2010/10/15
TRANSFORMATION TOWARDS A DEVELOPED AND HIGH-INCOME NATION
Mr. Speaker Sir,
I beg to move the Bill intituled “An Act to apply a sum from the Consolidated Fund for the service
INTRODUCTION
1.Praise be to Allah, for enabling me to table the 2011 National Budget. Indeed, this is a significant
budget. This Budget is a precursor in our final efforts towards achieving Vision 2020, which is
3,365 days or 9 years, 2 months and 17 days away.
2.On this auspicious Friday, I present a budget that lays the foundation for Malaysia to become an
advanced nation. Over the last 18 months, the Government has taken measures to propel the
country towards becoming a developed and high-income economy.
3.The 2011 Budget is formulated with firm determination to bring significant changes to the
nation’s development and the well-being of the rakyat. This transformation process is holistic,
encompassing economic, social and political aspects.
4.The Government upholds the concept of 1Malaysia as the fundamental philosophy in driving the
nation’s development path. The Government Transformation Programme or GTP and Economic
Transformation Programme or ETP will be a guiding force in this journey. The six National Key
Result Areas (NKRA) and the New Economic Model with its eight Strategic Reform Initiatives
will be the framework for the nation’s economic transformation. The implementation of the
development programmes will be realised through the 10th and 11th Malaysia Plans (10MP and
11MP).
5.The era of “the Government knows best” is over. Therefore, in formulating this Budget, the
Government consulted and took into considerations views from various parties comprising the
public and private sectors, focus groups, media, 1Malaysia blog as well as lab sessions.
6.I appreciate the contributions of all those involved. This is the strength of 1Malaysia. With these
ideas coupled with unrelentless efforts, I am confident that we shall overcome challenges and
obstacles. More so, we can free ourselves from the middle-income trap and leap to a higher level of
development.
ECONOMIC PERFORMANCE AND CHALLENGES
7.Malaysia has recovered from the global economic recession resulting from proactive measures
undertaken by the Government and the successful implementation of two Economic Stimulus
Packages amounting to RM67 billion. The effectiveness of these measures is reflected by the 9.5%
expansion in gross domestic product (GDP) in the first half of 2010 compared with -5% during the
in 2009. Likewise, international trade is expected to expand 11.4% compared with -11% in 2009.
8.On the domestic front, key indicators also reflected strong economic growth. The FTSE Bursa
Malaysia KLCI surged to 1,496 points on 14 October 2010, the highest since February 2008. Trade
performance was encouraging in the first eight months of 2010, with exports increasing 22% and
imports 28%, particularly imports of capital goods which rose 18%.
9.The ringgit is among the best performing currencies in the region, strengthening 11% against the
US dollar since 31 December 2009 to RM3.0833 on 14 October 2010. Malaysia’s international
reserves remained strong at RM310.8 billion or USD100.7 billion on 30 September 2010, sufficient
to finance 8.5 months of retained imports and 4.3 times the nation’s short term external debt.
10.In line with these positive developments, the Government revised growth for 2010 to 7%
compared with 6% previously. It is significantly higher than -1.7% in 2009. The sterling
performance is contributed by the expansion of the manufacturing sector at 10.8%, services 6.5%
and construction 4.9%. Private investment expenditure is expected to increase 15.2%, private
consumption 6.7% and exports 11.6%.
11.In 2011, the global economy and trade are expected to grow moderately by 4.2% and 7%,
respectively. In line with this, the Malaysian economy is expected to expand between 5% and 6%.
However, the Government will strive to achieve growth of 6%. Growth will be supported by
private investment, expanding 10.2%, private consumption 6.3% and exports 6.7%. The
manufacturing sector will continue to spearhead growth, expanding 6.7% and the services sector
5.3%.
12.Income per capita will increase 6.1% to RM28,000 while income in terms of purchasing power
parity to USD16,000. These estimates are based on moderate inflation of 2% to 3% and low
unemployment rate of 3.5%.
2011 BUDGET STRATEGIES
13.To attain developed nation status, we cannot remain complacent. We must change our mindset.
