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BUDGET 2024 SPEECH

BY YAB DATO’ SERI ANWAR BIN IBRAHIM
PRIME MINISTER AND MINISTER OF FINANCE

INTRODUCING
THE SUPPLY BILL (2024)

IN DEWAN RAKYAT
FRIDAY, 13 OCTOBER 2023

THEME: BUDGET 2024: ECONOMIC REFORMS, EMPOWERING THE PEOPLE

I beg to move the Bill intituled “An Act to apply a sum from the Consolidated Fund for the services of the year 2024 and to appropriate that sum for the services of that year” be read a second time.

Bismillahirrahmanirrahim.
Assalamualaikum Warahmatullahi Wabarakatuh and Salam Sejahtera.

Allah SWT decreed in Surah Al-Qasas, verse 77:

But seek, with the wealth which Allah has bestowed on you, the reward and happiness of the Hereafter. Do not forget your share (of the needs and provision) from this world and be good (to others) as Allah has been good to you (by giving more than what you needed), and do not seek mischief in the land. Allah does not like the mischiefmakers.

1. This reminder from Allah SWT to the human race is indeed meaningful. There must be determination to plan ways to ensure the wellbeing of the people during this chaotic and challenging time as the world is no longer what it used to be.

2. We are now going through an unusually strange epoch, one that is unprecedented in the history of human civilisation. The world has yet to recover from the lethal grip of the COVID-19 pandemic, which has not only debilitated us health-wise, but also weakened entire limb and nodes of a country’s core and societal structure.

3. Thus, faced with a postnormal era which are characterised by chaos, complexity and contradiction, will help us navigate our way out. The circumstance is further made complex due to multifarious factors which move at alarming speed, scope, scale and simultaneity. As a result, it victimise the Rakyat, damages the ecosystems and disrupts food supply chain.

4. Therefore, we must adumbrate and assimilate by addressing the impediments in the country’s economic system. We start by improving governance, administrative systems and eradicating corruption. Among the notable examples is the implementation of a broad-based subsidy system that has benefitted the elite and superrich.

5. The economic policy is supposed to be geared towards growth and economic flattening. However, a huge amount of subsidies has benefitted the rich. It is hoped that by improving the leakage of subsidies, the proceeds can be distributed to the Rakyat including the increase in wages of the working class.

6. Past losses have also resulted in the country’s debt and liabilities reaching RM1.5 trillion or 82 percent of the GDP. Debt service payments alone are expected to register RM49.8 billion or 15.2 percent of revenue in 2024. Only by reducing the deficit and liabilities can the Government restore the country’s fiscal position.

7. The determination to change must begin with the commitment of every citizen, shown from confidence and conscience. This is expressed by the Algerian thinker Malik Bennabi as “the inner struggle of conscience,” followed by “collective consciousness for renewal” – a shared awareness towards reform.

8. Therefore, the Budget 2024 which I term as the Second Belanjawan MADANI demonstrates the commitment and determination of the Unity Government in actualising our intent to elevate the country and Rakyat’s economic stature.

9. Alhamdulillah, as we approach a full year, the Unity Government has strived to restore the strength of our homeland. The domestic economy remains strong.

10. While this achievement proves the country is on track, we should not rest on our laurels and become complacent. We must acknowledge that the global economic situation has dampened our economic performance. The Gross Domestic Product (GDP) in the second quarter of 2023 recorded a moderate growth of 2.9 percent compared to 5.6 percent in the first quarter. Overall, in the first half of 2023 we have achieved growth of 4.2 percent.

11. This achievement reflects the subdued demand in exports as well as the high-base effect in the second quarter of last year. In line with this development, the GDP growth for the year 2023 to be projected at approximately 4 percent.

12. Therefore, existing opportunities need to be capitalised on to comprehensively reform our economic structure to restore the nation’s status as an Asian powerhouse.

13. Consequently, the Ekonomi MADANI: Memperkasa Rakyat was launched as the main framework to address complex immediate and long-term challenges by raising the ceiling and floor. The focus is to reform the economic structure and raise the standard of living of the Rakyat. The measures under the Ekonomi MADANI aims to achieve seven benchmarks as medium-term targets.

14. Ekonomi MADANI also serves as a guide to policies that have been launched, namely the National Energy Transition Roadmap (NETR), the New Industrial Master Plan (NIMP) 2030 (NIMP 2030) and the Mid-Term Review of the Twelfth Malaysia Plan (MTR of the Twelfth Plan).

