On Friday, 6 November, Finance Minister Tengku Zafrul Aziz tabled #Budget2021, the first Federal budget by the Perikatan Nasional government since it came to power
While in Dewan Rakyat, he said that the COVID-19 pandemic has been described as the worst economic crisis since the 1930s' Great Depression and it has upended the economies in over 150 countries.
However, the minister assured that it is the government's main priority to protect the lives of the rakyat. Therefore, this year, the budget is focused on three things: the rakyat's well-being, business continuity, and economic resilience.
The total amount allocated for Budget 2021 is the largest in history with a value of RM322.5 billion.
1. No more Bantuan Sara Hidup (BSH)
BSH is a financial aid scheme that was introduced by the Pakatan Harapan government in 2019.
Tengku Zafrul said that the government has decided to replace it with Bantuan Prihatin Rakyat (BPR).
RM6.5 billion will be allocated for the new BPR incentive and it is estimated to benefit 8.1 million people.
In general, people will see an increase in the amount of financial assistance under the new programme.
Under BPR, these initiatives will take place:
- Households with an income of less than RM2,500 and have only one child will receive RM1,200.
- Households with an income of less than RM2,500 and have two children or more will receive RM1,800.
- Households with an income of RM2,501 to RM4,000 and have only one child will receive RM800.
- Households with an income of RM2,501 to RM4,000 and have two children or more will receive RM1,200.
- Households with an income of RM4,001 to RM5,000 and have only one child will receive RM500.
- Households with an income of RM4,001 to RM5,000 and have two children or more will receive RM750.
Meanwhile, single persons above 21 with an income of less than RM2,500 will receive RM350. Previously, only singles above 40 are entitled to the BSH financial aid.
2. You will be taxed for vaping
The government will impose a 10% tax for all types of electronic and non-electronic cigarettes, including vape.
This will come into effect starting 1 January 2021. Meanwhile, the liquid used in electronic cigarettes will be imposed an excise duty at a rate of RM0.40 per millilitre.
3. Unlimited public transport pass MY30 initiative will be continued
Not only that, the initiative will also be expanded to Kuantan and Penang with a total allocation of RM300 million. This enables users to enjoy all bus and rail services operated by Kumpulan Prasarana for as low as RM30 a month.
4. Income tax relief limit for lifestyle has been increased
The tax relief limit for lifestyle is increased from RM2,500 to RM3,000 where the additional RM500 is specifically provided for expenditure related to sports including participating fee for sports competitions.
The minister said, "The scope of relief is also expanded to include subscription of electronic newspapers."
5. Malaysian youths between the ages of 18 and 20 are entitled to RM50 of e-wallet credit
Tengku Zafrul said, "Youths play an important role as pioneers and consumers in adopting the latest technology. Towards embracing a cashless society, the government will credit a one-off RM50 into e-wallet accounts for those aged 18 to 20 years via the eBelia Programme."
With an allocation of RM75 million, this initiative is expected to benefit more than 1.5 million youths.
6. Civil servants get special financial assistance of RM600
The minister said that this move is put in place as a show of appreciation for the services and duty rendered by the civil servants.
However, the financial assistance will only be granted to civil servants Grade 56 and below. The payout will be made in early 2021.
7. Retirees and non-pensionable veterans will receive RM300
Also as a show of thanks for their services, civil servant retirees and non-pensionable veterans will get a one-off payment of RM300 at the beginning of 2021.
Meanwhile, 40,000 police retirees who received the National Hero Service Medal will receive a one-off grant of RM500.
8. The minimum Employees Provident Fund (EPF) contribution rate is reduced from 11% to 9%
Effective beginning January 2021 for a period of 12 months, this move is put in place to ensure an increase in take-home pay. This will benefit EPF contributors with a potential cashflow of up to RM9.3 billion.
9. You can now withdraw EPF savings from Account 1 on a targeted basis
EPF contributors who have lost their jobs will be allowed to withdraw RM500 per month from Account 1 starting January 2021.
Tengku Zafrul said that the move will help those who have lost their jobs due to the pandemic.
However, those affected will only be allowed to withdraw a maximum of RM6,000 over 12 months. Those who qualify can apply beginning January next year.
10. An additional RM1 billion will be allocated to stem the third wave of COVID-19
The allocation will be broken down to smaller amounts. Firstly, RM475 million will be used for the purchase of reagent, test kits, and consumables for the Ministry of Health's (MOH) usage.
Secondly, RM318 million is allocated to provide PPE and hand sanitisers to MOH front
Next, RM150 million will be granted to the National Disaster Management Agency to coordinate efforts to fight COVID-19.
