Summary of Malaysia Budget 2010 (1st Strategy)

Malaysia Budget 2010 presented by Prime Minister Najib implemented under 3 strategies, which were:

1st Strategy: Driving the Nation towards a High-Income Economy

2nd Strategy: Ensuring Holistic and Sustainable Development

3rd Strategy: Focusing on Well-Being of the Citizens

Below is the 1st Strategy Summary:

1st Strategy: Driving the Nation towards a High-Income Economy

1) Increasing Private Investment
Government will give priority to enhance domestic investment and encourage local companies abroad to remit their profits and reinvest in the country.


1.1) Providing Business Friendly Environment
-Accelerate the pace of businesses activity such as registration and commercial cases.
-MyID and MyCOID as tools in enhance effective delivery system.
-Permanent Resident (PR) status granted to high skilled and talented expatriate more smoother.
-TNB will spend RM 5 bil to improve electricity services in 2010. Sabah Electricity Sdn Bhd as well will improve services.

1.2) Implementation of Privatization Initiatives
-Government will privatize companies under Ministry of Finance and other viable government agencies.

1.3) Enhancing Implementation of Public-Private Partnership Initiatives
-High impact projects by the private sector such as Integrated Immigration, Customs and Quarantine Complex (CIQ) in Bukit Kayu Hitam, construction of 6 UiTM campuses and the development of MATRADE centre will be undertaken jointly with the government.

1.4) Intensifying FDI
-Relaxed condition and simplified procedures for foreign companies to operate in Malaysia.
-Khazanah Bhd and Permodalan Nasional Bhd enhance collaboration with foreign investors in education, tourism and infrastructure.
-1MDB will establish a CSR fund totaling RM 100 mil as a start to finance community activities.

2) Intensifying R&D and Commercialization
The government will undertake the following measures:
a) Rationalizing all research funds and grants to be more effective to achieve set targets.
b) Establishing the National Invention Centre supported by a network of innovation excellence centre under the Ministry of Science, Technology and Innovation and in collaboration with the Ministry of Higher Education.
c) Integrating R&D activities with patents, copyrights and trademarks registration to ensure R&D&C processes are implemented more effectively. The cooperation between patent and research agencies will expedite the commercialization of research findings.
d) Providing SME with tax deduction on expenses incurred in the registration of patents and trademarks in the country.

3) Leveraging Fully On Niche Areas
3.1) Boosting Tourism Industry
-Government will allocate a total of RM 899 mil in 2010 to implement:
a) Attracting participants from UK, Japan, Republic of Korea, Middle East, India and China to participate in the MM2H program.
b) Upgrading the infrastructures in tourism centres such as ecotourism development and homestay facilities.
c) Ensuring front-liners are local.
d) Utilizing internet-based advertising to promote tourism activities.
e) Providing more attractive tourism products and events.
-To further promote medical tourism industry, income tax exemption of 50% on the value of increased exports will be increased to 100%.

3.2) Strengthening ICT industry
-Government will expedite the implementation of HSBB at a total cost of RM 11.3 bil, of which RM 2.4 bil from government and remain are from Telekom Malaysia.
-To increase broadband penetration, government proposes that individual tax payers be given tax relief on broadband subscription fee up to RM 500 from 2010-2012.
-Civil servants can apply for computer loans up to max RM 5000 once in every 3 years.

3.3) Intensifying Halal Industry
a) Formulate the Halal Act
b) To corporatize the HDC as an agency under MITI.
c) Intensify Halal certification by JAKIM.
d) An amount of RM 24 bil provided to developing the Halal products anti-smuggling system.

