Malaysia’s Budget 2018 Summary

Prime Minister Datuk Seri Najib Tun Razak  has proposed an allocation of RM280.25 bil for  Malaysia Budget 2018 on Friday 27 Oct 2017.

Here are the main points of his speech :

– A total of RM280.25bil has been allocated for Budget 2018, an increase of RM19.45bil over the 2017 budget allocation of RM260.8bil.

– Malaysia's income per capita is expected to rise to RM42,777 by 2018, median monthly income in the country has risen from RM4,585 in 2014 to RM5,288 in 2016

Budget 2018 has eight core thrusts.

– The first thrust is to enhance investment, trade and industry.

– Amount of domestic investment is expected to increase by 6.7%.

– Private investments are expected to touch RM260bil in 2018, in line with goals to make the private sector an engine of growth.

– Pulau Pangkor to be declared a tax-free zone (excluding liquor, cigarettes and motor vehicles).

– RM30mil allocation for the Malaysian Healthcare Travel Council (MHTC) to implement initiatives, among them to promote Malaysia as the Asian Hub for Fertility Treatment, IVF and Cardiology; to introduce the Flagship Medical Tourism Hospital Programme.

– Construction of the MRT3 or Circle Line to be completed by 2025, earlier than the initial target of 2027.

– The second thrust is towards achieving TN50 aspirations.

– Every Malaysian child born from Jan 1, 2018 until 2022, will be given RM200 worth of Amanah Saham units in new fund called Amanah Dana Anak Malaysia 2050 or ADAM50.

– RM2.2bil for scholarship grants under the Public Service Department (JPA), Higher Education Ministry and Health Ministry

– RM400mil for research grants and development for public universities, including special allocation to Universiti Malaya to become one of the Top 100 universities globally.

– RM90mil allocated for MyBrain Programme for 10,600 people to further their studies at the Masters and Doctorate level.

– University and Form Six student to continue receiving book vouchers worth RM250, benefiting 1.2mil students.

– RM1bil for initiatives spanning FitMalaysia, National Sports Day, athlete programmes, grassroots programme and the national football development programme.

– RM20mil for the Bukit Jalil Sports School to upgrade its facilities as a premier sports school.

– Third Thrust: Excellence in Education Development, Training, Skills and Talent, a total of RM61.6bil for this sector

– RM550mil allocated to special fund for improvement and upkeep of schools, as follows:
RM250mil for national schools; RM50mil for Chinese schools; RM50mil for Tamil schools; RM50mil for Mubaligh (missionary) schools; RM50mil for full boarding schools; RM50mil for Maktab Rendah Sains Mara, RM50mil for government-aided religious schools.

– Government to extend discount on repayment of PTPTN loans until Dec 31, 2018, grace period for PTPTN loan repayments extended to 12 months after graduating, loans for those furthering studies can now be combined.

– Fourth Thrust: Driving inclusive development

– RM6.5bil Budget 2018 allocation for rural development includes:
RM2bil for the Pan-Borneo Highway; RM1.1bil to upgrade bridges, streetlights, villages, surau and markets; RM1bil for SKMM to upgrade the communication infrastructure and broadband facilities in Sabah and Sarawak; RM934mil for rural road projects, including almost RM500mil for Sabah and Sarawak; RM672mil for electricity supplies, including RM620mil for Sabah and Sarawak involving 10,000 rural homes; RM420mil including almost RM300mil for Sabah and Sarawak provided for clean water supply involving 3,000 homes; RM500mil allocated for the Public Infrastructure Maintenance Programme and Basic Infrastructure Project; RM50mil for mapping and measurement of custom lands, in which RM30mil is for Sarawak and RM20mil for Sabah.

– Almost RM9bil allocated for Royal Malaysian Police, including RM720mil to build 11 headquarters and six police stations, purchase of new firearms and operational vehicles, RM170mil to upgrade ICT equipment, including 1PDRMnet system.

– Over RM14bil allocated for the Armed Forces, including RM3bil for purchase and maintenance of defence assets and RM250mil for Esscom to enhance coastal security controls in Sabah and Sarawak.

– Fifth thrust: Prioritising well-being of rakyat and income-making opportunities

– two percentage point reduction in income tax for the middle income (M40) group with household income of RM9,000 and below, benefiting 2.3mil taxpayers.

– Individual tax rate reduced by two percentage points, for those with chargeable income from RM20,000 to RM70,000.

– Move to increase rakyat's disposable income by around RM300 to RM1,000, resulting in an estimated excess of RM1.5bil in disposable income.

– New tax rates for three income brackets as follows:
1) RM20,001 to RM35,000 (3%)
2) RM35,001 to RM50,000 (8%)
3) RM50,001 to RM70,000 (14%)

– Over 261,000 people no longer have to pay income tax.