Another RM50 million is exclusively for the purchase of equipment, laboratory test supplies, and medicine for university teaching hospitals and also to procure the equipment needed to resume dental services, virtual clinical services, and preparation of preliminary zone facilities and thermometers at health facilities to meet the standard operating procedures (SOPs).
11. There will be tax relief for a handful of different medical treatments
In an effort to encourage people to seek vaccination as a preventive measure against diseases, the government has agreed to expand the scope of the tax relief for medical treatment expenses covering vaccination expenses such as pneumococcal, influenza and COVID-19. This tax relief, covering taxpayer, spouse, and child has a limit of RM1,000.
Tengku Zafrul added, "The government will also increase the tax relief limit on medical expenses for self, spouse, and child for serious diseases from RM6,000 to RM8,000 and tax relief limit for expenses on full medical check-up will be increased from RM500 to RM1,000.
In addition, the limit of tax relief on expenses for medical treatment, special needs, and parental care is also increased from RM5,000 to RM8,000."
12. Medical staff will receive RM500
Tengku Zafrul noted that as a sign of appreciation of the contribution by the MOH frontliners, 100,000 medical staff in Malaysia can expect to receive a one-off payment of RM500.
13. Extra allowance for people with disabilities (OKU), senior citizens, and workers who take care of the OKU community and patients with chronic illnesses
The rate of financial assistance for people in the OKU community who are incapable of work is increased from RM250 to RM300.
Meanwhile, the rate for financial assistance for senior citizens, carers of bedridden and OKU persons and chronically ill patients is increased from RM350 to RM500.
On the other hand, the rate for incentive allowance of workers with disability will be increased from RM400 to RM450.
14. RM5 public transport pass for students from Standard 1 until Form 6
Tengku Zafrul explained that an unlimited monthly travel pass for as low as RM5 will be introduced for school children from Standard 1 to Form 6 as well as OKU persons.
This pass can be utilised on the Klang Valley commuter lines, northern sector commuters, Kuala Lipis and Tumpat inter-city train, and the Beaufort-Tenom line in Sabah. The current fare is RM5 per day. Starting next year, the fare will only be RM5 per month.
15. RM180 telecommunication credit for B40 individuals
RM5 billion has been allocated to implement the Jaringan PRIHATIN Programme and it is focused on making internet services more accessible for B40 groups.
In the first quarter of 2021, an estimated eight million individuals in the B40 category will each be eligible to receive a telecommunication credit worth RM180. This credit can be used for internet subscription, or defray part of the cost to buy new mobile phones.
At the same time, telecommunication companies will match the value by providing benefits worth RM1.5 billion, such as free data.
16. Underprivileged families will get cash aid of up to RM200 per child
Financial assistance for children will be increased from RM100 per child with a maximum of RM450 per family, to RM150 per child aged seven years to 18 years, or RM200 per child aged six years and below with a maximum of RM1,000 per family.
Tengku Zafrul elaborated, "For example, if Puan Safiah has three children, with two of them below the age of six years, and a disabled husband who works, her family will receive monthly assistance of RM1,000 per month."
17. The government will set up a training and relocation program for 8,000 staff members from Malaysian aviation companies
Tengku Zafrul noted, "The government is aware that the tourism sector is one of the most affected sectors as a result of COVID-19. In this regard, the government will provide training and placements for 8,000 employees of airline companies in Malaysia."
For this purpose, a total of RM50 million will be allocated.
18. RM150 million will be used to provide students at 500 schools with laptops
The Finance Minister addressed that in this new norm, online education has become a way of life.
Therefore, he announced that Government-Linked Companies (GLCs) and Government-Linked Investment Companies (GLICs) will contribute RM150 million into the Tabung CERDIK to provide laptops to 150,000 students in 500 schools as a pilot project.
This project will be supervised by Yayasan Hasanah.
19. Banks had previously continued to offer extended moratorium and other forms of repayment assistance. Now, banks will further enhance the Targeted Loan Repayment Assistance (TRA).
BSH or BPR recipients and micro enterprises with loans of up to RM150,000 will be given several different options. They can choose to opt for a moratorium on their instalments for a period of three months or reduce their monthly repayment by 50% for a period of six months.
Eligible borrowers will only need to contact their banks to choose the options and complete the documentation.
Meanwhile, for the M40 borrowers, application for the repayment assistance will be simplified. In order to secure the repayment assistance, borrowers would only need to make a self-declaration of the reduction in income.
The facility for the B40 and M40 will commence in December 2020.