Malaysia Budget 2022

 

 The theme for Budget 2022 is "Keluarga Malaysia, makmur sejahtera" (Malaysian family, prosperous and peaceful). 

Finance Minister Tengku Zafrul Abdul Aziz said it is based on three core concepts "rakyat yang sejahtera" (people's wellbeing), resilient businesses and a prosperous economy.

Screengrab from the live broadcast of the Budget 2022 speech from Parliament on Oct 29, 2021.

PETALING JAYA: Tengku Datuk Seri Zafrul Abdul Aziz has started delivering his Budget 2022 speech in Parliament here on Friday (Oct 29).

The Finance Minister is expected to deliver a Budget in line with the Malaysian Family concept, which will concentrate on the country's recovery after the Covid-19 pandemic.

On Wednesday (Oct 27) Prime Minister Datuk Seri Ismail Sabri Yaakob said Budget 2022 was from the people, by the people, for the people and would be of high impact for all layers of society and businesses.

Ismail Sabri said Budget 2022 would also generate more jobs to tackle unemployment and enable the recovery process to return the country and its economy to the pre-Covid-19 pandemic with new norms in place.

He added that Budget 2022 was drawn up carefully and comprehensively, taking into account the views of all quarters, including Opposition parties.

Here are the highlights of the Budget 2022 speech as they are delivered:

Budget 2022 allocation

Budget 2022 has a total allocation of RM332.1bil, the largest-ever for the country. This surpasses Budget 2021 allocation of of RM322.54bil.

Tengku Zafrul said this involves RM233.5bil in administrative expenses, RM75.6bil in development, RM23bil for the Covid-19 fund and RM2bil for unexpected expenses.

Family focus

The Bantuan Keluarga Malaysia outlined in Budget 2022 will benefit over 9.6 million recipients with an allocation of RM8.2bil.

Households with three children or more with household income less than RM2,500 will receive RM2,000 in aid. An extra RM500 will be given to for single mothers/fathers with dependents and monthly income of up to RM5,000. This means single mothers/fathers with three children and above are entitled to a maximum RM2,500 in aid.

An additional allocation of RM300 will be given to senior citizens.

Overall, RM2.4bil in welfare aid is allocated to benefit over 440,000 households.

Education first

Education gets the biggest slice of the pie in Budget 2022 with RM52.6bil for the Education Ministry and RM14.5bil for the Higher Education Ministry.

Tengku Zafrul said this includes RM450mil in aid to be provided to three million students.

Health matters

Health Ministry gets an allocation of 32.4bil, the second-largest after the Education Ministry.

From the allocation, RM2bil will be channeled to purchase of vaccines and RM2bil for additional Covid-19 expenses.

He added that the government would be purchasing another 88 million doses of vaccines, which includes the third dose for children between the ages of 12 and 17.

PTPTN repayment incentives

Government to give discounts to PTPTN borrowers for payments from Nov 1 to April 30.

Borrowers will get a 15% discount for full settlement; 12% for payments of at least 50% of the outstanding balance in a single payment. Those who make repayments through salary deduction or scheduled direct debit will get a 10% discount.

Just for jobs

Allocation of RM4.8bil to create 600,000 job opportunities under the JaminKerja initative.

With a target of 300,000 hires, the initiative will offer incentives to employers such as 20% of the first six months' pay, and 30% of the following six months pay for hired employees making above RM1,500.

Among others, RM1.1bil has been allocated for training and upskilling programmes for 220,000 trainees.

The Technical and Vocational Education and Training (TVET) sector will receive an allocation of RM6.6bil under Budget 2022.

Tengku Zafrul said the focus is on eeting industry needs and an additional allocation of RM200mil has been allocated for joint venture programmes with industries.

Boosting healthy lifestyles

There will be an excise duty imposed on nicotine-based gel or liquid products for vaping and electronic cigarettes, says the Finance Minister.

"Towards a healthy lifestyle the government plans to broaden the scope of excise duty to include premix sugary drinks made from chocolate, malt, coffee and tea," said Tengku Zafrul.

Women matters

The goverment will make it mandatory for all publicly-listed companies to appoint at least one woman to its board of directors.

Tengku Zafrul said RM5mil would also be allocated for the Women Leadership Foundation to encourage female participation in the economic sector.

Free self-hygiene kits will be given to young women in the B40 category monthly, which will benefit some 130,000 youths nationwide.

Tengku Zafrul added that RM11mil would be allocated for free mammogram and cervix examinations.

New villages

A total of RM200mil has been allocated for the Chinese community, among them for the purpose of upgrading Chinese new villages, as well as financing schemes for the small and medium enterprises (SMEs).

RM145mil has been set aside for the Indian community, among them for the implementation of programmes to strengthen the community's social economy through Tekun Nasional, the national Entrepreneurial Group Economic Fund, under the Indian Entrepreneurs Development Scheme.

Levelling up eSports

To push the eSports industry in the country, RM20mill will be allocated under Budget 2022.

This includes RM5mil to develop an excellence centre for drone sports in the country.

