Prime Minister Datuk Seri Najib Tun Razak has tabled Budget 2010 with the theme "1Malaysia, Together We Prosper". Totalling RM191.5 bil, he said it would be the foundation of a new economic model and precursor to the 10th Malaysia Plan.

These are the main highlights of the speech as per delivery.

* Time for country to move to an economy of innovations to face the challenges of the future

* GDP for 2009 expected to be -3%, better than previous projections of -4% to -5%

* Focus of Budget 2010 will be on well-being of the people

* Three strategies:

- driving the country towards a high-income economy,

- ensuring holistic and sustainable development,

- focusing on the well-being of the rakyat.

* Government to make it easier for skilled/qualified people to get permanent residence status. Visa to be granted for family within 14 days.

* CSR Fund of RM100mil to be set up to carry out social programmes.

* Tax breaks for registration of patents and copyrights.

* Big scale factory outlets to be set up to boost tourism besides having major events like KL Grand Prix Fest, National Water Festival, Malaysia International Golf Exhibition and Rain Forest Eco-Challenges

* Taxpayers will get tax relief on broadband subscription fee of up to RM500 from 2010 to 2012. Civil servants can apply for computer loans up to a maximum of RM5,000 from the govt once in every 5 years.

* RM6bil for agriculture sector for irrigation of paddy fields, fish production, fruit farming, livestock farming infrastructure, training

* RM2bil subsidy for farmers and fishermen including subsidies for fertilisers, incentives for padi yields and allowances for fishermen

* RM9bil to finance infrastructure projects including road and bridges projects and rail, sea ports and airports facilities

* RM1.5bil fund to promote green technology by providing soft loans to companies that supply and use green technology

* RM200mil Creative Industry Fund to finance film, drama, music productions, animation, advertisements through Bank Simpanan Nasional

* RM30bil to be allocated to enhance primary and secondary school education nationwide

* Rewards for students who excel in studies:

- 30 National Scholarships for the creme de la creme of students, stictly based on merit

- Conversion of PTPTN loans to scholarships for students who graduate with 1st class honours degree, beginning from 2010,

- Offer of netbook package, including free broadband service, to university students for RM50 per month for 2 years.

* The Permata programme, which emphasises on early childcare and education, including the gifted child programme, to get RM100mil

* Insurance industry to be improved to meet market demand.

* Govt to clamp down on the abuses committed by Ah Longs by enforcing Anti-Money Laundering and Anti Terrorism Financing Act 2001. Moneylenders Act 1951 to be also reviewed.

* Allow 100% foreign equity participation in corporate finance and financial planning companies compared with the present requirement of at least 30% local shareholding.

* To ensure rapid development of financial services, the existing tax incentives to be extended to 2015.

* Among steps to combat corruption is to set up 14 Special Corruption Sessions Courts and 4 Special Corruption Appeal High Courts.

* Tax of 5% to be imposed on gains from the disposal of real property from Jan 1, 2010. Existing tax exemption will be retained for gifts between parent-child, husband-wife, grandparent-grandchild.

* To promote prudent spending, a service charge of RM50 a year to be imposed on each principal credit card and charge card; and RM25 a year on each supplementary card, effective from Jan 1, 2010.

* To ensure that fuel subsidies only benefit targeted groups, Govt will implement a fuel subsidy management system in early 2010, which will utilise the MyKad.

* All ministries and govt departments are required to provide day care and education centres for children of civil servants.

* The maximum income tax rate for individuals to be reduced to 26% from assessment year 2010. Personal relief increased to RM9,000.

* Police force to get RM1bil to improve its services in govt's efforts to reduce crime. Major measures include to increase police presence, including mobile police stations in 50 crime hotspots.

* To promote house ownership, Govt will launch a scheme that enables EPF contributors to utilise current and future savings in Account 2.

* Employees' EPF contribution to be increased to 11% again, on a voluntary basis, effective immediately. However, from Jan 1, 2011 employees' EPF contribution will revert to 11%.

* Personal relief for EPF and life insurance schemes to be increased to RM7,000.