Business is not as usual. Success demands drastic changes, not incremental. It requires a quantum
leap. The choice before us is clear. Change is not an option but an imperative. We must change or
risk being left behind.
14.We succeeded in transforming Malaysia from an agricultural economy to become among the
largest exporters in the world. Therefore, the challenge now is to make a quantum leap to the next
stage of development. This is possible with careful planning and clear strategies. Indeed, we shall
succeed.
15.The trend of external trade is increasingly challenging, while there is heightened competition to
attract foreign investment. The global economic environment is rapidly changing. To rise to these
challenges, the private sector must be dynamic, creative and innovative to drive economic growth.
They must be bold to undertake risks and seize opportunities. The Government will, in turn,
provide a conducive ecosystem to facilitate the private sector activities.
16.The 2011 Budget will emphasise efforts to transform the nation into a developed and highincome
economy with inclusive and sustainable development, spearheaded by the private sector as
well as focus on the well-being of the rakyat. With the theme “Transformation Towards a
Developed and High-Income Nation”, the 2011 Budget will centre on the following four key
strategies:
Second:Intensifying Human Capital Development;
Third:Enhancing Quality of Life of the Rakyat; and
Fourth:Strengthening Public Service Delivery.
FIRST STRATEGY: REINVIGORATING PRIVATE INVESTMENT
17.The Government has been assuming a significant role in driving economic growth since the
financial crisis in 1997/98. The time has come for the private sector to resume its role as the engine
of growth. In this context, the Government announced and strategised that the 10MP commencing
in 2011 will emphasise the role of private sector. In 2011, private investment is estimated to expand
12.5% to RM86 billion. The implementation of the 12 National Key Economic Areas (NKEA) is
expected to generate investment exceeding RM1.3 trillion or USD444 billion and create 3.3 million
job opportunities. The private sector will finance 92% of the NKEA and the remaining by the
Government.
Public-Private Partnership Initiatives
18.The Government will further intensify the Public-Private Partnership (PPP) initiative to enhance
private sector involvement in economic activities. The Government will provide allocation as a
tipping point for infrastructure support to ensure viability of private sector-led projects. Several
PPP projects identified under the 10MP will be implemented in 2011 through private investment of
RM12.5 billion. The Government will allocate RM1 billion from the Facilitation Fund. Among the
PPP projects are:
First:Construction of highways such as the Ampang-Cheras-Pandan Elevated Highway, Guthrie-
Damansara Expressway, Damansara-Petaling Jaya Highway, Pantai Barat-Banting-Taiping
Highway, Sungai Dua-Juru Highway and Paroi-Senawang-KLIA Highway;
Second: Construction of a 300-megawatt Combined-Cycle Gas Power Plant in Kimanis, Sabah to
increase electricity generation capacity to meet rising demand; and
Third:Development of projects such as the International Islamic University Malaysia Teaching
Hospital in Kuantan, Pahang, the Women and Children’s Hospital as well as the Integrated Health
Research Institute Complex in Kuala Lumpur.
19.Another PPP project identified is the Academic Medical Centre. This project is a joint venture
between Academic Medical Centre Sdn. Bhd. and Johns Hopkins Medicine International as well as
Royal College of Surgeons Ireland. This project involves private investment of RM2 billion.
High-Impact Strategic Development
20.Private investment has increased through various strategic high-impact projects. Recently, the
1Malaysia Development Berhad (1MDB) in collaboration with Mubadala Development Company,
an investment arm of the Government of Abu Dhabi, agreed to develop the Kuala Lumpur
International Financial District (KLIFD) valued at RM26 billion, commencing in 2011. Major
international banks and professional financial services firms, including syariah experts will be
located in the KLIFD. More importantly, such strategic development will further strengthen
Malaysia’s position as the premier international Islamic financial hub. The Government is prepared
to consider special incentive packages to attract investors to the KLIFD.