Housing for all

RM1.5bil has been allocated for continuing low-cost housing projects. Another RM2bil allocated for housing credit guarantee scheme to help those without a stable income to buy a house.

Tengku Zafrul also said the government would no longer impose the real property gains tax (RPGT) on Malaysians, permanent residents and companies when they dispose of their real property assets from the sixth year onwards.

For sporting excellence

To further improve the national Paralympics team, the National Sports Council (NSC) will receive a RM10mil allocation. This is to enhance training programs and organise leagues for various sports to prepare for the 2024 Paris Paralympics.

RM158mil will be allocated to renovate, enhance and build sporting facilities around the country.

RM50mil will be allocated to encourage people to continue leading an active lifestyle.

Cash in hand

Employees’ contribution rate to the Employees Provident Fund (EPF) that was reduced to 9% in 2020 will remain until June 2022.

Boost for youths

A RM300mil allocation to provide RM150 in credit into eWallets of youth aged 18 to 20 who are students at institutions of higher learning.

Lower vehicular taxes continue

To reduce the cost of vehicle ownership, the government will extend the 100% sales tax exemption on completely knocked down (CKD, locally-assembled) passenger vehicles and 50% on completely built-up (CBU, imported cars) including MPVs and SUVs for six months until June 30, 2022.

The exemption was introduced by the government in 2020 to drive sales in the automotive sector which was affected by the Covid-19 pandemic.

Defending the nation

The Defence Ministry will get an allocation of RM16bil, of which RM1.6bil is to upgrade the readiness of main assets of the Armed Forces. This allocation also involves RM14mil to replace main equipment of Naval Special Forces (Paskal) and Air Force Special Forces (Paskau) such as parachutes, closed-circuit diving equipment and boats.

e-vehicles to get a power up

Tengku Zafrul said the government sees the potential of electronic vehicles (EV) to minimise pollution, and therefore plans to give up to 100% exemption of import and excise duties as well as sales tax.

Road tax exemptions of up to 100% will also be given out for electronic cars.

Tax relief of up to RM2,500 will be given for the purchase, assembly, renting and leasing of EVs.

Tourism budget

A total of RM1.6bil has been allocated for the tourism industry. RM600mil will be allocated under the Penjana Tourism Financing dan BPMB Rehabilitation Scheme while RM85mil will be go towards a three-month special assistance for over 20,000 tourism operators.

Zafrul also announced matching grants for the purpose of the renovation of budget hotels and homestays, with an allocation of RM30mil.

To spur domestic tourism, the RM1,000 tax rebate will be extended until 2022.

Sabah and Sarawak

The two states will receive increased development allocations of RM5.2bil and RM4.6bil respectively under Budget 2022.

Fisheries and agriculture

RM1.7bil allocated for the various incentives and subsidies for the fisheries and agriculture industries.

Please folllow The Star's coverage of Budget 2022 here.

Click on the logo to see the full text of Tengku Zafrul's Budget 2022 speech in Malay.

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Budget that braces for tough times

2020 Budget designed to brace for rough times: AmBank ...

Broad measures spelt out under Budget 2020 will likely sustain the economy, if there is no further escalation in trade fights.

A glimmer of hope emerged after the US outlined the first phase of a deal to settle some issues related to trade, but there is a lingering suspicion that China could be just buying time as it will most likely not concede to any loss of sovereignty.

China is developing its own ecosystem that could be “outside the reach” of the US, and it is possible that the time bought with such rearguard actions may allow China to achieve its aims.

Malaysia, a trade dependent economy, can only hope that it all works out well, if it can integrate into both ecosystems, said Inter-Pacific Securities head of research Pong Teng Siew.

More stimulus measures would be undertaken should the global economy worsen and in the worst case scenario, Malaysia would have room to spend more if it increases the budget deficit, currently at 3.2% of the gross domestic product (GDP).

The worry is that a further deterioration in global trade tensions may push the global economy into recession. If that does not happen, these Budget 2020 measures should be able to sustain the economy, according to RHB Research Institute chief Asean economist Peck Boon Soon.

Given the external headwinds that continue to pose more downside risks, it looks like Budget 2020, which attempts to spread out its positive effects, has been designed to brace for rough times.

Some positive impetus could be derived from measures to support tourism, construction and infrastructure, as well as small and medium scale enterprises (SMEs), said AmBank Research head Anthony Dass.

Tourism-related businesses such as food and beverage, accommodation, travel and transport, shopping and entertainment will likely benefit.

Recognising the importance of SMEs in driving growth, a string of measures to facilitate their financing needs, ease of doing business, faster adoption of high technology and green initiatives, should also bode well.

The bottomline is that resources are limited while the government still aims for fiscal consolidation and repayment of all debts.

Spreading out these scarce resources will probably succeed in paring off any broad-based slowdown, but it will be hard to make a dent when the sense of a loss in economic momentum is gradually settling in, said Pong.

More measures are required to stimulate the economy but in view of the gloomy global outlook and domestic issues, it is still overall, a good budget.

