KUALA LUMPUR (Oct 21): Budget 2017 largely came in within expectation, although there was a tinge of disappointment in some quarters over the lack of easing rules on bank lending and personal income tax cuts.

In his Budget 2017 speech today, Prime Minister Datuk Seri Najib Razak highlighted the government's commitment to reduce budget deficit as well as to address house ownership problem.

He pledged to cut the budget deficit further to 3% of gross domestic product (GDP) in 2017 from a target of 3.1% this year.

The prime minister also brushed off the allegations and misconceptions that the government will go bankrupt.

"I would like to clarify that a government will be declared bankrupt only if it is unable to pay off its debt," said Najib.

Citing reports from three international rating agencies — Fitch, Moody's and Standard & Poor's — Najib said Malaysia's ratings is similar to advanced and larger economies such as South Korea (AA-), China (A+), Taiwan (A+) and Japan (A).

"This means bankruptcy is never in Malaysia's economic dictionary," he said.

Najib also dismissed claims that Malaysia is a failed state.

"A failed state refers to a country that fails to implement most of its responsibilities and basic functions of a government.

"These characteristics do not exist in Malaysia and with the blessings of Allah, this government will never allow our country to become a failed state," he added.

For 2017, federal government revenue collection is projected at RM219.73 billion, up 3.4% against a target of RM212.59 billion this year.

Najib also expects the country's GDP growth to accelerate to between 4% and 5% versus a target of 4% to 4.5% this year despite the global economic slowdown.

Themed "Ensuring Unity and Economic Growth, Inclusive Prudent Spending, Wellbeing of the Rakyat", Budget 2017 allocates a sum of RM260.8 billion — up 3.4% from the 2016 Budget Recalibration — of which RM214.8 billion is allocated for operating expenditure and RM46 billion for development expenditure. This does not include contingencies which amounts to RM2 billion.

According to Najib, the government has collected RM30 billion from the goods and services tax (GST) as at Oct 19 this year. The current collected amount accounted for 77.9% of the RM38.5 billion the government expected to collect from GST this year.

To make house ownership a reality for some, Najib said the government has set aside RM134 million to the Urban Wellbeing, Housing and Local Government Ministry to build 9,850 houses under the People's Housing Programme (PPR).

And to enhance first home buyers' affordability, the government will provide vacant lands at strategic locations to government-linked companies (GLCs) and Perumahan Rakyat 1Malaysia (PR1MA) to build more than 30,000 houses, with selling prices ranging between RM150,000 and RM300,000.

Other measures include:

Budget 2017 also unveiled measures to address the escalating cost of living faced by the people, which includes RM10 billion for subsidy allocation, comprising fuel subsidies including cooking gas, toll charges and public transport.

In terms of the 1Malaysia People's Aid (BR1M), households earning below RM3,000 per month will see their BR1M increase to RM1,200 from RM1,050 and RM1,000.

"Overall, the BR1M programme will benefit seven million recipients with an allocation of RM6.8 billion," said Najib.

In term of taxation, the prime minister said that to facilitate tax payers in claiming existing tax reliefs, the purchase of reading materials, computers and sports equipment will be combined as lifestyle tax relief.

"This relief is extended to include the purchase of printed newspapers, smartphones and tablets, internet subscriptions as well as gymnasium membership fees," he said, adding that a tax relief of up to RM2,500 per year is applicable for the 2017 assessment year.

At the same time, the rate of stamp duty on instruments of transfer of real estate worth more than RM1 million will be increased from 3% to 4% effective Jan 1, 2018.

For the construction sector, Najib said the government will implement the new East Coast Rail Line project connecting Klang Valley to the East Coast in phases.

The 600-km rail will connect townships such as Port Klang, Integrated Transport Terminal (ITT) Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu, Kota Bharu and ends in Tumpat, with an estimated cost of RM55 billion.

"A sum of RM100 million is allocated to restore the East Coast railway line along Gua Musang-Tumpat that was destroyed during flood," he said.

To assist the B40 group, with household income of RM3,900 and below, Najib said the government will encourage their participation as ride-sharing drivers such as Uber drivers, particularly those who own vehicles.

The incomes of part time drivers who work between 10 hours and 40 hours per week could reach up to RM1,500 per month, and if they work more than 40 hours per week, RM4,300, he said.

"[For] those who do not own a vehicle, down payment will be made using BR1M and a rebate of RM4,000 will be provided for the purchase of Proton Iriz," he added.