15. Today, the Second Belanjawan MADANI is presented as a continuation of the Ekonomi MADANI framework. Efforts will follow the priorities and benchmarks of Ekonomi MADANI, namely:

First: Good Governance for Service Agility;

Second: Restructuring of the Economy to Boost Growth; and

Third: Raising Rakyat’s Standard of Living.

16. The Economic MADANI framework has set a clear goal, which is to improve the Rakyat's standard of living and to regain our lead as a regional economic champion.

17. Hence, a reform must be implemented even it is difficult. This includes expanding the revenue base, implementing targeted subsidies and eradicating all forms of systemic corruption and malpractice. We also need an efficient, intelligent and agile public service in realising the country’s build back better agenda.

First: Fiscal Responsibility

18. The increase in subsidies in 2023 is accommodated by savings and revenue additions. For 2023, the revised revenue estimate is RM303.2 billion compared to RM291.5 billion. Total deficit is projected at 5 percent of GDP.

19. For 2024, the Government expects GDP to grow within the range of 4 to 5 percent. Despite the World Bank and the International Monetary Fund (IMF) projection for Malaysia’s economy to grow at 4.3 percent. With the Ekonomi MADANI reform that will be implemented, the Government is confident of achieving growth nearing 5 percent.

20. The Government’s revenue collection is expected to record an increase from RM303.2 billion this year to RM307.6 billion in 2024. Fiscal deficit in 2024 is projected to decrease to 4.3 percent compared to the target of 5 percent this year and 5.6 percent in 2022.

21. In the medium term, we will achieve a 3 percent deficit of the GDP or lower, as set in the Ekonomi MADANI framework. Alhamdulillah, yesterday, this August House passed the 2023 Public Finance and Fiscal Responsibility Bill or the Fiscal Responsibility Act (FRA). This reinforces the Government’s commitment in strengthening the governance and ensuring transparency and accountability.

Second: Budget 2024 Estimation

22. The Second Belanjawan MADANI has allocated RM393.8 billion, the highest budget ever tabled. From that, RM303.8 billion is allocated for operating expenditure, while RM90 billion is allocated for development expenditure and RM2 billion for contingency savings.

23. The expenditure includes an increase in the Twelfth Plan ceiling by additional RM15 billion, totalling RM415 billion for the period of five years. This increase implies that the Government is adopting expansionary fiscal stance while at the same time being accountable in reducing the deficit fiscal in stages.

Third: Expansion of Revenue Base

Tan Sri Speaker Sir,

24. The facts are:

25. Thus, as a measure to improve the quality of services and assistance to the Rakyat, the Unity Government is responsible for broadening the revenue base. Beginning next year, a number of tax reform measures will be implemented to broaden the country’s revenue base, while not burdening the majority of the Rakyat.

26. FIRST: The Government plans to increase the Service Tax rate to 8 percent instead of 6 percent. However, in order not to burden the Rakyat, this increase does not include services such as food and beverage as well as telecommunications. The Government will also expand the scope of taxable services comprising of logistics, brokerage, underwriting and karaoke services.

27. SECOND: Considering inputs and views received from various stakeholders during a series of engagements, the Government will enforce the implementation of Capital Gains Tax on net profit derived from the disposal of local companies’ unlisted shares based at a rate of 10 percent beginning 1 March 2024. The Government will also consider the exemption of Capital Gains Tax on the disposal of shares related to certain activities such as approved Initial Public Offering (IPO), internal restructuring, and venture capital companies subject to the stipulated conditions.

28. THIRD: The Government will enact new legislation to implement the High Value Goods Tax at a rate of 5 to 10 percent on certain high value items such as jewellery and watches based on the threshold value of the goods price.

29. Malaysia needs to be in line with international taxation standards especially in curbing tax base erosion activities and the transfer of profits to countries with low tax rates. Taking into account the feedback from industry and the latest international developments, the Government is expected to implement the global minimum tax in 2025 and only applies to companies with a global income of at least EUR750 million euros. The government will also continue to monitor the development of the global minimum tax at the international level.

30. In relation to the implementation of e-invoice by the Inland Revenue Board of Malaysia (IRBM), the Government takes into account the feedback received and to provide ample time to the taxpayers:

31. Enforcement agencies will continue to intensify joint efforts in addressing revenue leakages. For instance, cigarette smuggling control measures has contributed to a decrease in the percentage of illegal cigarettes in the local market to 56.6 percent in 2022 compared to 63.8 percent in 2020. As the number of illegal cigarettes in the market is still high, inter-agency cooperation will be enhanced including tightening of liquor smuggling control.