However, the allocation between capital and operating expenditure is still imbalanced; there is too little capital expenditure and there appears to be ‘little effort’ to reduce operating expenditure.

This will have a long term effect, especially in an aging society, according to Areca Capital CEO Danny Wong. In view of concerns over the lack of investments and falling revenue, efforts to boost foreign direct investments and tourism are welcome but more robust steps are required.

A correction in property prices may be a remedy for the overhang and inaffordability issues especially among young people.

The budget tries to forestall a price pullback, which would affect developers stuck with high land prices, by allowing foreigners to fill the demand gap.

But demand has evaporated, partly caused by the migration of mid-level talent and delays in household formation, the driver of long term demand and new home construction. Developers, lulled by the padding of demand through low interest rates for borrowers, high financing margins and easy access to debts, find it hard to lower prices.

They had thought the elevated level of demand was sustainable but it was not. Reduced prices may mean less profits but possibly a lifeline by way of cashflows, and may help restore delays in household formation and loss of talent, said Pong.

A worrying trend is that more and more young Malaysians are moving out of the country in search of jobs.Even mid-level expertise and talent is migrating; previously, it was mostly those who were highly mobile internationally.

A major cause is the lack of growth in real purchasing power.

Is the projected GDP growth of 4.8% achievable?

With the government continuing its spending and development initiatives, growth should remain robust, supported by services and construction, higher production from agriculture and mining. But manufacturing is expected to moderate.

Malaysia can achieve its 4.8% growth target, said Hong Leong Bank chief operating operating officer, global markets, Hor Kwok Wai.

However, in view of slower world GDP growth of 2.8%, AmBank Research expects growth of 4.0% with an upside of 4.3% for Malaysia.

Coming up with a further set of stimulus, should things worsen, may be a challenge.

Columnist Yap Leng Kuen is watchful of the tech war. The views expressed are the writer’s own.

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The Pakatan Harapan government yesterday tabled its maiden budget that sought to restore Malaysia’s status as an “Asian Tiger” with a clean and transparent government that cares for the rakyat. (EPA/FANDY AZLAN)

KUALA LUMPUR: THE Pakatan Harapan government yesterday tabled its maiden budget that sought to restore Malaysia’s status as an “Asian Tiger” with a clean and transparent government that cares for the rakyat.

Finance Minister Lim Guan Eng, in tabling the 2019 Budget in Parliament, said: “As long as we are clean, people-centric and focused on carrying out institutional reforms, we can restore Malaysia back to fiscal health in three years.

“Let our love for our country unite us, our challenges make us stronger and our confidence awaken Malaysia as an Asian Tiger all over again.”

Themed “A Resurgent Malaysia, A Dynamic Economy, A Prosperous Society”, the RM314.5 billion budget for next year has three areas of focus with 12 key strategies.

One focus area — to ensure the socio-economic well-being of Malaysians — will be the key performance indicator of the government’s success.

“We will seek to meet this objective by ensuring welfare and quality of life, improving employment and employability, enhancing wealth and social welfare protection, raising real disposal income and education for a better future,” he said.

In a speech that lasted more than two hours, interrupted by intermittent heckling from opposition lawmakers, Lim announced a slew of measures to address the people’s key concerns, from cost of living to housing, healthcare, education and transport.

Cash grants for the low-income Bottom 40 (B40) group will continue, single vehicle/motorbike owners with engine capacity of 1500cc and below will get targeted fuel subsidy, and the minimum wage will be raised to RM1,100 from Jan 1.

A National Health Protection Fund, with free coverage on four critical illnesses of up to RM8,000 and a hospitalisation benefit of RM50 a day, was also introduced for the B40 group.

For the affordable home programmes, Lim announced an allocation of RM1.5 billion while Bank Negara Malaysia will set up a RM1 billion fund to help those earning below RM2,300 a month to own houses costing below RM150,000.

The government will also allow the private sector to engage in new crowdfunding schemes for first-time housebuyers.

The Education Ministry received the lion’s share of the budget, with an allocation of RM60.2 billion, including RM2.9 billion assistance for the poor and RM652 million to upgrade and repair schools.

An amount of RM3.8 billion has been set aside for government scholarships.

All intra-city toll rate hikes will be frozen next year, said Lim, and public transport users, meanwhile, can buy RM100 monthly passes for unlimited trips on RapidKL rail or bus services beginning January.

A RM50 monthly pass is also available for those who use RapidKL buses only.

Civil servants and pensioners were not left out — staff up to Grade 54 will receive a one-off special payment of RM500; while government pensioners will get RM250.

The budget deficit for this year is likely to be 3.7 per cent, while gross domestic product (GDP) growth is forecast at 4.8 per cent and 4.9 per cent next year.

To ensure strong and dynamic economic growth, another focus area is to promote an entrepreneurial state that leverages innovation and creativity, while embracing the new digital economy.

The government aims to provide at least 30Mbps broadband connectivity outside urban centres within five years, while funds have been allocated to encourage investments in green technology and transition into Industry 4.0.