4) Advancing Agricultural Sector
-Government will allocate RM 6 bil for the agricultural sectors, where:
a) RM 137 mil to upgrade and drainage and irrigation infrastructures in paddy fields.
b) RM 70 mil provided in 2010 to implement the Paya Peda Dam project in Terengganu.
c) RM 82 mil will allocate to modernize the aquaculture industry and implement entrepreneurship training scheme for aquaculture breeders.
d) Allocation of RM 149 mil to develop food farming industry.
e) Allocate RM 58 mil to develop basic infrastructure of livestock farms and establish related supply chain.
f) Implement the incubator program to train and guide youths and graduates to be successful agro-entrepreneurs.
-FELDA, FELCRA and RISDA cooperate in establishing a consortium to implement various high impact projects in downstream and upstream industries. Which each of the authority contributing RM 100 mil and will be implemented at the end of 2009.
-MASKargo will upgrade air cargo facilities for export of perishable agricultural products.
-Government will provide subsidies, incentives and assistance amounting to almost RM 2 bil to safeguard farmers and fisherman interest.
-In 2010, more than RM 400 mil for paddy price subsidy, almost RM 300 mil for paddy fertilizer subsidy, almost RM 220 mil for incentives to increase paddy yield, production and rice subsidy, and additional RM 170 mil allocated to provide cost of living allowances and incentives to fisherman.

5) Promoting Construction Industry
-In 2010, RM 9 bil provided to finance infrastructure projects:
a) Provision of RM 4.7 bil for road and bridge projects as well as RM 2.6 bil for water supply and sewerage services.
b) Provision of RM 899 mil for rail facilities, RM820 mil for port and sea services as well as RM 276 mil for airport projects.

6) Strengthening SME
-Government will taking steps to consolidate SME funds and grants from earlier 79 totaling RM 8.8 bil to 33 and these funds will be coordinated by SME Corp.
-A sum of RM 350 mil for SME Corp, where RM 200 mil for SME soft loans, RM 100 mil for capacity enhancement, remain balance for branding and promotion. Interest rate charge will be same as development finance institutions.
-Government will ensure financial institutions approve micro financing at an average of 6 days and disbursement at an average of 4 days.
-Government will allocate RM 538 mil for the implementation of various SME development programs:
a) RM281 mil to state economic development corporation.
b) RM 200 mil to TEKUN, where RM 20 mil for small scale Malaysian-Indian entrepreneur. Besides, loan approval and repayment processes will be restructured to improve effectiveness.
c) RM 57 mil for the purchase of business premises, provision of infrastructure outside industrial areas and Skim Kilang Bimbingan through the SME Bank.

7) Developing Green Technology
-RM 20 mil provided to intensify green awareness activities.
-A fund amounting to RM 1.5 bil to provide soft loans to green companies, maximum financing is RM 50 mil for suppliers and RM 10 mil for consumer companies. Government will bear 2% interest rate.

7.1) Promoting Construction of Green Buildings
a) Building owners that obtaining GBI Certificates from 24 Oct 09 until 31 Dec 14 will be given income tax exemption.
b) Buyers purchasing buildings with GBI Certificates from developers will be exempt from stamp duty charges on instruments of transfer of ownership.

8) Promoting Creative Industry
a) Formulate a comprehensive Creative Industry Policy.
b) Establish RM 200 mil creative industry fund to finance related activities and will managed by BSN.
c) Launching grant of RM 3 mil to establish Tabung Kebajikan Penggiat Seni to ensure the welfare of artistes.

Glossary
NKRA: National Key Results Areas
MATRADE: Malaysia External Trade Development Corporation
FDI: Foreign Direct Investment
1MDB: 1 Malaysia Development Bhd
CSR: Corporate Social Responsibilities
SME: Small and Medium Enterprise
MM2H: Malaysia My Second Home
HSBB: High Speed Broad Band
HDC: Halal Industry Development Corporation
MITI: Ministry of International Trade and Industry
JAKIM: Department of Islamic Development Malaysia
FELDA: Federal Land Development Authority
FELCRA: Federal Land Consolidation and Rehabilitation Authority
RISDA: Rubber Industry Small Holder Development Authority
TEKUN: Tabung Kumpulan Usaha Niaga
GBI: Green Building Index

*Adapted from 2010 Malaysia Budget Speech by Prime Minister Najib