Below are the highlights of the Mid-Term Review of the 11th Malaysia Plan (2016-2020) Report, which is being tabled in Parliament today:
Fiscal and governance reforms will affect economic growth but manageable
The new government’s fiscal and governance reforms starting mid-2018 will have an impact on economic growth but is anticipated to be short-lived and manageable.
“The short-term growth trade-off is necessary to further strengthen the economy in ensuring more meaningful economic growth for the rakyat”.
Govt to cut development expenditure by RM40 billion to RM220 billion for 11th Msia Plan
The development expenditure ceiling will be rationalised from the original allocation of RM260 billion to RM220 billion for the overall 11MP period of 2016-2020 to consolidate the fiscal position.
Govt mulls digital tax on e-commerce biz
Thanks to the continued growth of e-commerce and sharing economy activities, the government will explore imposing tax on these online transactions.
Government tightens belt to invest less and spend less
The country will see a mild contraction of 0.6% in real public investment between 2016 and 2020, compared with the initial target of 2.7% growth.
Public consumption, meanwhile, is expected to grow moderately by 0.3% a year for the remaining 11MP period, with emphasis on optimising public expenditure without affecting the quality of public service delivery.
Slow down on private investment
The government expects a target annual growth of 5.7% on private investment for the remaining period of 11MP. With the growth target, contribution of private investment to GDP will increase from 12.3% in 2010 to 17.8% in 2020.
Private consumption the main growth engine, contributes 56.9% of GDP by 2020
Private consumption will continue to be a major source of growth and is expected to expand at an annual average rate of 7%, with the share to GDP reaching 56.9% in 2020.
Operating expenditure accounts for 98.9% of govt revenue 2016-2017
A total of RM427.9 billion was expended for operating expenditure during the review period. This was lower than the initial budget of RM430 billion due to the decline in oil-related revenue.
Fiscal deficit target may “temporarily be beyond target” to shore up growth
In the remaining 11MP period, the federal government will undertake measures to strengthen its medium-term fiscal position, among others by strengthening the management of public debt and accelerating institutional reforms.
However, fiscal targets will be flexible during the transition period of the new administration to shore up growth,” said the mid-term review released this afternoon.
Govt to raise indirect taxes and non-tax revenue
Revenue will continue to be diversified by increasing the contribution of indirect taxes and non-tax revenue such as licenses, permits, fees and rentals
Two-term limit for PM and state chiefs in the works
Malaysia is set to limit the term for the Prime Minister, chief minister and menteri besar to two terms in a bid to curb possible power abuse and corruption.
The excessive concentration of power in the Prime Minister before this has had a negative repercussion on the nation and has contributed to trust deficit among the rakyat, said the report.
Govt to streamline state-owned enterprises, monopoly entities
The government will focus in reviewing and streamlining the role of state-owned enterprises (SOEs) and monopoly entities, to help promote market efficiency and protect consumer interest.
This is part of its steps to address market distortion and unfair practices, in an effort to promote market efficiency and healthy competition in the economy.
Institutions to assist Bumiputera 30% corporate ownership target
The government will continue to emphasise Bumiputera participation in strategic investments towards achieving the target of at least 30% corporate equity ownership.
In this regard, Bumiputera institutions will continue to invest in high growth companies and companies listed on Bursa Malaysia as well as venture into potential companies as a minority shareholder, said the review.
Voting age to be lowered to 18
The government has agreed to lower the voting age to 18 from the current 21.
Higher levy looms for firms with more foreign workers
The government seeks to implement a “progressive multi-tiered levy system” that is based on the proportion of foreign workers employed to strictly reduce and regulate the number of foreign workers in the country.
Government won't consider proposals for new container ports
The Malaysian government will not be considering any proposals for new container ports. This decision was made “given the underutilised capacity of existing ports”.
Govt mulls national health financing scheme
The government will explore a healthcare scheme that aims to create a national health financing scheme, according to the report on the Mid-term Review of the 11th Malaysia Plan 2016-2020.
The scheme will provide assistance for primary care treatment for the B40 households to ensure comprehensive health coverage, said the review, without providing a timeline.
Government to build 200,000 affordable housing
A total of 200,000 affordable houses targeted to build for the remaining 11MP period. This is in line with the objective to improve rakyat's wellbeing, under which efforts will be intensified to provide quality and affordable housing and increase home ownership.