– Budget 2018 still includes up to RM3.9bil in subsidies, for items, goods and transport, cooking gas, flour, cooking oil, electric subsidies and toll.

– Toll collection to be abolished at Batu Tiga and Sungai Rasau in Selangor; Bukit Kayu Hitam, Kedah and at Eastern Dispersal Link, Johor from Jan 1, 2018.

– Mandatory maternity leave for private sector to be increased from 60 to 90 days; women returning to work after two years to enjoy tax exemption for 12 consecutive months.

– RM27bil allocation to improve healthcare, including RM1.4bil to upgrade and maintain health facilities, medical equipment and ambulances; RM100mil to upgrade hospitals and clinics electrical/wiring systems.

– Cost of hiring foreign domestic helpers to be reduced, employers can employ foreign domestic helper directly from nine source countries without going through an agent.

– Zero-rate GST for all reading materials, extended to cover all magazines, comics, journals and periodicals from Jan 1, 2018.

– Sixth thrust: Preparing for the fourth Industrial Revolution and the Digital Economy

– RM5bil for Green Technology scheme, RM1.4bil for non-revenue water programme, RM1.3bil for off-river storage, RM517mil for flood mitigation.

– RM83.5mil for Phase 1 DFTZ Aeropolis; minimum value for imports raised to RM800 from RM500 so Malaysia can be the regional e-commerce hub.

– Seventh thrust: Enhancing efficiency and delivery of government-linked companies (GLC) and public service.

– GLC employees to enjoy increased benefits such as flexible working hours, childcare centres in offices.

– Increase allowance for senior citizens to RM350 per month, RM50 increase for working and unemployed People with Disabilities (PWD) as well as caretakers.

– Eighth thrust: Balancing between the par excellence of the worldly and the hereafter.

– Retirement benefits for public servants who retire on medical reasons.

– Cash in lieu of accumulated leave of more than 150 days during the retirement year.

– Women more than five months' pregnant and husband can leave work an hour earlier, provided both working in the same location.

– Maximum of 90 days maternity leave a year, total leave allowed is now 360 days.

– Minimum pension of RM1,000 per month.

– Medical facilities extended to parents of retirees.

– Special assistance of RM1,500 to Village Heads and Tok Batin

– Upgrading and maintaining wiring systems in all registered religious schools by GiatMara

– Monthly allowance and one-off RM1,500 payment for imam, bilal, Kafa and takmir teachers.

– A special payment of RM1,500 be given to all public servants, RM1,000 in January 2018 and the balance during Hari Raya Aidilfitri.

– Special payment of RM750 to Government retirees, RM500 in January 2018 and the balance during Hari Raya Aidilfitri.

Malaysia defence Budget 2016-2020

In October 2014, Prime Minister Najib Razak announced that Malaysia’s defense budget would be increased to $5.4 billion in 2015, a hike of ten percent.  At the same time, the defense procurement and research budgets were increased by six percent to over $1 billion. This increase in defense funding, however, did not include the replacement of aging major weapons platforms such as MiG-29 jet fighters.

Malaysia’s increased defense spending was designed to meet two concerns: security threats from the southern Philippines and Chinese assertiveness in the seas around James Shoal. For example, defense funds will be used to relocate 19 light combat fighter planes to Labuan island. The airstrip at Labuan will also see the basing of the US Navy’s P-8 Poseidon maritime patrol aircraft on a case-by-case basis.

It is significant within this context that the Chief of the Royal Malaysian Navy, Admiral Aziz Jaafar, revealed in his New Year address on January 7, the navy had requested $2.86 billion in funding under the 11th Malaysia Plan, 2016-2020.

These funds, if approved, would be used primarily for the procurement of eight guided missile corvettes and six anti-submarine helicopters as well as for the acquisition of small craft and the replacement of obsolescent torpedo and missile systems on navy ships.

Malaysia Struggles to Update Military

by Dzirhan Mahadzir

 - February 7, 2014, 11:20 PM

The current political climate and government austerity measures in Malaysia mean that a number of programs for the Malaysian armed forces look likely to be postponed until the time frame of the 11th Malaysia Plan, which covers government spending for the period of 2016-2020. A combination of public dissatisfaction over the cutting of government subsidies and the government’s need to balance an increasing deficit has made spending on military procurement politically unviable at the moment.

One of the key programs already on hold indefinitely is the Royal Malaysian Air Force MRCA (multi-role combat aircraft) requirement to replace its MiG-29s, though all four contenders for the program–Boeing, Dassault, BAE Systems and Saab–have, in the light of the current situation, made proposals such as long-term repayments and lease options to Malaysia in an attempt to persuade the country to make a decision soon to go ahead with the program.

