Budget 2008 Highlights

Budget-Highlights (General)

* The period for income tax refund is reduced from six months to between 14 to 30 days for e-filling application.
* Registration of companies is now immediate, compared to three days previously.
* The approval time for the Environmental Impact Assessment is reduced from three months to five weeks.
* Effective Jan 1, 2008, private valuation will be allowed for purposes of assessment in stamp duty payment to expedite the transfer of property by enabling it to be executed pending the final valuation from the Valuation and Property Services Department.
* Effective Jan 1, 2008, the Customs Department will merge 16 customs foms into four.
* Immigration Department will shorten the processing period for the issuance of work permits for skilled workers from 14 to seven days effective Jan 1, 2008.
* Immigration Department will introduce a new category of visa for business travellers, which validity period will be longer, effective Jan 1, 2008.
* The process for obtaining professional visit passes for knowledge workers will be streamlined by enabling applications to be made in Malaysian embassies and consulates overseas, effective Jan 1, 2008.
* Effective Jan 1, 2008, Indian and Chinese nationals can also apply for multiple entry visas (MEV) from international financial centres such as New York, London, Hong Kong and Singapore.
* A Public Companies Accounting Oversight Board will be established under the Securities Commission to monitor auditors of public companies to ensure that the quality and reliability of audited financial statements are enhanced.
* The Code of Corporate Governance is being amended to improve the quality of the Boards of public-listed companies (PLCs) and the amendment will be implemented from Oct 1, 2007.
* A 50 per cent stamp duty exemption on documents of transfer will be given for the purchase of one house of not more than RM250,000 per unit.
* RM6.5 billion is allocated for the agricultural sector. Among the programmes to be implemented include encouraging the cultivation of floriculture, herbs and spices.
* RM236 million is provided for the biotechnology industry. Among the projects are the development of biodiversity research centre, biotechnology commercialisation centre and anti-cancer compound research.
* To further promote MSC internationally, the government will host the World ICT Week in Kuala Lumpur in May 2008 as well as the World Congress on Informational Technology 2008 conference.
* Several measures will be taken to enhance Cyberjaya's attraction as a major Cyber City including the construction of an international school, affordable homes and increasing the security level in Cyberjaya.
*RM858 million is allocated for the implementation of various programmes to further increase Malaysia's attraction as a major tourist destination.
* RM22 million is provided to increase homestay activities in 47 selected villages.
*RM30 billion is allocated for the Education Ministry, including the implementation of the Education Development Blueprint.
* RM500,000 will be provided to each cluster school for co-curriculum activities, training as well as educational equipment.
* The annual fee for primary and secondary schools as well as the examination fee for Sijil Tinggi Agama Malaysia has been abolished effective 2008.
* The Text Book Loan Scheme will be provided to all students, irrespective of their families' income and with no restrictions on the number of eligible children, beginning the 2008 school session.
* School students from families with a monthly income of RM1,000 and below will be provided with a free uniform for one co-curriculum activity requiring uniform.
* Special education teachers will receive an increase in allowance from RM100 to RM250 per month.
* Graduate substitute teachers will receive a raise in allowance from RM85 to RM 150 per day.
* An allowance of RM60 per hour will be provided for degree holders and RM50 per hour for diploma holders teaching Chinese and Tamil languages in national primary schools.
* Retired teachers will be recruited to train teachers and serve as substitute teachers.
* Primary and secondary schools funded and well-managed by trust and charitable bodies will be given income tax exemption.