2011. This project, with an estimated private investment of RM40 billion, is expected to be fully
completed by 2020. Upon completion, the utilisation rate of public transport is expected to increase
to at least 40%. This project will provide an efficient and comfortable transport system, reduce
travelling time as well as strengthen connectivity in Klang Valley and be integrated with other
modes of transportation, including buses and taxis. 22. Another major project is the development of
the Malaysian Rubber Board land in Sungai Buloh covering an area of 2,680 acres. The Employees
Provident Fund (EPF) will undertake mixed development comprising affordable houses as well as
commercial, industrial and infrastructure facilities. The entire development is estimated at RM10
billion and is expected to be completed by 2025.
23.We take pride in our national icon, the Petronas Twin Towers. It signifies the spirit of Malaysia
Boleh. Another landmark to be developed by Permodalan Nasional Berhad is Warisan Merdeka,
expected to be completed by 2020. This is an integrated development project comprising a 100-
storey tower, the tallest in Malaysia. The project will retain Stadium Merdeka and Stadium Negara
as national heritage. The total project cost is RM5 billion, with the tower expected to be completed
by 2015.
Revitalising Capital Market
24.To support the financial liberalisation policy, the Government will implement bold measures to
revitalise the domestic capital market, particularly diversifying investment products, liberalising
equity holding requirements and investment limits, providing attractive incentives as well as
enhancing cooperation with foreign bourses. Therefore, the following measures will be
implemented:
First: Government-Linked Investment Companies (GLICs) will divest their shareholdings in major
companies listed on Bursa Malaysia to increase liquidity and trading velocity in the market;
Second:GLICs will be allowed to increase investment in overseas markets to explore opportunities
for better returns. For example, the Employees Provident Fund’s (EPF) investment overseas is
currently at 7% and will be raised up to 20% of the total assets managed;
Third: Listing of Petronas Chemicals Sdn. Bhd. and Malaysia Marine & Heavy Engineering Sdn.
Bhd., subsidiaries of Petronas and MISC, respectively, to offer higher public shareholding this
year;
Fourth:Bursa Malaysia will launch sukuk and conventional bonds to meet retail investors’ demand
for fixed income instruments in order to boost the bond market;
Fifth: The Securities Commission (SC) will offer three new stock broking licences to eligible local,
foreign or joint venture companies to increase retail market participation;
Sixth:The SC will increase the number of Proprietary Day Traders operating in the market; and
Seventh: The SC will facilitate process and procedures for the listing of companies and products,
particularly Exchange Traded Funds.
Islamic Capital Market
25.Efforts will be taken to strengthen Malaysia’s position as a premier Islamic capital market.
Bursa Malaysia will develop an international board to enable foreign securities to be listed
including syariah-compliant products.
expenses for the issuance of Islamic securities which adopt the principles of Murabahah and Bai’
Bithaman Ajil based on tawarru’ be given tax deduction. This will strengthen Malaysia’s position
as the leading sukuk market and promote transactions in Bursa Suq al-Sila, the world’s first
syariah-compliant commodity trading platform. The Government proposes that takaful
contributions for export credit be given double tax deduction.
Intensifying Venture Capital Industry
27.The venture capital industry plays an important role in contributing towards economic growth,
particularly in high technology sectors such as information and communication technology (ICT),
biotechnology and the creative industry. For this, the Government will provide Entrepreneurship
Enhancement Training Programme to train 500 new technopreneurs and attract more angel
investors. Both programmes will be managed by Cradle Fund Sdn. Bhd, an MOF Inc. company.
Malaysian Technology Development Corporation (MTDC) will be provided a start-up fund
amounting to RM100 million to provide soft loans which allow loan repayments only after the
companies generate income. MTDC will also host an International Venture Capital Symposium in
2011 to enable networking and partnering of foreign and local venture capitalists to boost high
technology industries.
Bumiputera Property Trust Scheme
28.To ensure meaningful and sustainable participation of Bumiputera, the Bumiputera Property
Trust Foundation (BPTF) will provide opportunities for Bumiputera ownership of prime
commercial properties in major towns. The BPTF will establish a fund to enable ownership of
prime commercial properties in the Klang Valley, through a group ownership scheme. For this, the
BPTF will launch a syariah-compliant Bumiputera Property Trust Scheme this year with a size of
RM1 billion.