However, it appears that even this will not be enough for Malaysia to proceed in the near future, even though the timetable has already fallen behind the RMAF’s projected target date of 2015 for phasing out the MiG-29s. The RMAF currently has restricted the MiG-29 fleet (which number around eight aircraft) to operational duties and missions only in an effort to preserve their operational lifespan. Previously, the MiG-29 also carried out public event duties such as fly-pasts and airshow displays.

Delay for Lead-in Fighters

The delay on the MRCA program has also impacted the RMAF’s plans for additional lead-in fighter trainers to add to the eight MB-339CMs it currently operates, as the RMAF has held off ordering additional MB-339CMs due to a combination of budget constraints and wanting to see which type of aircraft would be chosen for the MRCAprogram. It could then decide whether additional MB-339CMs or a more compatible lead-in fighter trainer for the new MRCAs would be required.

At the moment, the RMAF faces a shortfall in lead-in fighter trainer aircraft for its current training requirements, though the planned deactivation in 2015 of No. 12 Squadron, which currently operates two RF-5Es and four F-5E/Fs, would free up fighter pilots for duties in other squadrons. For basic pilot training the RMAF is expected to sign a contract in April this year for additional PC-7 Mk IIs to add to its current fleet during the Defense Services Asia (DSA) exhibition in Kuala Lumpur.

AEWC on Hold

Another program on hold indefinitely is the airborne early warning and control (AEWC) requirement; the RMAFhas had a long-term requirement for at least four aircraft but the government has balked at the potential cost of purchasing and operating such aircraft. RMAF chief general Tan Sri Rodzali Daud has tried to persuade the government to purchase AEWC aircraft on the basis that such an aircraft would also be of use in other roles, such as surveillance and monitoring of Malaysian waters and airspace, and also provide surveillance support for Malaysian civilian enforcement agencies in addition to the traditional military missions of such platforms. However, there still seems to be little government interest in providing funding for such a platform.

Two RMAF programs are expected to commence soon, namely the upgrade of the RMAF’s Lockheed C-130 fleet and the service life extension of 15 of the RMAF’s 28 operational Sikorsky S-61 Nuri helicopters. TheRMAF C-130 fleet, numbering around 14 aircraft, are to be upgraded with avionics and navigation systems that would bring them up to compliance to international aviation requirements along with a glass cockpit.

The upgrade for the C-130s would be done in batches–an initial number of four to eight aircraft is currently funded, with Malaysian company Airod to do the work along with an assigned foreign partner selected by theRMAF. Esterline CMC, Astronautics, Marshall Aerospace and Rockwell Collins are said to be on the RMAF’s down-select list for this program and an announcement is expected to be made at DSA in April.

The S-61 upgrades will also be done by Airod. The lack of funding to purchase additional EC725s to add to the 12 in service has forced the RMAF to prolong the life of 15 S-61s as the Malaysian Armed Forces has laid down the requirement that the RMAF must have a minimum of 27 medium-lift helicopters in service.

Attack Helicopter on Hiatus

While last year’s incursion by Sulu militants into eastern Malaysia initially provided impetus for the acquisition of an attack helicopter capability for the Army Air Corps, again the financial crunch has placed the program in a hiatus. Boeing and Airbus Helicopters have been marketing the AH-64 and Tiger, respectively, for this requirement though recently the Bell AH-1Z Cobra has been promoted as a cheaper alternative to both. The army is also seeking to arm its 11 A109 helicopters, which are currently operating in the light-observation helicopter role for the Army Air Corps. As a stop-gap contingency measure, three of the RMAF’s S-61 Nuri helicopters in eastern Malaysia have been outfitted with .50 caliber door guns to provide gunship support.

Since 2011 the Royal Malaysian Navy has been proposing the acquisition of at least six antisubmarine warfare helicopters to add to its current fleet of six Super Lynx and six Eurocopter AS555 Fennecs. However, the chief of the RMN, Adm. Tan Sri Aziz Jaafar, told AIN that the likelihood of funding for the ASW helicopters also may come about only in the timeframe of the 11th Malaysia Plan.

The U.S. has already been heavily promoting the MH-60R Seahawk for this requirement with exercises and port calls by U.S. Navy ships to Malaysia, emphasizing the helicopter’s role and capabilities along with familiarization flights for Malaysian navy personnel and defense ministry officials. However, there has also been talk of a navalized Eurocopter (Airbus Helicopters) EC725, which would ensure some compatibility of logistics and maintenance with the Royal Malaysian Air Force’s EC-725 fleet. However the RMN is said to be leaning towards the MH-60R.

