Published: Friday October 25, 2013 MYT 5:00:00 PM
Updated: Friday October 25, 2013 MYT 10:43:09 PM
KUALA LUMPUR: The following is the 2014 Budget Speech tabled by Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak at the Dewan Rakyat Friday.
The text of the speech will be updated as it progresses.
"STRENGTHENING ECONOMIC RESILIENCE, ACCELERATING TRANSFORMATION AND FULFILLING PROMISES"
Mr. Speaker Sir,
I beg to move the Bill intituled "An Act to apply a sum from the Consolidated Fund for the service of the year 2014 and to appropriate that sum for the service of that year" be read a second time.
Mr. Speaker Sir,
I begin the 2014 Budget Speech by reciting the holy kalimah Bismillahirrahmanirrahim. Surah al-Qasas from the holy Quran, verse 77 says, "But seek, through that which Allah has given you, the home of the Hereafter; and [yet], do not forget your share of the world. And do good as Allah has done good to you;"
Philosophers often say:
"Unity is the beginning, staying united reflects progress while working together is the recipe for success."
1.Let us begin by expressing our gratitude to Allah Subhanahu Wa Taala for with His Blessings, my colleagues and I are able to gather in this august House, a symbol of our vibrant democracy in our sovereign and independent nation.
2.On behalf of the Government, I would like to record our highest appreciation and thank the rakyat for supporting and giving the mandate to Barisan Nasional in the 13th General Election to continue to lead the country.
Mr. Speaker Sir,
3.This proves that though faced with various obstacles and challenges as well as allegations hurled at us, with God's grace and the transformative leadership of Barisan Nasional, we prevailed and continue to be resilient and strong as the party chosen by the rakyat for the next five years.
4. Indeed, we went through a challenging General Election. We take pride that we observed all the rules and regulations in the true spirit of democracy as provided for under the Federal Constitution. This election has been acknowledged by friend and foe alike as the mother of all elections.
Mr. Speaker Sir,
5. The Government is certainly aware that in an environment of global political and economic uncertainties, and if we are not vigilant, we will be adversely affected. Hence, we are most grateful that our nation has not been dragged into civil unrest which can destroy the country.
6. We are also grateful that our nation remains blessed, as we are free from natural calamities unlike in other countries. We pray that we are always protected by Him.
Mr. Speaker Sir,
7. We have implemented 10 Malaysia Plans and 3 Outline Perspective Plans, since 1965 to 2010.
8. The National Development Policy was implemented from 1991 to 2000. Next came the National Vision Policy which spanned the period from 2001 to 2010. When tabling the 2010 Budget, I launched the National Transformation Policy, the bedrock and catalyst towards achieving Vision 2020.
9. I must stress explicitly that all these plans would not have been realised without careful planning and clear strategies by the Government. In fact, for decades the Barisan Nasional Government has taken relentless efforts to develop the nation from an agriculture-base to a modern industrial economy and further grow to upper middle-income status. We are now poised to become a high-income and developed nation.
Mr. Speaker Sir,
10. On 14 September 2013, I presented the Agenda on Bumiputera Economic Empowerment at the Dewan Agong Tuanku Cancelor in the main campus of UiTM. In my speech, I explained the demographics of the nation, particularly in relation to the Malays and Bumiputeras.
Mr. Speaker Sir,
11. Currently, the demographics beginning from Arau, Perlis to Kudat and Tawau in Sabah, through Bintulu and Batang Ai, Sarawak, indicate that Malays comprise 41 subgroups within nine major groups, Chinese 10 subgroups, Indians eight subgroups, Orang Asli 18 categories, Bumiputera Sabah more than 60 ethnic groups and in Sarawak, more than 40 subgroups.
12. The truth is, irrespective of whether we are Malays, Chinese, Indians, Kadazans, Murut, Dusun, Iban, Bidayuh, Orang Ulu, Orang Asli, Sikhs, Eurasians, Siamese, Baba Nyonya and Chitty, we are all Malaysians. Every ethnic or subgroup irrespective of numbers is important in our journey towards success.
Mr. Speaker Sir,
13. According to the 2010 Population and Housing Census, estimates for 2013 indicate that there are 18.6 million Malays and Bumiputera (67.9% of total population) including Muslims and non-Muslims, Chinese, 6.6 million (24%)
Indians, 2 million (7.2%), while there are 259,000 (0.9%) people of other ethnic groups (0.9%). This means there are about 27.4 million Malaysian citizens.