Private Pension Fund 29.To revitalise capital market activities, I wish to announce that the
Government will launch a Private Pension Fund in 2011. This Fund will benefit private sector
employees and the self-employed. The existing income tax relief of up to RM6,000 for employee’s
contributions to the EPF will be extended to the contributions made to the Private Pension Fund,
including the self-employed. Employers will also be given tax deduction on contributions made on
behalf of their employees. This will provide an option for the rakyat to invest for their old age.
Enhancing Electrical and Electronics Industry
30.The electrical and electronics (E&E) industry remained the largest contributor to exports with
41% or RM228 billion in 2009. However, the E&E industry is still focused on assembling
activities. We should leverage on our strengths to develop local E&E companies to compete at the
international level. A sum of RM857 million is allocated for local companies to invest in high
value-added activities, particularly in Penang and the Kulim High-Tech Park in Kedah.
Propelling Oil, Gas and Energy Industry
31. The oil, gas and energy industry is one of the main contributors to the economy. In 2009, the
industry contributed 10.2% to GDP with export revenue amounting to RM56 billion. This industry
has the potential to expand, particularly in downstream activities. To achieve this objective, the
Government will allocate RM146 million to support the sector. Among the projects to be
implemented include the establishment of the Oil Field Services and Equipment Centre in Johor
with private investment of RM6 billion over a period of 10 years. To meet the increase in gas
demand by industries, Petronas will implement a regasification project with an investment of RM3
billion in Melaka, which will be operational in 2012.
32. The Government is committed to develop green technology to ensure sustainable development.
In this regard, the Government will continue to provide several incentives:
First:Pioneer Status and Investment Tax Allowance for the generation of energy from renewable
sources and energy efficiency activities be extended until 31 December 2015;
Second:Import duty and sales tax exemption on equipment for the generation of energy from
renewable sources and energy efficiency be extended until 31 December 2012;
Third:Tax exemption on the income derived from trading of Certified Emission Reductions
certificate be extended until year of assessment 2012; and
Fourth: Full import duty and 50% excise duty exemption was granted to franchise holders of hybrid
cars as well as hybrid an electric motorcycles up to 31 December 2010. To further encourage
ownership of hybrid cars, import duty and excise duty exemption will be extended until 31
December 2011 with excise duty to be given full exemption.
33.Malaysia is committed to reducing carbon emission intensity to preserve the environment. For
this purpose, the Government will implement among others, the Programme on Blending of
Biofuels with Petroleum Diesel (B5 Programme) on a mandatory basis beginning in Putrajaya,
Kuala Lumpur, Selangor, Negeri Sembilan and Melaka in June 2011.
34. The Government will also implement the Feed in Tariff (FiT) mechanism under the Renewable
Energy (RE) Act, to allow electricity generated from RE by individuals and independent providers
to be sold to electricity utility companies.
Invigorating Agriculture Sector
35.The Government allocates RM3.8 billion in 2011 to increase productivity and generate higher
returns in the agriculture sector. For this, the following measures will be taken:
First: Develop large-scale integrated Aquaculture Zones in Pitas, Sungai Telaga and Sungai Padas
in Sabah as well as Batang Ai and Tanjung Manis in Sarawak that meet standards as well as
produce high quality products, with an allocation of RM252 million;
Second: Upgrade the drainage and irrigation system as well as use high quality paddy seeds to
enhance productivity in Muda Agricultural Development Area (MADA), Kedah and other areas.
For this, RM235 million is allocated;
Third: Encourage farmers participation in high value agriculture activities, including swiftlet nests,
aquaculture, seaweeds, ornamental fish as well as herbs and spices with an allocation of RM135
million for basic infrastructure;
Fourth: Foster partnership between small-scale fruit and vegetable farmers with anchor companies
through an allocation of RM80 million;
Fifth: Improve the Agriculture College in Kubang Pasu, Kedah by constructing a diagnostic lab
involving an allocation of RM70 million;
Sixth: Build an International Centre for Crops of the Future in Semenyih, Selangor with an
allocation of RM15.7 million; and
companies undertaking food production activities for another 5 years until 2015.