32. Beginning 1 January 2024, the Government will tighten the smuggling control measures and expand the measures to liquor products.

33. The Government appreciates the commitment of enforcement agencies such as the Royal Malaysian Police (RMP), the Malaysian Anti-Corruption Commission (MACC) and the Royal Malaysian Customs Department in enhancing enforcement efforts and operations to combat the leakage of national revenue. The agility of RMP to combat crime and MACC’s efforts to ramp sack financial syndicates and cartels should be appreciated. As an encouragement, I am pleased to reward the enforcement agencies that demonstrate continued commitment and excellent performance.

Fourth: Targeting of Subsidies

Tan Sri Speaker Sir,

34. Budget 2023 allocated RM64 billion for subsidies and aid expenditure but this year's needs are expected to reach RM81 billion. The increase is due to the Government's move to maintain the price of subsidised goods for the Rakyat despite the unexpected increase in world commodity prices. Even though subsidised goods help the people in minimising the cost of living, the fact is that the subsidies are benefitting more by the rich and the cheap prices have increased leakage and smuggling abroad. In fact, subsidies were also enjoyed by more than 3.5 million foreigners.

35. Thus, starting next year, the retargeted subsidy approach will be implemented in phases. A portion of the savings will be channelled to increase the allocation of cash assistance through the Rahmah Cash Contribution from RM8 billion to RM10 billion.

36. Since February 2022, the Government has incurred RM3.8 billion for chicken and egg subsidies. The initial purpose of this temporary subsidy was to control the sudden increase in chicken and egg price and to address the shortage of supply.

37. Alhamdulillah, current trends indicate that the supply of chicken and egg has started to stabilise and the current market price is now below the control ceiling price. Thus, the temporary price controls will be lifted to enable the local market to function freely in ensuring the availability of chicken and egg supply in the market.

38. Announcements on further concrete measures will be made by the Ministry of Agriculture and Food Security in two weeks’ time.

39. The provision of broad-based electricity subsidies is very burdensome and benefit the rich more. In 2022, the trend shows that 10 percent of the consumers with the highest electricity consumption enjoyed 50 percent of the subsidies, while 50 percent of the consumers with the lowest electricity consumption enjoyed only 10 percent of the subsidies provided.

40. Therefore, starting this year, the Government has implemented targeted subsidies by lifting some of the subsidies for the highest 10 percent of electricity consumption, but at the same time, maintaining the same subsidies for 90 percent of consumers. This targeted approach has saved over RM4.6 billion of the projected electricity subsidy of RM20 billion. However, the Government still bears RM16 billion in electricity subsidies in 2023 especially for consumers in homes and MSMEs.

41. The Government will continue to improve the approach of targeted electricity subsidy according to the level of electricity consumption. The Government hopes that this decision will send the right signal to consumers to practise energy efficiency and thrifty practices in the daily use of electricity.

42. The Government agrees to continue providing electricity bill rebates of up to RM40 per month to hardcore poor households with an allocation of RM55 million. In addition, the Government also agrees to waive deposit payment of electricity bill in their own names.

43. Diesel fuel also faces serious leakage issues. The current price of subsidised diesel is set at RM2.15 compared to the market price of RM3.75 per litre. This means that the Government has to bear RM1.60 per litre of diesel or around RM1.5 billion in total. According to diesel consumption date, sales of subsidised diesel have increased by up to 40 percent since 2019, even though the number of vehicles using diesel has only increased by less than 3 percent. This means that there is a possibility of serious smuggling activities due to the cheaper price of Malaysian diesel.

44. To prevent leakage and smuggling, the Government intends to rationalise diesel prices in stages. Conceptually, the price of subsidised diesel will continue to be enjoyed by selected consumers such as freight transport. Meanwhile, other users will be charged higher prices. This approach can reduce the leakage of subsidies but at the same time, reduce the impact on the price of goods for the Rakyat.

45. Finally, to achieve the goal of retargeted subsidy implementation, the trade relationship between the buyer and the seller must be based on honesty. Although we do not deny traders’ right to make reasonable profits, but the symptoms of cartels and price pacts that cause excessive and uncontrolled price increases are against the MADANI principle. The Government will not remain silent if the implementation of retargeted subsidies is used as an excuse to increase prices in reckless and unreasonable manners.

46. Therefore, the Government’s focus is to eliminate the parasitic practice through strict and comprehensive control measures by the Ministry of Domestic Trade and Cost of Living (KPDN) as well as strengthening the capacity and functions of the Malaysian Competition Commission (MyCC) with an allocation of RM10 million.

