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Budget 2022: Here Are The Key Highlights And Takeaways For You Team Team

Last updated 21 February, 2022

The recent economic highlights of  Budget 2021 was tabled in parliament by Finance Minister, Tengku Dato Sri Zafrul Aziz on 6 November 2020. Read below to find out the main takeaways that you can expect to get and understand how they may affect you and your business. 

Though all eyes are currently focused on the passing of the proposed Budget 2021 bill, which is expected to be held on November 25 during the parliamentary voting session, we decided to take a closer look at what was tabled in Dewan Rakyat last week.

With the theme “Teguh Kita, Menang Bersama”, Budget 2021 centred on four broad themes: caring for the people, steering the economy, sustainable living, and enhancing public service delivery.

Budget 2021 is the highest-ever recorded in Malaysia history. (Image source: Malaysiakini)

With a record RM322.5 billion expenditure - an increase of 8.58% compared to last year’s allocated budget - Budget 2021 is the largest budget in Malaysian history.

But is it enough to revive and revitalise the economy and help Malaysians weather the COVID-19 pandemic?

Overall, the budget consists of more than 20 targeted measures aimed at directly benefiting Malaysians across all levels of society, many of whom have been severely affected either through a reduction or loss of income due to the pandemic.

Despite the record-breaking budget, the Malaysian government has less to spend, however, than years before due to the global economic slowdown caused by the COVID-19 pandemic - for one, it has resulted in fallen oil prices, in turn affecting the government’s petroleum income tax.

On a micro level, livelihoods are affected as well as loss of businesses and jobs have resulted in the loss of corporate and income taxes.

What is the economic and fiscal outlook for 2021?

Without a doubt, the effects of the global economic slowdown due to the COVID-19 pandemic are felt across sectors. The government is expecting a fiscal deficit of RM86.5 billion, or 6% of the Gross Domestic Product (GDP) in 2020 — the largest gap since the global financial crisis in 2009. The government has forecasted a deficit of RM84.8 billion, or 5.4% of GDP for 2021. Not any better, the recovery in 2021 is also expected to be slow.

Some additional statistics from the Budget 2021: Economic Outlook report

  • Malaysia’s economy forecast to shrink 4.5% in 2020 but to grow to 7.5% in 2021.
  • Federal Government debt is expected to increase by RM81.3 billion in 2020.
  • Exports are expected to rebound 8.8% in 2021.
  • Unemployment rate is expected to be 4.2% in 2020 and to drop to 3.5% in 2021.
  • Inflation is forecast to fall 1% in 2020 and increase 2.5% in 2021.

How is Budget 2021 allocated and where does the money come from?

A quick view of the report reveals that 40.9% of the total budget will come from income tax, 26.5% from borrowings and use of government’s assets, 19.4% from non-tax revenue and 13.2% from indirect tax.

A breakdown of what funds the Budget 2021. (Ministry of Finance)

From the RM322.5 billion figure, below is the breakdown of where the money will go,, with the highest percentage or 26.2% going to emoluments, followed by 12.1% to debt service charges and 10.2% to supply and services. The COVID-19 Fund will take up 5.3% of that figure.

The Malaysian government plans to add a further RM20 billion to the COVID-19 fund, increasing the overall size of the fund to RM65 billion. (Ministry of Finance)  

If you didn’t already know, development expenditure covers things that are necessary for the country’s development such as construction of hospitals and schools while operations expenditure is used for expenses that allow the government to operate such as paying salaries and rental. The COVID-19 Fund was created to mitigate the effects of the pandemic.


All in all, Budget 2021 strikes a right balance between addressing job and income losses in the near term, while also building a solid foundation for Malaysians to recover in the medium as well as long-term.

To some degree, some of the initiatives in the budget even appear as a continuation of the previous economic stimulus packages.

Here are some of our main key highlights and takeaways:

1. Cash and repayment assistance, and subsidy programmes to aid those most vulnerable among us

The COVID-19 pandemic has severely affected the livelihoods of thousands of Malaysians and many Malaysian businesses, as lockdown measures had resulted in the loss of jobs or business opportunities.