Corporate tax rate will be reduced to 17 per cent from 18 per cent for SMEs with paid capital below RM2.5 million, and businesses with annual taxable income below RM500,000.

Meanwhile, after inheriting “a worrying state of financial affairs which was in dire straits” with debts amounting to RM1.065 trillion from the previous administration, the third area of focus is to implement institutional reforms that promote transparent fiscal discipline.

“We intend to table a new Government Procurement Act next year to govern procurement processes to ensure transparency and competition, while punishing abuse of power, negligence and corruption,” Lim said.

He said open tenders will not only achieve more value-for-money for taxpayers, it will also nurture an efficient and competitive private sector.

To ensure that Malaysia has a clean government, the budget also saw the Malaysian Anti-Corruption Commission receiving an increased allocation of RM286.8 million.

Lim said the allocation, which is an 18.5 per cent increase from this year’s, will see MACC employing up to 100 more staff next year as the government revs up its anti-graft campaign.

Putrajaya expects to collect a revenue of RM261.8 billion next year, including a RM30 billion dividend from Petronas.

To raise its revenue, the government will leverage its assets and review taxation policies.

This includes reducing its stake in non-strategic companies, expanding the Service Tax to cover online services, and raising licence fees and taxes in the gaming sector.- By Nst Team

Key highlights of 2019 Budget

The following are the highlights of the 2019 Budget, which was tabled by Finance Minister Lim Guan Eng in Parliament on Friday. (Bernama photo)

The budget carries the theme of "Credible Malaysia, Dynamic Economy, Prosperous Rakyat" and will focus on three main thrusts with 12 key strategies to recapture Malaysia's 'Economic Tiger' status.

The three main thrusts are:

*Institutional reforms
*People's wellbeing
*Promotion of entrepreneurial culture
.
The 12 strategies are:

*Strengthening fiscal management
*Restructuring and rationalising government debt
*Increase government revenue
*Ensuring welfare and quality life
*Increasing job opportunities and marketability
*Improving quality of healthcare services and social welfare protection
*Increasing disposable income
*Education for a better future
*Initiating new economic power
*Grabbing opportunity to face global challenge
*Redefining government’s role in business
*Ensuring economic fairness and sustainable economic growth


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GST vs SST. Which is better?

MALAYSIA’s decision to revert to the Sales and Service Tax (SST) from the Goods and Services Tax (GST) will result in a higher disposable income due to relatively lower prices it will incur in most goods and services.

Consumers will have a choice in their consumption – by paying service taxes based on their affordability and ability.

The coverage of GST was comprehensive and it covered too wide a sector. While it was able collect a sustainable sum of RM44bil for the country, it was not people-friendly.

The narrowing scope of the SST will at most, collect approximately RM23bil for the country but it will indeed relieve the people – so SST is needed by the people.

Methodology of SST

The Sales Tax Bill and the Service Tax Bill have just been passed at the Dewan Rakyat and are expected to get approval from the Dewan Negara when it convenes on August 20.

This leaves little room for businesses and entrepreneurs to get ready for the new tax regime in less than a month’s time.

Therefore, it is of utmost importance to understand the concept and mechanism of SST as stated in both the Bills.

SST comprises two legislations. The sales tax is imposed on the manufacturing sector as governed by the Sales Tax Act 2018 while service tax is imposed on selected service sectors, with one of the most notable ones being the food and beverage (F&B) service providers.

The Service Tax Act 2018 would govern the selected service providers and the details would be gazetted in the subsidiary legislation, PU(A) Service Tax Regulations 2018.

Finance Minister Lim Guan Eng has announced that the threshold for F&B providers is set at annual turnover of RM1mil.

This would mean that those who operate with less than RM1mil turnover would not charge service tax at 6%.

This translates into hawker food, cafes, take aways or food trucks being able to provide F&B at lower prices as compared to the GST regime of 6%. Consumers are deemed to be given an option to pay service tax or not, depending on their consumptions at places such as fast food outlets, restaurants or food courts.

Generally, living costs will be relatively lower in the SST era as the B40 group of consumers would certainly be relieved in their daily eating affair.

The existing GST regime sets up the threshold at RM500,000 per year, meaning that almost all restaurants, including simple mixed rice outlets, would have a GST of 6% imposed. The service tax regime would not impose service tax of 6% on service charge rendered in any restaurant or café operator.

Service charge in its true essence, represents tips or gratuity to the waiters working in the restaurant and it is entirely at the discretion of the F&B operators.

These operators may choose to charge from 5% to 15% or even free of charge. In summary, in the event service charge is imposed, it would not be subject to service tax.

SST is people friendly as the daily consumption of food and beverages would be much lower in price as compared to the GST regime. The imposition of service charge is not governed by any law and it is entirely at the discretion of the F&B operators.

In order to avoid disputes, it is advised that notice be placed outside the premises if the F&B operator is imposing a service charge ans the rate determined by them.

SST is one stage

Sales Tax is only imposed one time on the manufacturing company when a sale is made to a trading company. The subsequent sales of the goods by the trading company would have no sales tax imposed.