* RM12 billion is provided for the implementation of various higher education projects and programmes to produce highly knowledgable and first class human capital as well as develop world-class higher institution.
* The Public Service Department (PSD) will increase sponsorship for undergraduate students in local universities from 5,000 students to 10,000 annually, beginning 2008.
* The cost of living allowance (COLA) for students in local higher learning institutions, including those attending preparatory and language courses, will be increased between 23 and 84 per cent effective the start of the first semester 2007 session.
* COLA for PSD-sponsored students in the United States, United Kingdom and Canada will be increased by up to 97 per cent effective Sept 2007.
* RM2 billion is allocated to various government training agencies to increase the number and quality of trained workers, in line with the needs of the labour market.
* RM480 million is allocated for GiatMARA and Industrial Training Institute (ILP) training programmes, as well as skills training in the National Youth Training Institute.
* RM550 million is allocated tp upgrade polytechnic and community colleges to enhance the capacity of training institution.
* RM750 million is allocated for the construction of Advanced Technology Training Centre in Taiping and ILP in Marang.
* The scope of the Human Resource Development Fund will be expanded to provide greater flexibility for employers to choose training and advanced education programmes for their staff.
* The Human Resource Development Fund will be amended to allow employers to provide financial assistance to enable their employees to pursue Masters or Doctoral degrees, especially in new and high technology areas
* For 2008, RM100 million will be allocated to train 50,000 workers under the Masterskills Training Programme, encompassing management skills and physical construction.
* For 2008, RM230 million is allocation for the Science Fund, RM300 million for the Techno Fund and RM546 million for research institution.
* The rate of royalty payment to researchers will be increased to 80 per cent and the balance to research institutions.
* More Technology Licensing Offices will be established in research centres and public universities such as SIRIM and Universiti Sains Malaysia.
* A Knowledge Workers Development Institute will be set up in Cyberjaya to support the development of the digital animation industry as well as increase local expertise in the area.
* Import duty and sales tax exemptions will be given on broadband equipment and consumer access devices
* Tax deduction will be given to employers on benefits in kind in the form of new computers and payment of broadband subscription fees for employees
* RM381 million is allocated for the implementation of low-cost housing programmes, of which RM191 million is allocated for the Program Perumahan Rakyat (PPR) Disewa while RM190 million is allocated for PPR Bersepadu.
* The government will establish a fund to provide guarantees to banks to provide loans for those without fixed income such as farmers and small traders to finance the purchase of low and medium cost houses.
* RM50 million is allocated to provide guarantees to Bank Simpanan Nasional and Bank Islam Berhad so that they could provide loans to those without fixed income, effective Jan 1 2008.
* EPF contributors are allowed to make monthly withdrawals from the balance in Account 2 for the financing of one house, effective Jan 1 2008.
* RM887 million has been allocated to build more quarters for civil servants nationwide in 2008.
* RM12 billion will be expended over the next four years to improve the public transportation system in Kuala Lumpur and Penang
* RM4 billion is allocated to implement several projects to improve the quality of life in Sabah.
* RM4 billion is allocated for the implementation of development projects in Sarawak.
* Individual tax relief of up to RM300 a year will be given on the purchases of sports and exercise equipment.
* A RM2 billion bond will be issued by Bank Negara Malaysia to be subscribed by senior citizens aged 55 years and above, who do not have permanent jobs.
* The disabled workers monthly allowance will be increased from RM200 to RM300.
* A special assistance of RM300 a month will be provided for eligible persons taking care of the disabled, who are bed-ridden and patients suffering from chronic illness.