Energising Tourism Industry
36. The tourism industry, which generated revenue of RM53 billion in 2009, has the potential to
provide more business and employment opportunities as well as further increase the nation’s
income. In the 2009 United Nations World Tourism Organisation Report, Malaysia was ranked
ninth in the world in terms of tourist arrivals. Efforts will be intensified to attract more foreign
tourists by offering innovative tourism packages and products. For this, the Government will
implement the following initiatives:
First:Provide infrastructure facilities with an allocation of RM85 million to facilitate construction
of hotels and resorts in remote areas with the potential to attract tourists;
Second:Construct several shaded walkways in the KLCC-Bukit Bintang vicinity with an allocation
of RM50 million;
Third: Restructure the Department of Civil Aviation to Civil Aviation Authority; and
Fourth:Nexus Karambunai, a renowned resort in Sabah is committed to develop an integrated econature
resort, the first in the world, by leveraging on the natural beauty and uniqueness of
Karambunai. The RM3 billion project will commence next year. To support the tourism industry,
the Government will allocate RM100 million.
37.To promote Malaysia as a shopping haven in Asia by providing branded goods at competitive
prices, the Government proposes that import duty on approximately 300 goods preferred by tourists
and locals, at 5% to 30% be abolished. Such goods are apparel, handbags, shoes, shampoo, suits,
children’s apparel, wallets, hair colourants, golf balls, imitation jewellery, talcum powder, curtains,
table cloth, blankets, bed sheets, shirt, undergarments, lingerie, nightwear, perfumes and mosquito
netting.
Revitalising Palm Oil and Related Industries
38.Currently, the export revenue from crude palm oil totalled RM37 billion, while that of palm oil
related products reached RM13 billion in 2009. The industry has the potential to be developed
further in downstream activities to generate higher income for estate owners and smallholders. In
efforts to propel the palm oil and related products industry, several measures will be implemented:
First: Enhance productivity by encouraging replanting activity to replace aged trees with high
quality new clones, through a fund of RM297 million; and
Second: A sum of RM127 million is allocated to support domestic oleo derivatives companies as
well as a sum of RM23.3 million to expand downstream palm oil industries including production of
vitamins.
Enhancing Information and Communication Technology
39.The Multimedia Development Corridor enters its third phase in 2011. The focus is on creation
of an innovative digital economy to achieve the target of a high-income nation. To enhance the
potential of the ICT industry, MY Creative Content Programme will be implemented to encourage
the development of local content creation, hosting local content and unlocking new channels for
content. This programme involves an allocation of RM119 million.
service providers. In addition, import duty and sales tax exemption on broadband equipment are
also extended for two years until 2012.
41.Currently, ordinary mobile phones are subject to 10% sales tax but mobile phones with various
applications such as internet and personal digital assistant (PDA) are exempted from sales tax. For
the purpose of streamlining tax treatment, the Government proposes that sales tax be exempted on
all types of mobile phones. Business Services Industry
42.In line with the increasing demand for repair and maintenance of aircraft and helicopters, the
Government will promote the development of the business services industry. The Sultan Abdul
Aziz Shah Airport, Subang will be developed as a centre for maintenance and overhaul of aircrafts
as well as provide specific training to develop experts in this field. The Government will allocate a
sum of RM91 million for capacity building in the maintenance, repair and overhaul (MRO)
services industry, aerospace and aeronautical engineering training programmes as well as
promotion of business outsourcing services.
Corridor and Regional Development
43. Corridor and regional development will be accelerated, focusing on several clusters with
specialisation and geographical advantages. Efforts to develop the corridors will focus on joint
venture projects between local and foreign investors as well as high-impact industries with
competitive edge. For this purpose, the Government allocates RM850 million for infrastructure
support.