47. Chinese philosopher Mengzi formulated four fundamental points as pillars of moral strength:

仁 rén (insaniyah), 义 yì (righteousness),
智 zhì (wisdom) dan 礼 lǐ (ritual propriety).

48. It is this internal strength that strengthens the Government’s determination to implement reforms to end the suffering of the Rakyat, eradicate systemic corrupt practices, reduce bureaucracy to hasten Rakyat-oriented projects and develop a stable political order.

First: Special Task Force on Agency Reform (STAR)

49. In driving the reform agenda, the Special Task Force on Agency Reform (STAR) chaired by the Chief Secretary to the Government has succeeded in accelerating the implementation of projects, especially those involving the issue of overcrowding in hospitals and the refurbishment of dilapidated schools and clinics. Next year, the STAR Team is entrusted to accelerate implementation in the maintenance of Government’s lifts (RM91 million) and Government quarters (RM170 million).

Second: Legislative Reform

50. With the passing of the 2023 Public Finance and Fiscal Responsibility Bill, the Unity Government’s onward commitment is to table the Government Procurement Bill in the Parliament, next year.

51. The Government has allocated RM18 million to launch legislative reform. This includes the preparation of the Implementation of the Alternative Punishment Execution Bill Against Mandatory Death Penalties.

52. The Judiciary is an independent institution that protects the sanctity of the Federal Constitution and the sovereignty of the law. An allocation of RM38 million is provided to increase the productivity of the country’s judicial institutions. This provision includes the priority of refurbishing infrastructure as well as upgrading the ICT facilities in court that are obsolete and damaged. This also includes empowering RM20 million to empower the Academy of Judiciary Malaysia and the Academy of Syariah Judiciary Malaysia to train judges of the upper courts in a more planned and effective manner.

Third: Public Institutions Reform

53. Based on several studies carried out to improve revenue sustainability, social protection, governance of Government-Linked Companies (GLCs) and national debt management, the recommendations that will be implemented are as follows:

Fourth: Public-Private-Philanthropy Partnership

54. In line with the MADANI Economic Framework, the Government will focus on Public-Private-Philanthropy Partnership (PPPP) in implementing projects for the Rakyat.

55. In addressing various issues of the Rakyat, the Government allocated RM100 million to continue supporting the efforts taken by NGOs and civil society organisations including Yayasan Hasanah.

56. To ensure the sources on income of institutions, organisations and funds approved under subsection 44(6) of the Income Tax Act 1967 continue to be sustainable and support the welfare initiatives envisaged by the Government, it is proposed that the terms of use do not exceed 25 percent of the funds raised for the purpose of involvement in business be increased to 35 percent. With this flexibility, cooperation between the Government and NGOs can be strengthened to improve Rakyat’s quality of life.

57. The Government will continue to defend the fate of the Rakyat and focus on services and projects which benefit Rakyat’s wellbeing. Among others, the Government will address the basic problems of the Rakyat that still linger.

First: Managing Rakyat’s Difficulties

(a) Repairing Lavatories

58. It is unacceptable that all this time we have allowed our children to attend school with deplorable basic facilities, particularly broken and dilapidated lavatories. Insya-Allah, repair works of lavatories in 8,354 schools nationwide is about to be completed by the end of this year. Next year, the same determination will be intensified to refurbish public lavatories nationwide. RM150 million is allocated to maintain and repair public lavatories in 150 local authorities nationwide.

(b) Road Accidents

59. Road accidents continue to contribute to a high number of deaths. Over the past decade, we have recorded an average of over 6,000 deaths due to road accidents. The latest tragic incident that claimed the lives of an entire family on Jalan Kuantan-Segamat- Bandar Muadzam had the whole country in mourning. The Government will continue to prioritise road safety aspects.

60. Alhamdulillah, until August, more than 4,100 potholes on federal roads have been identified and repaired. The Government is committed to ensuring that action is taken within 24 hours after receiving complaints regarding potholes on Federal Roads.

(c) Justice for Rakyat

61. Alhamdulillah, following the increase in the eligibility limit to get full legal aid to RM50,000, the number of civil and shariah cases receiving legal aid has increased to 8,500 cases. Next year, the function of the Legal Aid Department will be strengthened in defending the plight of the poor in getting justice.