Currently, ground-based air defense capabilities for Malaysia is limited to some 15 Jernas SAM systems, 28 Oerlikon Skyguard Systems (operated by the Army Air Defence Artillery Group–known as GAPU in the local acronym), along with an assortment of MANPADS. including the IGLA (operated by GAPU and RMAF), Anza Mk 2 (used by the Army’s parachute battalions) and the FN-6 (operated by GAPU). The Starburst MANPADs have all been phased out of service. GAPU has been tasked with formulating the ground-based SAM system requirement for all three services and a report was tabled by them late last year, although again funding for any procurement in the near term appears to be unlikely.

Malaysia's military expenditure is expected to increase to US$7.2 billion by 2020

Bloomberg

Over the historic period, Malaysia's defense expenditure registered a growth rate of 3.66%, increasing from US$4.7 billion in 2011 to US$5.4 billion in 2015

Malaysia's military expenditure, valued at US$5.4 billion in 2015, is expected to increase to US$7.2 billion by 2020, registering a CAGR of 5.89% over the forecast period.

 Malaysian military expenditure will be driven by the modernization of defense systems, international peacekeeping operations, and territorial disputes with neighboring countries

The Defense Ministry is expected to procure corvettes, multi-role aircraft, armored personnel carrier, and jet fighter.

Malaysia Expected To Order Fighters In 2016-20

Mar 23, 2015Bradley Perrett | Aerospace Daily & Defense Report

Malaysia’s long-running requirement for a MiG-29 replacement is expected to turn into an order in the country’s 2016-20 planning period, with the Saab Gripen looking like a prospect because of the drop in oil prices that has created additional budgetary pressure on the oil-producing country.

Malaysia issued a brief request for proposals for fighters in 2011. With the two main parts of its territory separated by the South China Sea, it wanted a fighter with two engines, eliminating the Gripen.

But the price of crude oil, a key factor supporting the national finances, has halved since then.

“I don’t think the requirement for two engines is set in stone,” says Kaj Rosander, head of major programs for Saab.
The other contenders for the order are larger, have two engines and should be somewhat more expensive: the Eurofighter Typhoon, Dassault Rafale, Boeing F/A-18E/F Super Hornet and possibly the Sukhoi Su-30. Lockheed Martin appears not to be offering the F-35.

Malaysia needs fighters to replace MiG-29s under the Multi-Role Combat Aircraft program. It introduced 18 MiG-29s in the early 1990s; about 10 remain in service. The industry has been expecting Malaysia to order about 18 replacement fighters, but that figure is probably not firm. Malaysia adopts the common practice of five-year government planning periods, so the industry expects the order to appear in the next one, covering 2016-20.

Apart from two engines, the 2011 request for proposals, which was a preliminary document more like a request for information, specified a radar with an active electronically scanned array. Contracts for Malaysian manufacturing and exports to offset some of the value of importing the fighters are likely.

Saab expects Malaysia to adopt the increasingly common practice of specifying a required capability, measured as annual available flight time, rather than a certain number of aircraft. The Swedish firm thinks 16 Gripen C/Ds could provide the flight time that will probably be required.

The timing of the program is not ideal for Boeing. No decision is likely within a year, but Boeing’s Super Hornet program manager, Dan Gillan, said this month the company would have to decide in the middle of the year whether to support continued production of the type. To remain a candidate for Malaysia, the Super Hornet will need further orders from elsewhere.

Howard Berry, vice president for Super Hornet sales, emphasizes the payload-range capability of the Super Hornet, which has twice the empty weight of the Gripen C/D. It also has the advantage that the Royal Malaysian Air Force operates the F/A-18D Hornet, of which the Super Hornet is an enlarged derivative.

Rosander and Berry spoke to Aviation Week at the Langkawi International Maritime and Aerospace Exhibition in Malaysia last week, where Andy Lavin of BAE Systems also detailed the offer of the Eurofighter Typhoon. Officials from Dassault and Sukhoi representative Rosoboronexport were not available.

The clear advantage of the Gripen C/D is that it presents a relatively low challenge to the Malaysian budget. Malaysia wants all of the candidates to reduce the fiscal challenge by offering a lease deal, something that the Swedish company has experience in doing. The Czech Republic and Hungary lease their Gripens.

Saab must offer Gripens of the C/D version, because the enlarged Gripen E/F, which will replace the C/D in production, must first be built for Sweden and Brazil. But because the C/D is leaving production, an order would be needed within a year, which is unlikely. If Malaysia moves too late, then C/Ds could be supplied otherwise, Rosander says. He declines to be more specific, but the obvious source would be secondhand aircraft, perhaps supplied as interim equipment pending later deliveries of E/Fs.