With an allocation of RM6.5 billion that is expected to benefit 8.1 million individuals, cash handouts via Bantuan Prihatin Rakyat (BPR) will replace Bantuan Sara Hidup (BSH), which had an allocation of RM5 billion with the goal of serving 4.3 million beneficiaries. The BPR is open for new registrations by the end of January next year.

Refer to the table below to check the requirements and benefits:

Bantuan Prihatin Rakyat 2021 Bantuan Sara Hidup 2020
Monthly income Aid Monthly income Aid
Less than RM2,500 (Singles aged 21+) RM350 Less than RM2,000 (Singles aged 40+) RM300
Less than RM2,500 (Household with one child or less) RM1,200 Less than RM2,000 (Household) RM1,000 + RM120/child*
Less than RM2,500 (Household with more than one child) RM1,800 RM2,001 - RM3,000 (Household) RM750 + RM120/child*
RM2,501 - RM4,000 (Household with one child or less) RM800 RM3,001 - RM4,000 (Household) RM500 + RM120/child*
RM2,501 - RM4,000 (Household with more than one child) RM1,200    
RM4,001 - RM5,000 (Household with one child or less) RM500    
RM4,001 - RM5,000 (Household with more than one child) RM750    

If you are a civil servant categorised as Grade 56 and below, you qualify for a one-off RM600 cash aid. RM300 is also allocated for pensioners and non-pensioners veterans.

The government is also giving out RM180 telecommunications credit for the B40 to be used for data or as a subsidy to purchase a mobile phone.

Related: T20, M40 And B40 Income Classifications in Malaysia

Though there would not be continuation of a blanket moratorium, the government will extend and enhance the Targeted Loan Repayment Assistance (TRA), allowing B40 borrowers to get 50% off for six months. Flexi payment will also be made available for M40 borrowers who lost income.

The enhanced targeted assistance programme is available for B40 individuals who are recipients of the Bantuan Sara Hidup (BSH)/Bantuan Prihatin Rakyat (BPR) and SMEs, more specifically microenterprises for facilities with approved amounts of up to RM150,000.

Borrowers in both individual and business categories may request to defer their monthly instalments for three months, or reduce it by 50% for six months. This assistance will be available to eligible borrowers between November 23, 2020 and June 30, 2021.

The government will also allow the withdrawal of RM500 a month from EPF Account 1 for up to RM6,000. At the same time, employee contribution is reduced from 11% to 9% a month.

To encourage more first time home buyers, the government is giving stamp duty exemptions for Rent-to-own schemes for 5,000 PR1MA homes.

At the same time, the financial assistance for non-working people with disabilities (OKU) would be increased from RM250 to RM300, while assistance for senior citizens as well as OKU and chronic patients will be raised from RM350 to RM500. The allowance for OKU workers would be increased from RM400 to RM450.

2. Government ramps up tax relief incentives

The government announced a slew of tax relief incentives under Budget 2021. These tax relief incentives would be of particular interest for those from the middle income-group or (M40), who usually don’t qualify for most cash handouts.

The first - and most notable tax reduction - is the reduction of personal income tax by one percentage point to 13% for those earning RM50,001 to RM70,000 annually. According to the Finance Ministry, the proposal will benefit 1.4 million taxpayers in the country. This tax cut revision is the first since the last revision in 2018, which saw a reduction from 16% to 14% for the same income bracket.

If you make RM50,001 to RM70,000 annually, you are qualified to receive the tax benefit. (Source: TheEdge)

Other useful tax cuts that you may be qualified for:

  • The cap on ‘lifestyle tax relief’ specifically for sports-related expenditure has been raised to RM3000. Its scope has been expanded to include subscription to electronic newspapers.
  • Tax relief limits raised to RM8,000 for medical treatment on critical illness, and increased to RM1,000 for a full health screening, both for self, spouse and children.
  • Tax relief for parents/special needs child medical expenses and care increased to RM8,000 for self, spouse and children.
  • Tax reliefs for immunisation programmes and insurance products, including up to RM1,000 for vaccination of pneumococcal, influenza and COVID-19.
  • Tax relief of up to RM8000 for the National Education Savings Scheme (SSPN) net savings; to be implemented until 2022.
  • The RM3,000 yearly tax relief for the Private Retirement Scheme (PRS) will be extended until 2025.
  • Special tax rates of up to 10% for manufacturing companies that relocate their operations to Malaysia extended to 2022.

