125. This country longs for a Malaysia that respects and cares for each other. Kindness and grace are essential in upholding social justice to ensure the well-being of ALL the rakyat.

THRUST 9: ERADICATING HARDCORE POOR

First: Cash Assistance and Livelihood Initiatives

126. The Government is determined to eradicate hardcore poverty. About 130,000 hardcore poor rakyat, regardless of race, will be immediately helped to lift them out of poverty through more holistic measures.

127. The Government will implement the People's Income Initiative (IPR), which will focus on empowering the poor to increase their income potential. A total of RM750 million is allocated to the Ministry of Economy in 2023 to make IPR successful. 

128. Several new approaches will be implemented to overcome the weaknesses of former practices, to increase the ability of hardcore poor households to earn an income, among others:

  • Assistance and facilities to participants are no longer given in a single tranche but on a monthly basis and will be monitored for sale and leaseback of equipment or employment subsidies for employers who employ hardcore poor participants.
  • Participants involved in economic activities must meet the needs of the local community, especially the agricultural and food sectors, to ensure consistent market demand.
  • This programme aims for the participants to earn between RM2,000 to RM2,500 within a 24-month monitoring period and, after that, enable them to generate their own income through the revenue obtained.

129. For the same purpose, the Government is currently providing welfare aid worth RM2.5 billion to over 400,000 recipients. To expedite data updates and ensure that no one is left out of receiving this aid, the Government will carry out a whitelisting of recipients of the Government monthly assistance between ICU and JKM in one database. 

Second: Role of the State Governments

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