REVISED BUDGET 2016: Workers’ EPF contribution cut 3%

EPF contribution by employees will be reduced by 3% under the revised Budget 2016. – The Malaysian Insider file pic, January 28, 2016.Prime Minister Datuk Seri Najib Razak announced the following measures under Putrajaya's recalibration of Budget 2016:

• EPF contributions by employees to be reduced by 3% from March this year until December 2017. Contribution rate by employers, however, remains the same.
• Najib said the reduced contributions would boost spending by an estimated RM8 billion.
• Tax exemption of RM2,000 for Malaysians earning RM8,000 and below for the financial year of 2015, a move that would affect two million tax payers.
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Food and cost of living

• To reduce the cost of daily food items, approved permits (APs) for agricultural products, including coffee beans and meats, will be liberalised.
• The Federal Agricultural Marketing Authority (Fama) will open MyFarm outlets to sell produce direct from farmers to consumers at prices between 5 to 20% cheaper.
• Domestic Trade and Consumer Affairs Ministry to increase the number of affordable shopping outlets like hypermarkets.
• RM50 incentive for every metric tonne of rice for paddy farmers.
• MyBeras programme introduced – 20kg of free rice for every registered hardcore poor household.
• GST to remain at the same rate (6%).
• Cash aid programme BR1M will be continued: "The government will not compromise on what is right for the country and people," Najib said.

Housing

• For new housing developments, sale of houses priced not more RM300,000 to be limited to first-time house buyers.
• Bank Simpanan Nasional and Bank Rakyat to offer assistance packages at 4% for homes costing RM35,000 under the People's Housing Projects or PR1MA.

Human resources

• 30% of levy contributed to the Human Resources Development Fund will be used to improve workers' skills and competency, including for those retrenched.
• Government to continue fine-tuning foreign worker management system. Foreign workers' levy will be clustered into two categories but will not include domestic helpers.
• To implement a relocation and rehiring programme for undocumented workers so that they can get valid work permits.

Datuk Seri Najib Razak addresses senior government officials in Putrajaya today to announce changes to Budget 2016. – The Malaysian Insider pic by Afif Abd Halim, January 28, 2016.Improving revenue collection

• Government to increase action against tax evaders; late-filing penalties to be reduced.
• Sale of alcohol and cigarettes on tax-free islands to be limited to licensed, tax-free stores, in order to reduce leakage of up to RM1 billion in revenue.
• Tighten taxes on exemptions for imported vehicles on tax-free islands.
• Optimise revenue from telecommunications by redistributing bidding processes.
• Develop government-owned strategic areas through a bidding process. 

Development spending

• Priority to be given to affordable housing, hospitals, schools, roads, public transportation and security.
• Non-physical projects and projects that are still at planning stage will be postponed. This move is expected to save the government RM5 billion.

Civil service and government-linked companies

• Government to keep its promise of July 1, 2016 additional salary increase for civil servants.
• Government will not touch civil service emoluments and will not stop the services of contract staff in the public sector.
• GLCs urged to reduce salary gap between top management and staff. This will be monitored by the Economic Planning Unit.
• Government to keep its promise of July 1, 2016 additional salary increase for civil servants.

Education and scholarships

• Government to continue the following four Public Service Department (JPA) scholarships for 2016:

1. The National Scholarship Programme (Program Biasiswa Nasional) will allow 20 top SPM-scorers to pursue their studies in universities abroad;

2. The Engineering Special Programme (Program Khas Kejuruteraan) for 200 students to pursue their studies in Germany, France, Korea and Japan;

3. The Bursary Programme (Program Lepasan Bursary) for 744 students to pursue their undergraduate degrees in public and private higher education institutions in the country; and

4. Scholarships for 8,000 students to pursue undergraduate degrees locally.

• The National Higher Education Fund Loan (PTPTN) allocation of RM5 billion will remain.
• Offers to enroll in MyMaster programme to increase by 15,000, MyPhd by 5,000 and IPTA (public universities) Academic Training Scheme by 300. Government to boost allocation by RM300 million.
• MyBrain1 and the Bumiputera Academic Training Scheme will be continued.

Businesses

Increased financing funds to small and medium enterprises (SMEs) and startup companies by RM6 billion.

Tourism

Visa-free entry to Malaysia for tourists from China from March 1 to December 31. – January 28, 2016.