44.For Iskandar Malaysia, a sum of RM339 million is allocated, including for the construction of
highways, development of housing areas as well as providing and improving public transportation
services. The amount of investment committed by the private sector as at June 2010 was RM62
billion, surpassing the targeted RM47 billion. Total actual investment up to June 2010 was RM25
billion. The Newcastle University Medicine Malaysia and Chelsea Factory Outlet are expected to
be completed in 2011 while Legoland and Marlborough College in 2012.
45.The Northern Corridor Economic Region (NCER) is allocated RM133 million, which includes
the development of an Agricultural Products Processing Centre, Tourism Infrastructure and a
Biotechnology Incubator Centre. The East Coast Economic Region (ECER) is allocated RM178
million for projects, including Industrial Parks, Water Treatment Plants, development of tourist
areas as well as redevelopment of former Pahang Tenggara Development Authority and Jengka
Region Development Authority areas.
46.For Sarawak Corridor of Renewable Energy (SCORE), a total of RM93 million is allocated for
facilities, including telecommunication, water supplies, airport and roads as well as halal food
industrial parks. For the Sabah Development Corridor, a sum of RM110 million is allocated,
among others, for palm oil industry cluster projects, agro-industrial precinct and integrated farming
centre.
Promoting R&D&C Activity
47. To accelerate the economy towards a high-income nation, research, development and
commercialisation (R&D&C) activity will be the platform for enhancing value-added activities
across economic sectors. For this, a sum of RM411 million is allocated in 2011 for the R&D&C
activities.
48. The Government has established a Special Innovation Unit (UNIK) under the Prime Minister’s
drive innovation. An Act will be formulated to enable UNIK to commercialise R&D findings by
universities and research institutions. Several programmes and activities will be designed to
enhance innovation, creation and commercialisation of new products. For 2011, a sum of RM71
million is allocated for UNIK.
Reforming Insolvency Law
49.During the recent economic crisis, there were entrepreneurs and individuals who faced financial
problems with a number of them declared bankrupt. They were blacklisted and unable to conduct
businesses or apply for loans. To assist these individuals, the new Insolvency Act will consolidate
the Bankruptcy Act 1967 and Part 10 of the Companies Act 1965, including introduction of
provision relating to relief mechanism for companies and individuals with financial problems. The
review will also involve amending the current minimum bankruptcy limit of RM30,000.
Advancing Creative Industry
50.The creative industry has great potential for further development to generate national income.
This industry encompasses animation, advertising, films, fashion design, crafts and cultural
heritage. To fully tap the potential of this industry, the Government will develop a creative industry
policy in an integrated manner. A sum of RM200 million is allocated to purchase creative products
such as high quality locally-produced films, dramas and documentaries.
51.A strong financial position is crucial to ensure the well-being of the nation. To achieve this
objective, the Government proposes that the rate of service tax be increased from 5% to 6%. The
Government is confident that this measure will not unduly burden the rakyat as the increase in the
tax rate is minimal. Moreover, the services tax is not imposed on all services. In fact, the sales
value thresholds for such services are still retained. In tandem with this aspiration, the Government
also proposes that service tax be imposed on paid television broadcasting services.
Strengthening Nation’s Financial Position
52.The Government is committed to strengthen the nation’s financial position by increasing
revenue collection and ensuring prudent spending. This includes emphasis on value-for-money and
value management. For example, measures undertaken include open tender, restricted tender and
competition for best design of Government hospitals. The Government will strengthen the revenue
collection system by increasing enforcement and audit as well as expanding coverage on all parties
that should be paying taxes.
SECOND STRATEGY: INTENSIFYING HUMAN CAPITAL DEVELOPMENT
53. The most important asset of a nation is its human capital. It is proven that a nation without
natural resources but which effectively manages its human capital will achieve greater success than
a nation that relies on natural resources. Malaysia cannot afford to be too dependent on its
depleting natural resources. Although we have successfully managed our natural resources, we
have a responsibility to plan human capital development in a sustainable manner, failing which we
will not be able to optimise the nation’s potential.