3. Financial support and aid for school kids

To support our youths between the ages of 18 to 20 years, the government is giving out one-off RM50 digital incentives via e-wallet credits, with hopes of encouraging the use of cashless and contactless payments. The e-wallet credits will be provided via the eBelia programme. According to the government, it is expected to benefit more than 1.5 million youths across the country.

The government is also allocating RM420 million to provide free milk for primary school children every day. In a separate initiative, about 150,000 school students in 500 schools will get free laptops as part of a RM150 million contribution from GLCs to Tabung Cerdik, a project managed by Yayasan Hasanah and designed to promote e-learning.

The government has allocated RM300 million to continue, and expand the implementation of the My30 unlimited travel pass initiative to Penang and Kuantan. Similarly, an unlimited monthly RM5 travel pass would be introduced for school students from Year One to Form Six.

The government also plans to support B40 families by setting up community centres for urban B40 communities to get childcare after school.

4. Extension of wage subsidies and hiring programmes to aid workers affected by the pandemic

About RM3.7 billion will be spent to create 500,000 jobs through a scheme known as JanaKerja, which will include upskilling and reskilling programmes.

A separate scheme, known as PenjanaKerjaya and currently handled by SOCSO, will also be deployed to encourage the employment of disabled, long-term unemployed and retrenched workers, and local workers in sectors with a high reliance on foreign workers; RM2 billion is allocated to the hiring incentive programme under this scheme.

With tourism being one of the worst-hit sectors due to the Covid-19 pandemic, the government plans to retrain and provide job placements for 8,000 airline staff, costing RM50 million.

The government also plans to extend the wage subsidy programme for another three months, with a more targeted approach focusing on badly affected sectors like tourism and retail. Each staff earning RM4,000 a month and below will be subsidised RM600. On top of that, the 200 cap for the number of staff qualified per company will be increased to 500. This programme is expected to benefit 70,000 employers and 900,000 workers.

As of October 31, the government had channelled RM12.5 billion to fund the wage subsidy programme which, according to the government, has helped 2.7 million workers and more than 330,000 employers.

The government also plans to support another 500 jobs for locals and the Orang Asli community to serve as eco-tourism guides at national parks.

5. Ramping up public health to fight the COVID-19 pandemic and other health efforts

As a token of appreciation to our frontliners, the government will provide a RM500 cash handout to 100,000 health workers.

The government also plans to raise the ceiling for the COVID-19 Fund from RM20 billion to RM65 billion to fund the KITA Prihatin supplementary assistance package.

RM3 billion will be spent on the COVID-19 vaccine through participation in the COVID-19 Vaccine Global Access (COVAX) programme. Separately, RM1 billion is allocated to control a third wave of infections, including the purchase of reagent, test kits, and consumables for the Ministry of Health’s (MOH) usage, among other things.

The government will initiate a pneumococcal vaccination programme, costing a total of RM90 million, which will benefit 500,000 children. Another RM6 million will be allocated for rheumatology treatment while RM25 million will be spent on home-based dialysis programmes, to reduce wait-time at hospitals.

The government has also allocated RM24 million to address issues pertaining to mental health, including strengthening the Mental Health, Violence and Injury Prevention, and Substance Abuse Programmes.

Other notable health initiatives include the mySalam protection programme, which will be extended to heart stents and prosthetics, and the Tenang Protection Scheme, which will provide the B40 with RM50 vouchers to purchase takaful and personal accident coverage.

Credit where credit’s due - Budget 2021 is pretty extensive

Overall, this was an inclusive budget that had included the Bottom 40, Middle 40 and Top 20, small and medium enterprises (SMEs) and multinational companies. But with all things in life, this budget, too, was not perfect. With this, we hope that you now have a better sense of the key initiatives in Budget 2021.

Watch this space as we will dive into how Budget 2021 taps into personal finance and SMEs in our two upcoming articles as part of the #Budget2021 series. 

The team is comprised of many talented individuals, sharing their knowledge, experiences and research to help others make better financial decisions.


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