62. This Government leaves no one behind. This Belanjawan MADANI allocates an addition of RM10 million under the Kumpulan Wang Amanah Rakyat Malaysia Luar Negeri to safeguard our citizens who fall victims to employment fraud syndicates and other welfare cases abroad.

(d) Second Chance Policy

63. As of July 2023, nearly 14,000 bankruptcy cases with small debts below RM50,000 have been discharged from bankruptcy. As a result of the implementation of the Second Chance Policy, the Insolvency Act (Amendment) 2023 has also automatically released urgent and backlogged cases that meet the conditions from bankruptcy declaration.

64. Next year, the Second Chance Policy will be extended to young individuals aged 40 and below with debts not exceeding RM200,000.

(e) Public Service Delivery

65. Those living in remote areas also have equal rights to government services. Next year, the Government will intensify the initiatives to deliver services directly to the Rakyat with an allocation of RM26 million including:

(f) Online Fraud (Scam)

66. Since establishment, the National Scam Response Centre (NSRC) has handled more than 49,000 calls and successfully froze up to RM60 million in transactions. Next year, the Government will increase the allocation up to RM20 million instead of RM10 million to further improve the functionality of the NSRC to combat scam related crimes.

67. Bank Negara Malaysia in collaboration with the financial sector is developing the National Fraud Centre (NFC), which is expected to be completed by the middle of 2024. With the automated ability to track funds, we hope that this Portal will speed up the time to detect, freeze and return funds.

68. In this regard, the related agencies are examining the need to amend the law including the Criminal Procedural Court to enable more effective actions to be taken against syndicates and account mules, further expediting the return of the money to the scam victims.

Second: Development of Sabah & Sarawak

69. Under the Unity Government, the attempt to honour the agreement achieved by the previous leaders in the Malaysia Agreement 1963 has been realised.

70. FIRST: Next year, the Federal allocation for the development of Sarawak will increase to RM5.8 billion from RM5.6 billion. Meanwhile, for Sabah, the allocation will increase to RM6.6 billion compared to RM6.5 billion. To increase the effectiveness of the allocation, the Federal Government has also delegated the authority to implement development projects valued under RM50 million to technical agencies in Sabah and Sarawak.

71. SECOND: The Unity Government has increased the interim Special Grants rate for Sabah and Sarawak to RM300 million compared to RM16 million for Sarawak and RM125.6 million to Sabah previously. The last review of Special Grants to Sarawak and Sabah was done in 1969 and 2022 respectively.

72. THIRD: The Malaysian Internal Revenue Board Bill (Amendment 2023) has been passed by the Dewan Rakyat yesterday to allocate a representative of the Sabah State Government named as the Chief Minister of Sabah and a representative of the Sarawak State Government named as the Premier of Sarawak in line with the results of the Intergovernmental Committee (IGC) Report, 1963.

73. FOURTH: The Federal Government and the Sabah State Government have reached an agreement regarding the transfer of electricity supply regulatory powers, which will come into effect on 3 January 2024. Although the regulatory power will be transferred to the Sabah State Government, the Federal Government will continue to assist the Sabah State Government in strengthening the electricity supply industry in Sabah by providing subsidies to Sabah Electricity Sdn. Bhd. (SESB) until the SESB Transformation Plan is successfully implemented by 2030.

74. FIFTH: To ensure stability and reduce electricity supply disruptions in Sabah, especially in the eastern areas, the Federal Government will support the implementation of hybrid solar energy generation as well as the construction of a network of electricity transmission lines in southern Sabah.

75. SIXTH: The Federal Government is also negotiating the handover of Bintulu Port and the operation of the Rural Air Service (RAS) to the State Governments.

Third: Digitalisation of the Public Sector

76. By the end of the Twelfth Plan, our aim is to be ranked among the top 20th in the Government Efficiency Sub-Index in the Global Competitiveness Report. To further improve the efficiency of public services, the National Digital Identity (NDI) development will be expedited as a reliable endorsement platform.

77. In empowering the digitisation of public service delivery, GovTech Nucleus Unit has been created to build internal expertise. This unit will also facilitate the development of National Digital Identity and other user-friendly applications at optimal cost.

78. The Ekonomi MADANI framework is aimed at establishing Malaysia as a regional economic champion. To achieve this goal, the economic structure needs to be restructured and reorganised so that existing potentials can be harnessed. NIMP targets a total investment of up to RM 95 billion while involving 3.3 million job opportunities with median salaries of up to 4,510 ringgit per month by 2030.

79. The Government will allocate up to 10 percent from the total NIMP investment as a catalyst to accelerate the NIMP mission with a 2024 startup fund amounting to RM200 million.