Business entrepreneurs must be mindful and careful in the cost management as Sales Tax – although imposed at 10% – would eventually result in a much lower pricing of goods as compared to the GST regime.

GST is operating on a value added concept with input tax available as deduction. The supply chain moving from manufacturers to distributors, dealers and to consumers would result in higher pricing as GST is imposed on final stage, comprising of value add and profit margin.

SST is a business cost

Under the GST regime, input tax is available as a credit or deduction against output tax based on tax invoice received from GST registrant suppliers.

This would mean that GST is never a business cost as deduction is available against output tax even though there is no sales generated. Sales Tax on the other hand, would be paid by the trading company purchasing goods from the manufacturing company.

It is a business cost and deduction is only available when there is a sale. This would mean that business cost would be higher as Sales Tax is part of the inventory cost and to be deducted as cost of sales when goods are sold or exported. In simple terms, no sales, no deductions.

Businessmen are urged to carefully analyse the cost and not overprice the goods for the benefits of the people and the sustainability of their businesses. The reduction of GST from 6% to nil would immediately translate a price reduction of 6%, which is a must for a businesses to adhere to.

Failure to adhere to the pricing would expose the operators to the fines and penalties on anti-profiteering governed by Price Control and Anti-Profiteering Act 2011.

As the breakdown shows, SST is well suited in the Malaysian environment, to both the business communities and the people.

Source: Dr Choong Kwai FattDubbed the Malaysian tax guru, Dr Choong Kwai Fatt is a tax specialist and advocate.

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Here are the highlights of the 2017 Budget proposals announced on Friday by Prime Minister Datuk Seri Najib Tun Razak:

Lower corporate tax

* Govt has proposed to reduce the corporate tax for the year of assessment 2017 and 2018

* Reduce tax rate between 1 and 4 percentage points for companies with significant increase in taxable income for year of assessment 2017 and 2018.

* Reduce tax rate from 19% to 18% for SMEs with taxable income up to first RM500,000.

* Extend double taxation promotion on operating expenditure borne by anchor companies for the Vendor Development Programme until 31 December 2020.

Amendment to Bankruptcy Act 1967

* To enable bankrupt individuals to rejoin business activities by amending the Bankruptcy Act for social guarantors and those diagnosed with chronic diseases as well as the elderly.

Infrastructure, railway projects

* New 600km East Coast Rail Line connecting Klang Valley to East Coast, costing RM55b. Conects Port Klang, ITT Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu, Kota Bharu ends in Tumpat

* RM100m to restore East Coast railway line along Gua Musang – Tumpat that was destroyed during flood.

* To increase trip frequency of ETS for JB-Padang Besar route, RM1.1b allocation to buy more train sets

Boosting investments in small, midcap companies

* Govt-linked investment companies will set aside up to RM3b to fund managers to invest in potential small and midcap firms

* Capital Market Research Institute will set up Capital Market Development Fund with initial funding of RM75m

* Stamp duty on instruments of transfer of real estate worth more than RM1m to rise from 3% to 4% from Jan 1, 2018

Broadband incentives for rakyat

* Malaysian Communications and Multimedia Commission (MCMC) will provide RM1 billion to ensure the coverage and quality of broadband nationwide reaches up to 20 megabytes per second.

* From January 2017, fixed line broadband service providers will offer services at a higher speed for the same price.

* A subscriber of 5 mbs per second package at RM149 will enjoy a package with twice the speed, which is 10 megabytes per second. Within the next two years, for this package, the speed will be doubled with the reduction in prices by 50%.

BR1M, subsidies

* BR1M’s assistance for 2017. Households with monthly income below RM3,000, raised to RM1,200

* For households earning RM3,000-RM4,000, the BR1M allocation increased from RM800 to RM900

* Government will provide nearly RM10b for fuel subsidies including cooking gas, toll charges, public transport

* For the purchase of reading materials, PCs, sports equipment be combined as lifestyle tax relief up to RM2,500 from 2017

Affordable housing for first time buyers

*Govt vacant lands at strategic locations will be given to GLCs and PR1MA to build 30,000 houses. The selling price RM150,000 to RM300,000.

*Govt to build 10,000 houses in urban areas for rental to eligible youths with permanent job, Rental up to 5yrs, below than market rate

* Rakyat-Centric projects will be continued through Private Finance Initiative with allocation of RM10b

Empowering taxi drivers, Uber

* Taxi drivers to get Govt grant of RM5,000 to buy new vehicles, individual taxi permits, RM60m allocation

* For ride-sharing drivers who don't own car, down payment can be made using BR1M, rebate RM4,000 to buy Proton Iriz*

Private retirement schemes

* Effective 2017, the Government proposes to introduce a one-off increase of the existing RM500 incentive to RM1,000 to PRS contributors. Minimum accumulated investment of RM1,000 during the otwo years. For this, an allocation of RM165mil will be provided.