14. However, this does not include the 40,000 Bangladeshis who were brought in as phantom voters in the recent 13th General Election as alleged by the Opposition. Till today no one has even seen them or their shadow. Enough of lies. Ask for forgiveness from Him.
Mr. Speaker Sir,
15. Indeed, for more than five decades, there has been an agreement forged by our former leaders in full wisdom and knowledge, supported by statistical evidence and our multiracial society. Therefore based on the solid premise, we present you this important document.
16. As in previous years, the tabling of this document of national importance falls on a Friday afternoon, a blessed day. This is the first Budget to be presented by the Barisan Nasional Government, after gaining the trust and confidence of the rakyat, once again. This is also my fifth budget as the Minister of Finance since 2009.
2014 BUDGET THRUSTS
17.The 2014 Budget is formulated to ensure that the economy continues to expand at a strong pace, and to reduce the fiscal deficit, with the overall objective of prospering the nation and promoting the well-being of the rakyat. Towards this, the 2014 Budget is formulating based on the theme "Strengthening Economic Resilience, Accelerating Transformation And Fulfilling Promises", outlining five main thrusts:
First Thrust: Invigorating Economic Activity
Second Thrust: Strengthening Fiscal Management
Third Thrust: Inculcating Excellence in Human Capital
Fourth Thrust: Intensifying Urban and Rural Development
Fifth Thrust: Ensuring Well-Being of the Rakyat
2013 ECONOMIC PERFORMANCE AND 2014 PROSPECTS
18. Allow me to highlight the current global and domestic economic prospects. The global economy is expected to grow at a slower pace of 2.9% in 2013. As a highly open economy, Malaysia is not spared from the modest growth. Nevertheless, the country's strong economic fundamentals and accommodative monetary policy will enable us to grow at a sustainable pace. In fact, the economy grew 4.2% in the first half of 2013.
19. Economic indicators reflect trends that support growth. For example, the FBMKLCI reached 1,818 points on 24 October 2013, with market capitalisation of RM1.66 trillion, a new record high in terms of level and value. This underscores the increasing local and foreign investors' confidence in the economy.
20. Net foreign direct investment was higher at RM18.2bil in the first half of 2013 compared with RM15.9bil during the same period in 2012. International reserves remained strong at RM444.9bil at 14 October 2013, sufficient to finance 9.7 months of retained imports and is 3.9 times the short-term external debt.
21. For the whole of 2013, the domestic economy is expected to expand between 4.5% and 5%. Growth is supported by private investment, increasing 16.2% to an estimated RM165bil. In addition, private and public consumption are expected to grow 7.4% and 7.3%, respectively mainly supported by strong domestic economic activity.
22. In 2014, in tandem with an improved global economic outlook, the domestic economy is projected to grow at a stronger pace of 5% to 5.5%. Growth will be driven by private investment expanding 12.7%, and private consumption at 6.2%.
23. Exports of goods are expected to grow 2.5% due to improving external demand. On the supply side, the construction sector is expected to grow 9.6%, followed by the services sector at 5.7%. The unemployment rate is estimated at 3.1% while the inflation rate will remain low between 2% and 3%.
24. The per capita income for 2014 is expected to reach RM34,126 compared with RM24,879 in 2009, an increase of 37% over 6 years. In this regard, we are confident of achieving the target per capita income of RM46,500 or USD15,000 in 2020. It is even possible that we will achieve developed nation status much earlier than 2020.
2014 BUDGET ALLOCATION
25. The 2014 Budget will allocate a total of RM264.2bil to implement programmes and projects for the well-being of the rakyat and national development. Of this amount, RM217.7bil is for Operating Expenditure while RM46.5bil for Development Expenditure.
26. Under Operating Expenditure, RM63.6bil is allocated for Emoluments and RM36.6bil for Supplies and Services. Meanwhile, RM114.5bil is allocated for Fixed Charges and Grants, while RM1.4bil is for the Purchase of Assets. The remaining RM1.5bil is for Other Expenditures.
27. From the Development Expenditure of RM46.5bil, a sum of RM29bil is allocated to the economic sector. A sum of RM10.5bil is allocated to the social sector for education and training, health, welfare, housing and community development. In addition, RM3.9bil is allocated to the security sector. The balance of RM1.1bil is for general administration and RM2bil for contingencies.
28. In 2014, the Federal Government revenue collection is estimated at RM224.1bil, an increase of RM4bil from 2013. Taking into account the estimated revenue and expenditure, the Federal Government fiscal deficit will further decline from 4% of GDP in 2013 to 3.5% in 2014. This clearly indicates the Government's commitment towards fiscal consolidation to further strengthen the financial position of the nation.