SALIENT POINTS

Quick facts

  • Malaysia economy to grow 2-3 percent in 2010.
  • Per capita income to increase by 2.5 percent to RM24,661.
  • Budget 2010 allocations totalled RM191.5 billion, of which RM138.3 billion is for operating expenditure and RM53.2 billion for development expenditure.
  • Federal government revenue in 2010 to decline by 8.4 percent to RM148.8 billion.
  • Budget deficit at 5.6 percent of GDP compared with 7.4 percent in 2009.

    Taxation
  • Maximum income tax rate to be further reduced to 26 percent from 27 percent effective from the 2010 year of assessment.
  • Personal tax relief will be increased to RM9,000 from RM8,000 effective from the 2010 year of assessment.
  • Individual taxpayers to be given tax relief on broadband subscription fee up to RM500 a year from 2010 to 2012.
  • Income tax for 2010 based on income derived from 2009 will be allowed to be paid in instalments in five years.

  • Employees EPF contributions will be raised again to 11 percent on a voluntary basis with immediate effect. However, from Jan 1, 2011 employees' EPF contribution will revert to 11 percent.
  • The government proposes existing personal tax relief of RM6,000 for EPF contributions and life insurance premiums be raised to RM7,000.
  • Civil servants are eligible to apply for computer loans once in every three years and up to a maximum of RM5,000 from the government once in every five years.
  • A five percent tax to be imposed on gains from disposal of real property from Jan 1, 2010.

    Credit cards
  • There will be no more free credit cards which are currently being used extensively. The number increased from more than two million in 1997 to 11 million as of August 2009, excluding 285,000 charge cards.

  • To promote prudent spending, a service tax of RM50 a year will be imposed on each principal credit card and charge card, including those issued free of charge.
  • There will also be service tax of RM25 a year imposed on each supplementary card.

    Fuel subsidies
  • To ensure fuel subsidies only benefit targeted groups, the government will implement a fuel subsidy management system in early 2010.

    Goods and Services tax
  • Government is in the final stage of completing a study on imposing Goods and Services Tax (GST). The rate will be lower than the current sales and service tax.

    Approved Permits (AP)
  • RM10,000 to be imposed for each AP to open AP holders effective Jan 1, 2010. A portion of the collection will be channelled to the bumiputera development fund in the automotive sector.

    Permanent residency
  • Simplify permanent residency (PR) applications for those who possess high talents, expatriates will be issued visas within 14 days while male expatriates who marry locals will be automatically conferred PR status.

KEY BUDGET ALLOCATIONS

Infrastructure

  • Government to allocate RM9 billion to finance infrastructure projects, with RM4.7 billion for road and bridge projects, RM2.6 billion for water supply and sewerage services, RM899 million for rail facilities, RM820 million for ports and sea services and RM276 milliion for airport projects.
  • RM3.7 billion set aside to beef up the security forces, including providing modern and sophisticated equipment for the relevant agencies.
  • TNB to spend RM5 billion to implement electricity generation, transmission and distribution projects in 2010.
  • Public-private collaborations to include an integrated immigration, customs and quarantine complex in Bukit Kayu Hitam, construction of six UiTM campuses and the development of Matrade centre.
  • RM3.5 billion for infrastructure and basic amenities and training programmes and socio-economic projects to support implementation of private sector projects.

    Corporate social responsibility
  • 1Malaysia Development Bhd (1MDB) will establish a corporate social responsibility fund totalling RM100 million as a start to finance community activities.

    Tourism
  • Government to allocate RM899 million to intensify tourism industry.
  • Tax incentives for healthcare service providers who offer services to foreign health tourists with income tax exemptions of 100 percent on the value of increased exports from 50 percent previously.

    Health
  • RM14.8 billion is allocated to manage, build and upgrade hospitals and clinics.

    Agriculture
  • Allocate RM137 million to upgrade and improve drainage and irrigation infrastructures in paddy fields involving 180,000 farmers.
  • RM70 million to build the Paya Peda Dam Project in Terengganu to increase water supply capacity to paddy irrigation scheme in Besut.
  • RM82 million to modernise aquaculture industry and conduct entrepreneurship training scheme for aquaculture breeders with focus on production of fish fry and ornamental fish.
  • RM149 million to develop food farming industry such as fruits, vegetables, organic farming, herbs, seaweeds and swiftlet nests.
  • RM58 million to develop basic infrastructures for livestock farms and establish supply chains for beef and mutton production.
  • A consortium comprising Felda, Felcra and Risda will be established by the end of 2009, with a paid-up capital of RM300 million and with each agency contributing RM100 million.
  • Government to provide subsidies, incentives and assistance amounting to some RM2 billion to farmers and fishermen to safeguard their interests.