* RM400 million will be allocated, among others for clean air and ecotourism initiatives

Source: The Star

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Accounting firms PwC and EY start a trend in recruitment to help business and society

 

Big Four

WE all know that good grades in school won’t necessarily land you that first job. They do however go a long way towards convincing a potential employer that you’re likely to perform well if hired. That’s why you’re routinely asked to produce certificates and transcripts during the application process. How else can the employer get a quick reading on the discipline, intelligence, diligence and knowledge of a school-leaver or a fresh graduate?

But what if an employer decides that your grades shouldn’t matter as much? How will that change things?

For the answer to that, we ought to be watching the Big Four accounting firms in Britain.

Starting in June last year, PricewaterhouseCoopers (PwC) stopped using the UCAS tariff as an entry criterion for most of its undergraduate and graduate recruitment schemes. Developed by the Universities and Colleges Admissions Service, the tariff is the British system for allocating points to those seeking undergraduate placements.

The system applies to a long list of entry qualifications — for example, A levels, City & Guilds diplomas, and music examinations — and the points for each qualification are worked out based on the levels of achievement.

Before this, a person usually must have a minimum number of UCAS points before PwC would consider his job application, even if he’s a graduate. This is apparently a common practice in Britain. With the policy change, the accounting firm can now overlook mediocre A-level results if the candidate has gone on to soar in his degree programme.

PwC says the reduced emphasis on UCAS points is because it’s important to be a progressive and socially inclusive employer, and because it wants to reach the broadest range of talented students.

“There’s strong correlation that exists in Britain between social class and school academic performance. This data suggests that by placing too much emphasis on UCAS scores, employers could miss out on key talent from disadvantaged backgrounds, because they may perform less well at school. That’s why, from an academic perspective, we’re focusing on your degree,” it explains on its website.

And then in August, Ernst & Young (EY) announced that it would remove academic qualifications from the entry criteria for its 2016 graduate, undergraduate and school-leaver programmes. Instead of insisting on certain standards for UCAS points and degree classification, the firm relies on “a new and enhanced suite of online “strengths” assessments and numerical tests to assess the potential of applicants”.

In other words, EY recruits by evaluating the candidates’ strengths and promise, not just their past performance.

This decision came after talent management firm Capp had studied EY’s student selection process over 18 months. The analysis found that EY’s strengths-based approach in recruitment, introduced in 2008, is a robust and reliable indicator of a candidate’s potential to succeed in his role in EY.

“At EY, we are modernising the workplace, challenging traditional thinking and ways of doing things. Transforming our recruitment process will open up opportunities for talented individuals regardless of their background and provide greater access to the profession,” says Maggie Stilwell, the managing partner for talent.

“Academic qualifications will still be taken into account and indeed remain an important consideration when assessing candidates as a whole, but will no longer act as a barrier to getting a foot in the door.”

“Our own internal research of over 400 graduates found that screening students based on academic performance alone was too blunt an approach to recruitment. It found no evidence to conclude that previous success in higher education correlated with future success in subsequent professional qualifications undertaken.”

It’s interesting that Stillwell describes an overriding dependence on academic qualifications as a blunt approach. Stephen Isherwood, the chief executive of Britain’s Association of Graduate Recruiters, has a similar view. The PwC press release on the firm’s move to drop the UCAS points entry criteria, quotes Isherwood: “Using a candidate’s UCAS points to assess his potential is a blunt tool and a barrier to social mobility. This is an innovative step by one of the most significant graduate recruiters in Britain. Other graduate employers should follow its lead.”

PwC definitely sees itself as a trendsetter, saying its new recruitment assessment process could drive radical change across its industry. However, these radical changes haven’t happened yet. So far, Deloitte and KPMG, the other two firms in the Big Four, are still sticking to their minimum academic requirements in Britain.

It’s too soon to conclude that the recruitment changes by PwC and EY are a failed experiment.

The war for talent is intense among accounting firms. Businesses can’t stay at the top without thinking out of the box, taking bold steps, and being caring. It should be no different when it comes to how they hire people.

By Errol Oh Optimistically cautious viewpoint

Executive editor Errol Oh joined an accounting firm right out of school. That doesn’t happen in Malaysia anymore.

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Big Four Corporation

The Big Four are the four largest international professional services networks, offering audit, assurance, tax, consulting, advisory, actuarial, corporate finance, and legal services. Wikipedia

Budget 2016: Malaysia not bankrupt ! PM said

http://english.cntv.cn/2015/10/24/VIDE1445654042676167.shtml

Prime Minister Najib Abdul Razak is tabling Budget 2016 themed ‘Prospering the Rakyat’ in the Dewan Rakyat.

Budget 2016 is the first budget under the 11th Malaysian Plan but it is also the toughest the prime minister has had to work on.

This is amid falling revenue due to the drop in commodity prices, on top of the need to keep the country's deficit in check.

In his speech, the prime minister said Malaysia is not a failed state or bankrupt and stressed that the fundamentals are still strong.

The house erupted when Najib took a jibe at the opposition, saying that the opposition, which at first opposed the goods and services tax (GST), has now included it in their alternative budget.

Budget allocations:

- 2016 Budget allocates a total of RM267.2 billion, an increase from a revised allocation of RM260.7 billion for 2015. The initial allocation for 2015 was RM273.9 billion.

