An insightful discussion on “Malaysian budget 2021: A
Rakyat –Centric Budget during the Pandemic?”
Budget 2021, unveiled on 6 November 2020 by the
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, was undoubtedly
an expansionary budget that aimed to revitalise the economy and help
Malaysian tide over the difficulties of COVID-19 pandemic. Budget 2021 was
indeed expansionary as it came with an allocation of RM322.5billion, the
highest in Malaysia’s history. It also saw an increase of 8.6% compared to
Budget 2020 which was RM297billion.
Themed ‘Resilient as One, Together We Triumph’,
Budget 2021 was formulated based on three integral goals, namely Rakyat’s
wellbeing, Business Continuity and Economic Resilience. The Budget 2021 was
also said to be a Rakyat-centric budget that strived to achieve a balance by
managing the government’s financial sustainability, ensuring social
well-being, and reviving the economy.
In view of this matter,
UTAR
Institute of Management
and Leadership Development (IMLD), Belt and Road Strategic Research Centre
(BRSRC) and the Department of Economics jointly organised a forum titled
“Malaysian budget 2021: A Rakyat –Centric Budget during the Pandemic?” on 13
November 2020.
The forum saw around 140 participants and it was
conducted via Zoom. The speakers were Deloitte Tax Services Sdn Bhd
Executive Director Stefanie Low Geok Ping and SME Association Malaysia
National Vice President Chin Chee Seong. It was moderated by Faculty of
Accountancy and Management lecturer Prof Dato' Dr Tai Shzee Yew. The forum
saw the two panellists, Stefanie Low and Chin highlighting the key measures
of Budget 2021 and sharing their thoughts on how the budget benefitted the
rakyat.
Stefanie Low presenting the budget’s
allocations and salient tax –centric proposals
Stefanie Low said, “The budget is presented annually
at the end of October or November and it is tabled under the supply bill.
The legislation such as the Income Tax Act and Companies Act needs to pass
the Parliament; the same goes to budget, it needs to be presented and
debated. Once the members of the Parliament vote, it will become law and
effective. As far as I know, the budget will normally pass but it will
require some modification.”
She added, “The supply bill refers to the spending of
the government. In addition to that, there is also a finance bill that needs
to be debated. Wherever the budget is presented, the finance bill will come
along. The finance bill will make an amendment to the Income Tax Act 1967
(ITA), Real Property Gains Tax (RPGT), Stamp Act 1949, Sales and Services
Tax to either tighten the rules or deny deduction on the increased revenue
of the country.”
Stefanie Low also talked about the budget
allocations; Salient tax-centric proposals, namely individual tax, tax
incentives, stamp duty and indirect tax. Speaking of the budget allocations,
she said, “Our government expected to raise RM236.9billion for income but
the expenditure allocated was RM322.5billion. Hence, we are running a
deficit, our expenditure is more than our income by 5.4%, and it is a
deficit in profit and loss.”
Stephanie Low breaks down the key to
various segments of the budget’s allocation
“The key revenue of the country is taxation. The
revenue comes from income tax and indirect tax. Income tax is the tax of
earning and the profit of a company or individual. Indirect tax, on the
other hand, comes from sales and service tax,” she explained.
Review of the income tax rate for
resident individual
Chin sharing the challenges faced by
the SMEs
Chin, on the other hand, commented on budget 2021
from the perspective of small and medium-sized enterprises (SMEs). He said,
“This overall budget is the largest budget allocation. It looks big but when
we drill down to the details, we can barely see how the budget benefits the
SMEs. In my opinion, the government should provide direct incentives for
various programmes. We want a targeted fund or effort that would help SMEs
to grow and survive. And we would also like to bring attention to the
government that the incentives given need to reach on time in order to
support the operations of the SMEs and for them to survive. The SME
Association Malaysia also constantly engaged with the government especially
during this pandemic situation to understand how the grants can bring
benefit to all the SMEs.”
He also emphasised on the press statement given by
SME Association Malaysia President Datuk Michael Kang, “Datuk Michael Kang
said that 100,000 small and medium enterprises (SMEs) may have closed down
since March. The figure mentioned was three times the statistics reported by
the Companies Commission of Malaysia’s (SSM), which showed 32,469 SMEs have
wound up between March and September. The SSM provided official statistics
but the unofficial number is much higher as many SMEs have some loose ends
to tie up after pulling down their shutters before submitting the documents
to SSM.”
Chin highlighted the challenging situation faced by
the SMEs, “Many SMEs in the food and beverage businesses have closed their
shops for the time being following the implementation of the conditional MCO
in a number of states in the Peninsula because there are no customers. For
the retailers, especially those who are doing business in malls, they had
gone through too much owing to the recent rise in cases. The SMEs are still
struggling with cash flow up till today; there are bills to pay while sales
haven’t fully recovered for some of them.”
“We will strongly engage with the government to let
them know what is actually happening on the ground and what the SMEs are
facing. We do hope the budget with whatever amount will quickly pass and
will be quickly implemented to help the SMEs,” he concluded his thought.
The one-hour discussion then saw an active interaction between the speakers and the participants. The talk was concluded with an extensive yet insightful Q&A session.
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