    Small and medium enterprises
  • To consolidate 79 SME funds to 33 to simplify access to SME financing to be coordinated by SME Corp.
  • An allocation of RM350 million to SME Corp, with RM200 million set aside for SME soft loans, RM100 million for capacity enhancement and the balance for branding and promotion.
  • Financial institutions to approve micro-financing in six days and disbursement in four days.
  • To allocate RM538 million for implementation of various SME programmes, with RM281 million to state economic development corporations, RM200 million to Tekun and RM57 million for purchase of business premises and infrastructures.

    Green technology
  • Government to sanction RM20 million to intensify green awareness activities and practise environment-friendly lifestyle.
  • Develop Putrajaya and Cyberjaya as pioneer townships in GreenTechnology as a showcase for the development of other townships.
  • Establish a RM1.5 billion fund to promote green technology, with a maximum RM50 million financing for suppliers and RM10 million for consumer companies.
  • Applications for financing through the National Green Technology Centre to commence on Jan 1, 2010 and 140 companies are to benefit.

    Construction
  • Building owners obtaining GBI Certificates from tomorrow until Dec 31, 2014 are to be given income tax exemption equivalent to additional capital expenditure. Stamp duty exemption to buyers of buildings with GBI Certificates from tomorrow till Dec 31, 2014.

    Regional corridors
  • Government will ensure that the five regional corridors - launched during former premier Abdullah Ahmad Badawi's tenure - will be developed according to schedule.

    Crime
  • Target set to reduce crime index by five percent, including street crimes such as snatch theft and robberies by 20 percent by the end of 2010. Among the measures that will be taken is to increase police presence by providing stations in 50 crime hotspots.

    Hardcore poverty
  • Government committee to achieve target of zero hardcore poverty in 2010. Five thousand poor households registered with eKasih and 4,000 Orang Asli households to receive aid. Skills training programmes and income generating programmes will be provided. Federal welfare assistance to be distributed on the 1st of each month.
  • RM141 million to be allocated for 'Program Lonjakan Mega' scheme to alleviate 5,600 families from hardcore poverty.

    Finance
  • Double deduction on expenditure incurred in promoting Malaysia as an international financial centre.
  • Deduction on expenditure incurred to set up Islamic stockbroking companies.
  • To introduce a basic insurance and takaful scheme for motor insurance protection by mid-2010.
  • To expand micro insurance and takaful coverage for small-scale businessmen to benefit from coverage ranging from RM10,000 to RM20,000 with a premium as low as RM20 per month.
  • Stock market to be further liberalised to enhance efficiency. Liberalise commission-sharing arrangements between stockbrokers and remisiers by allowing flexible brokerage sharing at a minimum rate of 40 percent for remisiers and to have commission-sharing fully liberalised effective January 1, 2011.
  • Allowing 100 percent foreign equity participation in corporate finance and financial planning companies.
  • Current tax incentives to develop financial services, particularly Islamic finance, extended to 2015. Twenty percent stamp duty exemption on Islamic financing instruments.
  • Tax exemption on banking profits derived from overseas operations.
  • Effective Jan 1, 2010, government agrees to allow agencies to retain 50 percent of rentals received while the remaining 50 percent will be remitted to the government as revenue.
  • Maximum tax rate for cooperatives will be reduced to 26 percent while the fixed tax rate for non-resident individuals will be cut to 26 percent.

    Human resources
  • Income tax on employment income of Malaysians and foreign knowledge workers residing and working in Iskandar Malaysia will be set at 15 percent compared with the maximum 26 percent for the rest of the country.
  • Government to launch a scheme in January 2010 that enables EPF contributors to utilise current and future savings in Account 2 to promote house ownership.
  • The government to establish the 1Malaysia Retirement Scheme to be administrated by EPF.