- For 2016, federal government revenue collection is projected at RM225.7 billion, up RM3.2 billion from 2015.

Taxes:



- Income tax increased from 25 percent to 26 percent for people earning between RM600,000 and RM1 million. Increased to 28 percent for those earning above RM1 million.

- Goods and services tax to increase government revenue by RM39 billion, versus RM27 billion in the first eight months of 2015. Some basic goods to be zero-rated, including over-the-counter drugs, baby milk, nuts-based food, noodles.

- Price of oil expected to remain low in 2016, so collection from oil-related resources expected to be around RM31.7 billion.

- Prepaid phone users will get GST rebate, which will be credited to their accounts. From Jan 1 next year.

- For medicine, it would be increased from 4,215 kinds of medicine to 8,630 kinds of (zero-rated GST) medicine.

- If Malaysia has no GST, national deficit will be 4.8 percent. With GST, deficit expected to be 3.1 percent for 2016.

- If Malaysia stuck to the sales service tax (SST), collection would only be RM18 billion. Whereas GST has netted RM39 billion.

- National revenue would reduce by RM21 billion if there was no GST.

- GST flat rate: all controlled medicine, including 95 brands of over-the-counter medicine used for diseases such as cancer, high blood pressure and heart diseases.

- More Small-time farmers can register under flat-rate GST scheme and increase two percent income - threshold for those who can apply decreased from RM100,000 to RM50,000.

- Exemptions from GST for all items that are being re-imported after being temporarily exported for promotion, research or display.

- For oil and gas industries, GST exemptions given to re-import of equipment exported temporarily for rent. For teaching material and equipment, for skills and vocational training. Tax relief:

- Parents with disabled children get RM6,000 tax relief and another RM14,000 if their child furthers their studies.

- Tax exemption of RM8,000 instead of RM6,000 for children above 18 in an education institution both local or overseas.

- Children supporting parents, even if not living together, will receive a tax relief of RM1,500 for both parents, if the parents are above 60.

- Tax exemption of RM4,000 instead of RM3,000 for those with a spouse with no income.

- Middle class families with a household income between RM3,860 and RM8,320 will get RM2,000 tax relief for every child under 18.

BR1M:

- BR1M to be continued. Based on response, Najib says the people are thankful for the help. BR1M allocations to be increased, with one new category.

- For those earning below RM1,000, BR1M increased to RM1,050

- Those earning below RM3,000, BR1M increased from RM900 to RM1,000

- Those earning RM3001-RM4,000, BR1M increased from RM750 to RM800

- Single people aged 21 and above earning not more than RM2,000, BR1M increased from RM350 to RM400

Minimum wage:

- Minimum wage to increase from RM900 to RM1000 a month for Peninsular Malaysia, except for domestic workers.

Expenditure:

- RM50 million to improve prison security measures

- RM13.1 billion to improve safety and national security.

- RM4.6 billion for vaccine, consumables, medicine in public hospitals.

- RM30.1 billion is allocated to the economic sector.

- RM13.1 billion is earmarked for education and training, health, housing and the well-being of the people.

- RM5.2 billion is allocated to the security sector.

Development:

- 2,000 affordable homes for the military, starting 2016.

- RM180 million to set up the National Disaster Management Agency.

- The government has allocated RM52 million for 328 1Malaysia clinics. Apart from this, 33 new 1Malaysia clinics will be opened.

- Five new hospitals will be constructed in Pasir Gudang, Kemaman, Pendang, Maran and Cyberjaya. Kajang Hospital to be redeveloped.

- RM150 million will be allocated to improve 11,000 homes belonging to the poor in rural areas.

- A total of 5,000 Rumah Pr1ma housing units and PPA1M to be built in 10 locations near LRT and Monorail stations, whereas 800 units of affordable homes by GLCs near MRT stations in the city centre.

- 20,000 houses for Felda, with the maximum price reduced to RM70,000 compared to RM90,000.

- The government will build 22,300 flats and 9,800 terrace houses under the Rakyat Housing Scheme.

- 100,000 houses, priced between RM90,000 and RM300,000 for civil servants will be ready by 2018.

- 10,000 Mesra Rakyat houses to be built, with RM20,000 subsidy for each unit. The government has allocated RM200 million for this.

- New boats and facilities for 1Malaysia clinics in rural areas.

- RM864 million to procure offshore patrol vessel and patrol boats.

- RM70 million interest-free loans for longhouse building in Sabah and Sarawak. Limit of RM50,000 loan for each longhouse unit.

- RM360 million will be used to improve National Service and RM160 million allocated for NGOs.

- The Pan-Borneo Sarawak Highway that is set to be completed in 2021 will be toll-free. It is 1,090km-long and costs RM16.1 billion.

- RM900 million allocated for 'Project Traffic Dispersal' at Jalan Tun Razak, to be executed immediately with the strategic cooperation of public-private sectors.

- RM42 million to build Mukah Airport in Sarawak and upgrade Kuantan and Kota Bharu airports.