29. Taking into account the current international and domestic economic environment, I will now present the five thrusts which will be the basis of the 2014 Budget.
FIRST THRUST: INVIGORATING ECONOMIC ACTIVITY
30. The Government will continue to provide a conducive environment to attract more domestic and foreign investment. The Government's efforts have led to an increase in private investment. For example, the share of private investment to GDP has grown from 12.4% in 2010 to 16.7% currently.
31. In 2014, private investment is expected to increase further to RM189bil or 17.9% of GDP, particularly in oil and gas, textile industry, transport equipment and real estate development.
32. Public investment is estimated to reach RM106bil. Projects to be implemented include construction of the 316km West Coast Expressway from Banting to Taiping as well as double-tracking projects from Ipoh to Padang Besar, and later from Gemas to Johor Bahru.
33. In the oil and gas sector, among projects to be undertaken by Petronas include the Sabah Ammonia Urea Project (SAMUR) in Sipitang; the integrated oil and gas production development project in Kebabangan; the regasification plant project in Lahad Datu, Sabah; and RAPID in Pengerang, Johor, which is the largest investment in Malaysia.
34. The Government will continue to encourage investments in the five regional economic corridors by providing basic infrastructure and implementing high-impact projects. As at end-2012, investments worth RM124bil or 41% of the total committed investments were realised in the regional corridors.
35. In the first nine months of 2013, the regional corridors attracted committed investments of RM53.4bil with almost 50% realised. Among the important projects in Iskandar Region are Pinewood Studio, Gleneagles Medini Hospital and Pegasus International School. In addition, sewerage and flood mitigation projects will be carried out.
36. In 2014, the Government will allocate RM1.6bil for development in the five regional corridors. Among the main projects to be implemented include the agropolitan project and oil palm-based industries in the Sabah Development Corridor as well as Samalaju Industrial Park and a halal hub in the Sarawak Regional Corridor.
37. Meanwhile, in the East Coast Corridor, Kuantan Port will be expanded. An integrated petrochemical complex will be built in Gebeng and Kertih. In the Northern Corridor, the main projects include planting of commercial crops and fertigation system.
Invigorating Services Sector
38. The services sector is the key contributor to economic growth and has huge potential for further development. The sector's contribution to GDP has increased from 49.3% in 2000 to 55% in 2013. To further promote growth in the sector, the Government will launch the Services Sector Blueprint in 2014 which outlines strategies and measures as well as identifies the following potential subsectors to be developed.
Logistics Sector
39. Malaysia is currently ranked 29th in the World Bank Logistics Performance Index Report 2012. The Index benchmarks the performance of logistics activities, including shipping, infrastructure, timeliness, customs clearance and competencies. Though lagging behind developed nations, our performance can be improved.
40. To ensure a more efficient logistics sector, the Government will formulate a Logistics Sector Master Plan. The Plan will provide the strategic direction for the development of logistics infrastructure and supply chain as well as review regulations and laws. In addition, the Government will allocate RM3bil in soft loans under the Maritime Development Fund through Bank Pembangunan Malaysia. The Fund will provide financing to encourage the development of the shipping industry, shipyard construction, oil and gas as well as maritime-related support activities.
Promoting Aviation Industry
41. Malaysia has potential to be an aviation hub in the region. The industry will have a multiplier effect on the economy in line with growing demand for passengers and air cargo. For the period January to July 2013, passenger traffic at airports nationwide increased to 43.9 million from 38.6 million passengers during the same period in 2012.
42. Total air cargo handled increased to 529,000 tonnes during the first seven months of 2013. When KLIA 2 is operational, passenger traffic is expected to increase to more than 70 million. To further develop the industry, the Government will formulate a National Aviation Policy, which will outline measures to strengthen the ecosystem and services network in the aviation industry.
43. To improve operations management and air traffic control, the Government will replace the existing air traffic control management system in Subang that is almost 20 years old. A new air traffic management centre costing RM700mil will be built at KLIA. The new system will facilitate an increase in air traffic from 68 to 108 movements per hour on three runways. This will be among the highest capacity in handling air traffic worldwide.
44. To increase passenger comfort, the Government will upgrade several airports, such as Kota Kinabalu and Sandakan in Sabah as well as Miri, Sibu and Mukah in Sarawak. For this, the Government will allocate RM312mil. In addition, the passenger terminals in Langkawi International Airport and Kuantan Airport will be upgraded.