Budget Highlights (Business)

* A single-tier tax system will be implemented from 2008 to improve the efficiency and simplify the adminstration of corporate tax.
* Under the single-tier tax system, profits are only taxed at the company's level and dividends received are exempted from tax.
* A six-year transition period will be provided to ensure smooth implementation of the single-tier system.
* A further reduction of corporate tax to 25 percent will be implemented in 2009. Corporate tax in 2008 is at 26 percent.
* Effective January 1, 2008, private valuation will be allowed for purposes of assessment in stamp duty payment, for the transfer of properties.
* Effective January 1, 2008, Customs Department will merge 16 customs forms into four.
* Public Companies Accounting Oversight Board to be established under the auspices of the Securities Commission to monitor auditors of public companies.
* Code of Corporate Governance being reviewed to improve quality of boards of public listed companies.
* Companies with high standards of corporate governance and market conduct will be accorded green lane status, which includes shorter time frame for processing of corporate proposals and longer period of licensing.
* Stamp duty exemption on instruments related to mergers and acquisitions of PLCs will be extended to December 31, 2010.
* Petronas's over 1,000 vendors told to merge to be more competitive globally. Stamp duty exemption to be given on all instruments relating to mergers of such vendors implemented by December 31, 2010.
* Foreign ownership on fund management companies and REITs management companies will be allowed up to 70 percent with minimum Bumiputera ownership requirement remaining at 30 percent.
* Commission rates for internet trading and cash upfront transactions will be fully negotiable to reduce cost of transactions in share investment by retail investors.
* Clearing fees to be reduced to 0.03 percent from 0.04 percent, with maximum fee of RM1,000.
* Minimum broking charges per transaction is fixed at RM40.
* Islamic fund management companies will be allowed to be wholly owned by foreigners.
* A RM7 billion fund will be channelled by EPF to be managed by Islamic fund management companies.
* Islamic fund management companies will be allowed to invest all assets abroad.
* Income tax exemption until 2016 will be given to fund management companies on all fees received in respect of Islamic fund management activities.
* To attract greater middle eastern investments, tax incentives will be provided for existing stockbroking companies to set up Islamic stockbroking subsidiaries.
* Three new stockbroking licenses to be issued to leading stockbroking companies that are able to source and intermediate business and order flows from the Middle East.
* To further promote the Takaful industry, several tax treatment will be enhanced, including tax cut on the share of distributed profits.
* Labuan Offshore companies to be given option to be taxe under the Income Tax Act 1967.
* A 50 percent stamp duty exemption to be given on documents of transfer for the purchase of one house, of not more than RM250,000 per unit.
* RM400 million initial fund has been earmarked by Pelaburan Hartanah Bumiputera Bhd to increase Bumiputera property investment in Iskandar Development Region (IDR).
* Government to provide additional RM100 million for investments in healthcare services related projects in IDR.
* SMEs will be given a two-year flexibility to pay taxes at the end of financial year instead of monthly instalments.
* Last mile network facilities providers will be given investment allowance of 100 percent on capital expenditure incurred for broadband up to December 31, 2010.
* Import duty and sales tax exemptions will be given on broadband equipment and consumer access devices.
* RM12 billion will be spent, over the next four years, to improve public transportation system in Kuala Lumpur and Penang.
* Penang Outer Ring Road Project will be implemented on a tender basis shortly.
* The East Coast Economic Region, the Sabah Corridor and the Sarawak Corridor will be launched soon.
* To eradicate hard core poverty, RM214 million will be allocated for Skim Pembangunan Kesejahteraan Rakyat; and RM117 million for Program Pengurangan Kemiskinan and Program Lonjakan Mega.
* RM680 million to be provided for the construction of rural and village roads, RM462 million for rural water and electricity suppply projects, RM70 million for social amenities, and RM15 million for ICT education in rural areas.
* Malaysian Communications and Multimedia Commission (MCMC) allocates RM45 million for the implementation of SchoolNet project to provide internet services to schools.
* RM13 billion allocated for improving the quality of hospital services, purchasing medical supply and health equipment.
* Ulu Kinta Allied Health Science College, Kuala Pilah Nursing College, Kluang Hospital, Tampin Hospital, Cheras Rehabilitation Hospital and Kuala Lumpur Women and Children Hospital will be constructed in 2008.
* Pioneer status of 100 percent or investment tax allowance of 60 percent for five years will be given to companies undertaking investments in laboratories of international standards for testing of medical devices.
* In efforts to inculcate corporate social responsibility (CSR), public limited companies (PLCs) will have to disclose their employment composition by race and gender, as well as programmes undertaken to develop domestic and bumiputera vendors.
* Government will support efforts to set up a CSR Fund with an initial sum of RM50 million, to be used to jointly finance selected CSR projects.
* RM9.7 billion to be allocated for various types of maintenance works.
* RM176.9 billion to be allocated for 2008 Budget, up 10.9 percent from 2007, of which RM128.8 billion is for operating expenditure and RM48.1 billion is for development expenditure.
* RM64 billion or 49.6 percent of operating expenditure is for fixed charges and grants, RM36.2 billion is for emoluments, RM25.5 billion for supplies an services, RM2.1 billion for purchase of assets and RM1.13 million for other expenditures.
* The largest allocation for development expenditure at RM20.6 billion is for the agriculture, industry and infrastructure sectors; RM15.6 billion is for education, health and housing sectors; RM7.0 billion for security sector; RM2.9 billion for administration; and RM2.0 billion for contigencies.
* The government expects to reduce its fiscal deficit to 3.2 percent of GDP in 2007 from 3.3 percent in 2006.
* Fiscal deficit to be reduced further to 3.1 percent in 2008.
* Economic growth in 2008 is projected at between 6.0-6.5 percent for 2008.

tunku : i must say that this is a very good budget for the education and business sector.i will benefits lots of people but not majority.for a poor family the only benefits that i can see is there's no more school fees as text book already free for them.for the middle income group it's only on the school fees and text book,but how many will benefits from it?as the epf withdrawal for housing loan repayments benefits just a handful people only.for businessmen they benefits a lot from this budget. i'm quite disappointed that personal tax relief not considered by the government at all and for free health care.mind you, these days salary of 2-4k still not enough to spend for a family of 4-5 people.