Malaysia’s finance minister Lim Guan Eng tabled the government's budget for 2019 on Nov 2, setting expenditure at 314.6 billion ringgit ($75.53 billion) and projecting total revenue to rise to 261.8 billion ringgit, up from 236.5 billion ringgit in 2018.
The new government’s first budget since coming to power in May included plans for widespread public spending cuts, sales of non-strategic assets and a one-off dividend of 30 billion ringgit ($7.2 billion) by state energy firm Petronas to help boost revenue.
There are specific provisions for the Islamic economy sectors and macro provisions that would also affect Islamic economy sectors. The highlights include:
1. ISLAMIC FINANCE OVERALL
1a. The government will set up a Special Committee on Islamic finance led by the Ministry of Finance and comprised of members from Bank Negara Malaysia, the central bank, and Securities Commission.
2a. The Government will extend the double tax deduction policy for additional expenditure incurred when issuing sukuk using ijarah and wakalah, as well as for additional expenditure incurred by companies issuing retail bonds or sukuk. Both these policies will be made available for 3 years starting in 2019 as the year of assessment.
3a. Health protection fund targeting B40 (lower income groups): In partnership with the private insurance industry, the government will pilot a national B40 Health Protection Fund to provide free protection against the top 4 critical illnesses for up to 8,000 ringgit and up to 14 days of hospitalisation income cover at 50 ringgit per day starting 1 January 2019. This means that hospitalisation income of 700 ringgit per annum is available. Great Eastern Life Insurance is contributing the initial seed funding of 2 billion ringgit to this fund to be managed by Bank Negara Malaysia. The government expects the fund size to grow with more partnerships and contributions with other insurance companies.
3b. Waiver of stamp duty for takaful products: Bank Negara Malaysia’s ‘Perlindungan Tenang’, launched in 2017 to make available affordable, accessible and simple insurance and takaful products for Malaysians, will have their stamp duties waived for two years beginning 1 January 2019.
4. GREEN ECONOMY, ACHIEVING SDGs
4a. To incentivise investments in green technology, there will be a 2 billion ringgit Green Technology Financing Scheme (GTFS) made available at selected commercial banks where the government will subsidise the interest cost by 2 percent for the first 5 years.
4b. The state-owned development financial institution Bank Pembangunan Malaysia Berhad will provide a Sustainable Development Financing Fund of 1 billion ringgit to support the Agenda 2030 for Sustainable Development as well as the 17 Sustainable Development Goals (SDG) under the United Nations Development Programme. The government will provide a subsidised interest rate of 2 percent as an incentive.
5. HALAL SMEs, EXPORTS, HALAL HUB BY 2020
5a. The government will encourage exports through financing by the export-import bank EXIM Bank by making available 2 billion ringgit worth of credit and takaful facilities to SME exports.
5b. The government will allocate 100 million ringgit to upgrade the capability of SMEs in the halal industry via various programmes in order to increase exports and to make Malaysia a global halal hub by 2020.
5c. There will also be a 1 billion ringgit SME Shariah-compliant financing scheme made available via Islamic financial institutions where the government will provide a subsidy of 2 percent profit rate.
6. DIGITAL ECONOMY
6a. The venture capital funds managed by the government agencies – Malaysia Technology Development Corporation, Malaysia Debt Ventures Bhd, Malaysia Venture Capital Management Bhd, Kumpulan Modal Perdana Sdn Bhd and Cradle Fund Sdn.Bhd –will be streamlined and made more efficient in delivering capital to companies in various stages of financing needs. To ensure that the funds are accessible to those who are most likely to succeed, the funding disbursements will be tied to the companies’ ability to secure matching funds from the private sector, said the finance minister.
6b. Government-Linked Investment Funds will similarly allocate 2 billion ringgit in matching funds to co-invest with the private equity and venture capital funds. This fund will focus on strategic sectors and new growth areas for Malaysia.
6c. The government will allocate 50 million ringgit to set up a Co-Investment Fund (CIF) to invest alongside private investors via new alternative financing platforms via Equity Crowdfunding and Peer-to-Peer Financing.
The Securities Commission has approved the regulatory framework for these platforms.
6d. The finance minister gave the data for these platforms as: Almost 170 million ringgit have been raised through crowdfunding platforms, benefitting more than 450 companies across a broad cross-section of sectors. Almost 10,000 investors have participated in these crowdfunding campaigns, where 45 percent of investors have been youths below the age of 35.
6e. The Capital Markets and Services (Prescription of Securities) Guidelines will be gazetted in early 2019 to set up a new regulatory framework to approve and monitor Digital Coin and Token Exchanges.
7. ISLAMIC AFFAIRS
7a. Allocation for Islamic affairs for both development and operating expenditures will increase from 1.1 billion ringgit in 2018 to 1.2 billion ringgit in 2019 to ensure the growth of the religion would not be impeded by the challenging economic conditions, said the finance minister.
7b. 150 million ringgit have been made available to carry out programmes such as building mosques and suraus across the country, “Khaira Ummah” initiative to train more professionals among the huffaz and religious learning modules using braille.
8. EQUALITY OF RELIGIOUS PILGRIMAGE LEAVE
8a. The Malaysian government currently approves unrecorded leave for its Muslim officers to perform their umrah for up to 7 days for the entire duration of service. It will extend the same for the 201,600 non-Muslims in the service for the purposes of performing their religious pilgrimage and functions, said the finance minister.
(Compiled by Emmy Abdul Alim firstname.lastname@example.org)
© SalaamGateway.com 2018 All Rights Reserved