October 23, 2015 / 8:53 AM / 2 years ago

HIGHLIGHTS-Malaysia's 2016 budget

KUALA LUMPUR, Oct 23 (Reuters) - Prime Minister Najib Razak announced Malaysia’s 2016 budget on Friday, highlighting how the government plans to narrow its budget deficit, address rising cost of living. The government also released an economic report.

Following are highlights of Najib’s ongoing speech to parliament

BUDGET ALLOCATION

- 2016 budget allocates total 267.2 billion ringgit ($63.32 billion), an increase from a revised allocation of 260.7 billion for 2015. The initial allocation for 2015 was 273.9 billion.

- For 2016, federal government revenue collection is projected at 225.7 billion ringgit, up 3.2 billion ringgit from 2015

TAXES

- Income tax increased from 25 percent to 26 percent for people earning between 600,000 ringgit and 1 million ringgit. Increased to 28 percent for those earning above 1 million ringgit. Some tax relief measures to help middle income wage earners.

- Goods and services tax to increase government revenue by 39 billion ringgit, versus 27 billion ringgit 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.

EXPENDITURE

- 41.3 billion ringgit allocated to improve education

- Defence Ministry allocated 17.1 billion ringgit

- Allocation of 30.1 billion for development projects, 5.2 billion for security, social development gets 13.1 billion

- Government allocates 1.2 bln ringgit to the tourism industry

- Majlis Amanah Rakyat, an agency to facilitate the development of ethnic Malays and other indigenous Malaysians, allocated 3.7 billion ringgit

SUBSIDIES AND HANDOUTS

- Spending allocation for Bantuan Rakyat 1Malaysia (BR1M), a programme providing cash assistance for low income households, will be raised to 5.9 billion ringgit in 2016, up from an estimated 4.9 billion in 2015.

DEVELOPMENT

- Affordable housing projects allocated 1.6 billion ringgit, to be spent building 175,000 houses

- 900 million ringgit allocated to resolve Kuala Lumpur traffic congestion

- Telecommunications infrastructure allocated 1.2 billion ringgit

- 1.4 billion ringgit earmarked for development of rural roads nationwide. An-Borneo highway to be toll free.

- Government to improve improve infrastructure in rural areas, including building houses and water supply

- 5.3 billion ringgit allocated to modernize agricultural sector

- 515 million ringgit allocated to improve electricity supply in Sabah state

OIL PROJECT

- Pengerang oil project to receive 18 bln ringgit in 2016

MINIMUM WAGE

- Increased from 900 ringgit per month to 1,000 ringgit in peninsular Malaysia

MACROECONOMIC HIGHLIGHTS

- Current account surplus in 2016 to be down more than half to 11.3 billion ringgit ($2.63 billion) from 23.4 billion ringgit this year and 47.3 billion ringgit in 2014

- Economic growth forecasts at 4.0-5.0 percent for 2016, compared with 4.5-5.0 percent this year

- Fiscal deficit for 2016 reduced to 3.1 percent of gross domestic product, down from 3.2 percent in 2015 and 3.4 percent last year

- Exports forecast to rebound 1.4 percent in 2016 after a 0.7 percent fall this year

- Inflation seen at 2.0-3.0 percent in 2016, against 2.0-2.5 percent this year

- Government debt limit to remain at 55 percent of GDP in 2016, forecasting a ratio of 54.0 percent this year and slightly up from 52.7 percent in 2014

- Oil and gas related revenues seen at 14.1 percent of total revenue in 2016, down from 19.7 percent in 2015

- Goods and Services Tax (GST) expected to raise 39 billion next year, against 27 billion ringgit collected in the first eight months of 2015

- Subsidy allocations seen falling slightly to 26.1 billion ringgit from 26.2 billion ringgit this year

$1 = 4.2200 ringgit Reporting by Kuala Lumpur Bureau; Editing by Simon Cameron-Moore

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