First: Priority of the HGHV Sector

80. Among the structural issues that disrupt the economic system include the industrial sector that contracts prematurely. The contribution of the manufacturing industry has remained below 25 percent of GDP. To curb this problem, future investment priorities are focused on high growth and high value (HGHV) areas.

81. The results-based incentive is a new dimension that uses a tiered system in the provision of incentives. It will stimulate companies to generate economy through investment in high-growth and high-value areas and eventually create new economic clusters, expand the domestic network and establish the balance between the economy and environment. With this, companies will enjoy an incentive equivalent to their respective commitments. To begin with, the Government plans to provide a tiered reinvestment tax incentive in the form of investment tax allowance of either 70 percent or 100 percent.

82. To support the ecosystem of high-value activities, the Government proposes that the Pengerang Integrated Petroleum Complex (PIPC) be turned into a development hub for the chemical and petrochemical sector with a tax incentive package in the form of a special tax rate or investment tax allowance.

Second: Malaysia as an Investment Destination

83. Furthermore, the Government will also continue to intensify efforts to obtain more high-impact investments. In developing Malaysia’s advantage as a foreign investment destination, the Government will implement several new policies and directives to facilitate business.

Third: Internationalisation of Startups

84. The emergence of more local startups is essential to accelerate the restructuring of the country’s economy. The Government aims to rank in the top 20 for the Global Startup Ecosystem by 2030, in addition to making Kuala Lumpur as the hub for digital industry and startups for the Southeast Asian region.

85. In accordance with the decision of the National Digital Economy and Industrial Revolution Council, RM28 million is provided to develop the MYStartup platform as a single window that brings together startups while simplifying business activities throughout their lifecycle. This initiative will optimise RM200 million fund under various funding agencies and venture capital under a single platform.

86. To internationalise local startups and increase their competitiveness to penetrate the regional markets:

87. To support capital funding for startups:

First: allocation of RM100 million to MyCIF for a period of 3 years to complete the cooperation with food security initiatives, environment, the community and the State Islamic Religious Council to create opportunities for developing waqf assets for health, education and agro-based enterprises.

Second: tax incentives for individual investors investing in startups through the equity crowdfunding platform (ECF) will also be extended to individual investors through limited liability partnership nominee companies and extended until 31 December 2026.

Third: tax incentive for angel investors extended until 31 December 2026 to encourage capital in technology related startups.

Fourth: Leader of the Global Islamic Economy

88. I have alluded to the approach of the Islamic financial sector in Malaysia which is yet to meet the meaning of the Islamic maqasid based on justice and benefit for al because it uses the same financial instruments as an alternative to conventional banks.

89. The words of the late Nejatullah Siddiqi should be appreciated. He said, “more than anything else, Islamic banking and finance, which is a sub-culture of Islamic economics, has been a quest for justice and morality into the ordinary business of life”.

90. Alhamdulillah, the Islamic finance field has presented us with a modern banking method without usury for the past four decades. Nevertheless, this development should not stop here. The direction of the Islamic economy should be determined in order to be able to achieve the wider objectives of Islam, including addressing the gap between economic practices that are in line with the teachings of the Quran and Sunnah.

91. The International Conference on Islamic Economics and Finance (ICIEF2023) will be organised in December 2023 to resolve this issue as an effort to pioneer the transition to a more inclusive Islamic financial system.

92. This conference will bring together more than 400 thinkers and technocrats in the field of Islamic finance and involve nearly 100 presentation papers to cover the issues and actions that can be taken to dignify Islamic Finance.

93. The readjustment of the Islamic financial system is necessary in the effort to strengthen the impact of the Islamic financial sector in order to have the opportunity to provide equality, well-being and prosperity to all levels of the society.

94. The government proposes to exempt income tax on income derived from Islamic Securities Selling and Buying (ISSB) from the year of assessment 2024. This is to increase the overall volume of securities trading and the liquidity of the sharia-compliant stock market through the involvement of more investors and brokers in ISSB transactions in addition to ensuring equivalent treatment is provided for Securities Borrowing and Lending (SBL) transactions.

95. In order to support the development of the Labuan International Business and Finance Centre (Labuan IBFC) as an Islamic financial and sharia-compliant hub, the Government also proposes to exempt income tax in full for 5 years for Labuan entities that carry out trading activities related to Islamic finance such as Islamic digital banking, Islamic digital bursa, ummah-related company and Islamic digital token issuer from assessment year 2024.

