The slide in oil prices has forced the governement to conduct what it calls a "budget recalibration exercise".
In other words, the government is now forced to make budget cuts to adjust for a fall in revenue.
The government will also need to introduce measures to boost revenue as well as support consumers, to avoid a severe contraction of consumer spending at times of austerity.
Below are the salient points, from Prime Minister Najib Abdul Razak's speech in Putrajaya today:
- Compulsory Employee Provident Fund contribution by employees to be reduced by 3 percent from March 2014 to December 2017. Employers' contribution remains;
- Tax breaks of up to RM2,000 for those earning RM8,000 per month or less in the 2015 assessment year;
- Liberalisation of approved permits for selected agriculture products, including coffee and meat;
- New farmer's market called MyFarm Outlet to sell food products at 5-20 percent lower than retail prices;
- RM50 cash subsidy per one tonne of raw paddy, to incentivise farmers to produce rice;
- Registered hardcore poor families to receive 20kg of rice every month;
- All new houses costing RM300,000 and below can only be sold to first-time housebuyers;
- Continuation of housing loans at 4 percent interest for 10,000 housebuyers who are buying units costing RM35,000 and less;
- A total of 744 PSD bursaries will be given out, but only for studies at local private or public universities, and 8,000 PSD scholarships for undergraduate studies at local institutions.A total 200 PSD scholarships for engineering degrees in Japan, South Korea, Germany and France, top 20 SPM scorers will be sponsored to study anywhere in the world;
- No visa needed for tourists from China from March 1-Dec 31 for visits no longer than 15 days, subject to conditions;
- Revision of levy for foreign workers, not including domestic workers. Those without permit will be allowed to get themselves legalised;
- RM6 billion allocated to assist small-medium enterprises and start-ups;
- Government-linked companies to reduce salary gap between top management and workers;
- Goods and services tax to remain at prevailing rate of 6 percent;
- No paycut, sackings or contract termination for civil servants;
- Salary revision of civil servants, as announced in Budget 2016 speech, to continue in July 2016;
- No compromise on bumiputera agenda;
- More efforts to be taken to clamp down on tax evaders;
- Allocation for training for retrenched workers.