- Develop Malaysian Vision Valley, 108,000 hectares from Nilai to Port Dickson, with forecast investments starting with RM5 billion in 2016.

- Execute Cyber City Centre in Cyberjaya with development valued at nearly RM11 billion over a five-year period

- Develop Bandar Lapangan Terbang or Aeropolis KLIA in 1,300 acres of land and expected to attract as much as RM7 billion investments.

- Investments estimated at RM18 billion for 2016 for RAPID Complex Project in Pengerang, Johor.

- The government will pump RM515 million for efforts to improve electricity supply in Sabah.

- RM67 million allocated for bus operation routes outside the city.

- The government will fork out RM60 million for social amenity projects and flood prevention efforts.

- RM1.2 billion will be allocated to improve Internet speed from 5mbps to 20mbps.

- The government will continue negotiations regarding high speed rail with Singapore.

- RM28 billion for new MRT projects, which would benefit two million residents

- RM730 million for the development of chemical industry, electronic and electrical machinery, aviation, medical equipment and services.

- For Felda settlements, RM200 million will be used improve roads in these areas.

- The government will fork out RM1.4 billion to improve rural roads nationwide. Aid:

- Aid for students slashed from RM540 million to RM350 million. In the past, RM100 aid was for all primary and secondary students. However, it has now been limited for students whose household income is less than RM3,000.

- A total of 1.2 million students will receive the 1Malaysia book voucher worth RM250.

- RM300 a month aid for poor senior citizens.

- RM662 million has been set aside to help children from poor families - aid of RM100-RM450 a month.

- RM2 billion allocated for aiding the disabled, senior citizens and poor families. RM350/month for working disabled persons, RM200 for those who are unemployed. RM300 a month for those who are bed-bound.

- Skim Khairat Kematian - RM1,000 to be continued

- RM100 aid for households with income below RM3,000. Expected to benefit 3.5 million students.

Others:

- To enable more workers to benefit from Socso, there will be compulsory savings of up to RM4,000 instead of RM3,000.

- RM200 million for first home deposit funding scheme.

- RM40 million to do infrastructure and easy loan programmes for Chinese residents of new areas to pay land premiums and house restorations.

- RM50 million by SME Bank to help small Indian entrepreneurs.

- RM100 million for Indian socio-economic development programmes.

- Tekun to provide RM100 million loan for Indian entrepreneurs.

- RM90 million allocated as micro-credit loans for small traders and Chinese businessmen.

- RM300 million allocated to improve the welfare and development of the Orang Asli community.

- Government aims for 30 percent women involvement in decision-making levels in public and private sectors.

- All economy class flights will be exempted from GST for rural routes.

- Malaysia has agreed to the Trans-Pacific Partnership Agreement (TPPA) in principle, while it has inked 13 Free Trade Agreements (FTA).

- For farming, RM5.3 billion will be used for the purpose of modernisation.

- The tourism sector is expected to contribute RM103 billion. To make it more convenient for tourists, e-Visa for seven countries will be made available in mid-2016.

- The poverty rate has been reduced to 0.6 percent in 2014 from 3.8 percent in 2009. In fact, extreme poverty has almost been wiped out.

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Budget 2016 Sets Stage for Next Five Years



Malaysia's Tax Structure No Longer Competitive: Deloitte's Yee

'Cliff' worries may drive tax selling on Wall Street

By Caroline Valetkevitch

NEW YORK (Reuters) - Investors typically sell stocks to cut their losses at year end. But worries about the "fiscal cliff" - and the possibility of higher taxes in 2013 - may act as the greatest incentive to sell both winners and losers by December 31.

The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling even more appealing than usual.

Tax-related selling may be behind the weaker trend in the shares of market leader Apple , analysts said. The stock is down 20 percent for the quarter, but it's still up nearly 32 percent for the year.

Apple dropped 8.9 percent in this past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one's tax bill is going to jump sharply just because the calendar changes.

"Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"You have a lot of high-net-worth individuals in taxable accounts, and that could be what's affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual."

Of this year's top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.

The rush to avoid higher taxes on portfolio gains could cause additional weakness.

The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions.

A PAIN PILL FROM THE FED?

Next week's Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 p.m. on Wednesday after the conclusion of the meeting - the Fed's last one for the year.

Friday's jobs report showing non-farm payrolls added 146,000 jobs in November eased worries that Superstorm Sandy had hit the labor market hard.

"After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

"I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year," he said.

MORE VOLUME AND VOLATILITY

Volume could increase as investors try to shift positions before year end, some analysts said.

While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade's chief derivatives strategist.

Volatility could pick up as well, and some of that is already being seen in Apple's stock.

"The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple's volatility to carry over into the market volatility," said Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York.

Shares of Apple, the largest U.S. company by market value, registered their worst week since May 2010. In another bearish sign, the stock's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38.

"There's a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple," Aama said.

While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia announced a special dividend of 52 cents a share to be paid on December 28.

To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come.

Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there's a decent chance that the market could rally before year end.

"Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it's hung in there in anticipation of something coming," he said. - Reuters

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