96. The organisation of the 19th Malaysia International Halal Showcase last month recorded sales of halal products reaching RM3 billion, which is 24 percent higher than the initial target. The world’s largest halal exhibition matched 469 local companies with 231 international buyers from 44 countries.

97. The i-Tekad social finance programme has benefitted nearly 4,000 micro-entrepreneurs with encouraging response from 12 financial institutions. Therefore, the Government is allocating additional funds of up to RM25 million in matching grants with financial institutions to benefit more entrepreneurs.

98. The Government provided RM200 million last April to redevelop waqf lands in Penang through soft loans. Next year, the Government will increase the funding to RM500 million to provide soft loans to increase the redevelopment of waqf lands nationwide.

99. The Second Belanjawan MADANI will continue to support micro, small and medium entrepreneurs (MSMEs) in line with the goals of the Ekonomi MADANI framework. The priority is to support the increase of business capacity and competitiveness in raising the income of the Rakyat and the country.

First: Business Loan Facility

100. Next year, the total value of loans and financing guarantees available for the benefit of MSMEs amounts to up to RM44 billion.

101. Certainly, micro-entrepreneurs and small traders are provided with small loan facilities with funds amounting to RM2.4 billion under agencies such as BNM, BSN and TEKUN.

102. Under BNM, a total of RM8 billion in loan funds are provided to support SME companies. From this amount, RM600 million is dedicated to help micro-enterprises and low-income entrepreneurs, small contractors, the application of sustainability practices and food security related sectors.

103. For 2024, RM600 million has been allocated under the Dana Impak Khazanah Nasional, with priority to promote economic growth and provide more opportunities to rural, semi-urban communities and those with less access to financial services.

104. So far, the Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) has more than 100,000 SMEs including 75 percent of non-Bumiputera SMEs and 25 percent Bumiputera SMEs with a total approved value more than RM75 billion. Next year, SJPP will guarantee up to 80 percent of SME entrepreneurs’ loans, especially those involved in the green economy, technology and halal fields with the availability of a guarantee fund of up to RM20 billion.

105. Since its establishment, Amanah Ikhtiar Malaysia (AIM) has assisted 1 million borrowers, especially single mothers and the poor, by providing small business capital since its establishment. AIM has shown excellent performance by recording the lowest non-performing loan (NPL) rate of 0.26 percent in 2022. To support AIM’s function to eradicate poverty, the Unity Government has allocated RM100 million in funding.

106. Next year, RM100 million in financing funds will be provided to the cooperative movement through the Revolving Capital Fund under the Malaysian Cooperative Commission, among others, to assist more cooperatives.

Second: Strengthening the Competitiveness of MSMEs

107. MSME entrepreneurs should be quick to adapt to technology and digitise their products and services to penetrate a wider market. The Government will intensify its efforts to encourage MSMEs to increase their level of competitiveness through the transition of business models via automation and digitalisation.

108. To support companies to remain competitive, the Government proposes to reduce the time frame for companies to claim capital allowances on the purchase of ICT equipment and computer software packages to 3 years, instead of 4 years, from assessment year 2024.

Third: Local Talent Development

109. Today, the complexity of the economy demands highly skilled new talents to constantly adapt to the fast-changing world. Consequently, the development of local talent needs to be done immediately through precise refinement to ensure that it is in line with the requirements of employers and the industry.

110. Next year, the total allocation for TVET education amounts to RM6.8 billion. The First Belanjawan MADANI has piloted the efforts to revamp the country’s TVET education through collaboration with GLCs and private companies. As of 5 October, 17 GLCs and 44 private companies have been involved in the signing of 61 Memorandums of Understanding covering cooperation through curriculum development as well as the provision of equipment and expertise.

111. For example, PETRONAS has collaborated with Institut Kemahiran Belia Negara (IKBN) Bandar Penawar, Johor to provide industrial training services, curriculum development and equipment that meet the specifications of the petrochemical industry in Pengerang. Next year, RM100 million will be allocated to provide industry-recognised professional certification to TVET graduates and as an incentive for the industry to collaborate with public TVET institutions.

112. Next year, the Human Resources Development Corporation (HRD Corp) will use RM1.6 billion to train 1.7 million workers. At the same time, HRD Corp will reallocate special fund using 15 percent of the total levy collection to implement the MADANI Training Programme including talent retaining and skill improvement programmes for MSME entrepreneurs and vulnerable groups such as ex-prisoners, the disabled, the elderly and retirees.

113. Efforts to create more future talent that meet the needs of the industry will be streamlined and expanded through close cooperation between Government agencies and industry players.

114. The Skills Development Fund Corporation (PTPK) with TVET Training Fund amounting to RM180 million will provide education loans to 12,000 trainees undergoing the Program Persijilan Kemahiran. RM20 million is reserved to benefit trainees who are undertaking courses in the maritime field, arts at ASWARA, and maintenance, repair and overhaul (MRO) for the aerospace sector.

115. RM17 million is allocated to implement the Tahfiz TVET Programme. This programme will open opportunities for tahfiz students to diversify their skills while continuing their lesson in Hafazan.

116. To encourage the Rakyat to improve their skills and venture into new fields, tax relief of up to RM2,000 as payment for skills improvement or self-improvement courses is extended until the assessment year 2026.

117. The Government will also expand the scope for lifestyle to include the fees for attending self-improvement courses such as language courses, photography, tailoring classes and others.

Fourth: Rakyat’s Economy

118. The Government will continuously strive to lift and dignify the economy of the Rakyat. I am determined to see this country be known for its clean, beautiful and safe business facilities and stalls. I assure you that the welfare of hawkers and traders in the markets will continue to be protected to ensure comfort for the business community and visitors.

First: Hawker centres and public market infrastructure, 150 local government areas will be repaired and upgraded with an allocation of RM110 million.

Second: The Government aims to beautify and improve the cleanliness of 10,000 stalls with an allocation of RM10 million.

Third: 4,000 units of new streamlined, comfortable and safe trade spaces will be built in every local government area with an allocation of RM50 million. The Government has also agreed to waive kiosk rental fees for the first 6 months for traders.

Fourth: MARA, Perbadanan Usahawan Nasional Berhad (PUNB), Perbadanan Pembangunan Bandar (UDA) and the Kuala Lumpur City Hall (DBKL) will also upgrade their business facilities.

119. Efforts on the purchase of local products will be intensified through the Buy Made in Malaysia Goods Campaign and the Use of Goods and Services from Local R&D (MySTI) programme with an allocation of RM27 million.

120. To date, more than 1,200 business franchises have been registered under the Ministry of Domestic Trade and Cost of Living and from this, 720 are owned by local companies with sales value in the country reaching RM30 billion. In fact, well-known local franchise brands such as Marrybrown, Daily Fresh Foods, Secret Recipe, Smart Reader and Laundrybar have been operating in 80 countries. To expand the franchise trade, the Government has provided RM10 million under the Franchise Strengthening Programme to Increase Exports.

First: Logistics Sector

121. Focus will also be directed towards the development of the transport and logistics infrastructure, in line with current demands to attract more investors and tourists as well as boost trade activities.

122. To strengthen the ecosystem and efficiency of the country’s ports:

123. To encourage more commitment from investor companies to make Malaysia a global service centre, the Government will introduce a Global Service Hub tax incentive with an income tax rate incentive of 5 percent or 10 percent determined on a success basis of for a period of up to 10 years.

124. The Government is committed to upgrade existing airports to enhance operational capabilities to meet the increasing influx of investors, traders and travellers. A total of RM47 million will be provided to improve passenger facilities at Tioman Airport terminals and to extend the existing runway to 1,300 metres.

Second: Tourism and Creative Sector

125. The country is rich in culture and heritage besides being home to many invaluable natural treasures. We excel in niche markets in the ecotourism, scuba diving, golf, wedding ceremonies and medical tourism segments. This huge potential should be developed with a thorough framework to revitalise the tourism sector to become an engine of economic growth for the country.

126. Therefore, the Visit Malaysia Year has been reinstated to the year 2026, with a target of 26.1 million foreign tourist arrivals and an estimated domestic expenditure of RM97.6 billion.

127. The Government will provide RM350 million to boost promotion and tourism activities for Malaysia to regain its position as the world’s preferred tourist destination. This provision includes:

128. Heritage areas, buildings and sites that are tourist attractions will continue to be preserved to maintain their beauty, safety and cleanliness.

129. Recognising the significant contribution of the tourism and manufacturing sectors to the development of the country, the Government is committed in introducing new initiatives under the Malaysian Visa Liberalisation Plan, involving the following facilities:

First: Facilitate Employment Pass approvals for strategic investors in key sectors;

Second: Introduce Long-Term Social Visit Pass for international students who have graduated to meet industrial skilled personnel needs; and

Third: Improve Visa-On-Arrival facilities, social visit passes and Multiple Entry Visa offers to encourage the e