54.A quality, skilled, knowledgeable, creative and innovative human capital is a prerequisite
towards achieving a developed and high-income nation. As such, education and training will be
restructured and strengthened. For this, a sum of RM29.3 billion is allocated for Ministry of
Education, RM10.2 billion for Ministry of Higher Education and RM627 million for Ministry of
Human Resource.
55.Education is always close to my heart. The Government will not compromise on quality of
education. Our children must be equipped with all the prerequisites to compete in the challenging
environment.
56.To increase the number of talented and quality workforce in the domestic market, the
Government will undertake efforts to attract, motivate and retain talented human capital from
within the country and abroad. For this, the Government will establish a Talent Corporation (Talent
Corp) under the Prime Minister’s Office in early 2011. Talent Corp will formulate a National
Talent Blueprint and develop an expert workforce database as well as collaborate closely with
talent networks globally.
Expanding Access to Quality Education
57. The national education system will be revamped to focus on thinking skills, character building,
creativity, innovation and competitiveness. For the Ministry of Education, a sum of RM6.4 billion
is allocated for development expenditure to build and upgrade schools, hostels, facilities and
equipment, as well as uphold the status of the teaching profession. A total of RM213 million is
allocated to reward high-performance schools as well as for the remuneration of Principals, Head
Teachers and Excellent Teachers.
Strengthening Early Education
58.To nurture children with good values and knowledge, human capital development must begin
from childhood. To achieve this, the Government will increase pre-school enrolment rate to a
targeted 72% by end-2011 through an additional 1,700 classes, strengthen the curriculum as well as
appoint 800 pre-school graduate teachers.
59.The Government also allocates RM111 million for PERMATA programme, including the
construction of the second phase of Sekolah PERMATA Pintar School Complex, 32 PERMATA
Children Centres (PAPN) and financing operations of 52 completed PAPNs as well as continuing
PERMATA Pintar, Seni, Insan and Remaja Programmes.
Strengthening Primary and Secondary Education
60.Every child regardless of race is a national asset and a future leader. Education must be
apolitical. Towards this, the Government allocates RM250 million for development expenditure to
religious schools, Chinese-type schools, Tamil national schools, missionary schools and
Government-assisted schools nationwide.
61.Recognising the importance of Islamic education, the Government will provide assistance per
capita for primary and secondary rakyat religious schools with an allocation of RM95 million.
62.To provide competent and quality teachers and instructors to better guide and educate students,
the Government allocates RM576 million in the form of scholarships for those wishing to further
their studies.
63. A sum of RM213 million is allocated to enhance proficiency in Bahasa Malaysia, strengthen
the English Language as well as streamline the Standard Curriculum for Primary Schools (KSSR).
In this regard, the Government will recruit 375 native-speaking teachers including from the United
Kingdom and Australia to further enhance teaching of English.
Strengthening Higher Education
Government in view of its significant contribution to the socioeconomic development of the nation.
The following measures will be implemented:
First: Increase the number of PhD qualified academic staff to 75% in research universities and to
60% in other public institutions of higher learning with an allocation of RM20 million; and
Second: Improve opportunities for promotion of lecturers in public institutions of higher learning.
Lecturers can be considered for promotion to the highest grade of Staff III, II and I as well as
conferred Premier Professors without holding administrative positions.
Intensifying Training and Skills Programmes
65.The Government allocates RM60 million to further intensify the Industrial Skill Enhancement
Programme in State Skills Development Training Centres. This programme will enhance skills of
engineering graduates and technical employees in line with market requirements. A sum of RM220
million is also allocated to ensure graduates from other fields are able to enhance their competence
and employability. These include the Professional Certification Programme, Sports Development,
Entrepreneurship Development and Graduate Employability Management Scheme. The
Government will also allocate a sum of RM50 million to Multimedia Development Corporation to
train graduates in ICT to enhance their employability and to meet the demand of the ICT industry.
66.A sum of RM474 million is provided to enhance productivity and skills of non-graduates,
including school leavers, youths and workers as there is high demand for skilled workforce in
technical fields.
1Malaysia Training Programme
67.The nation requires human capital that continually enhances knowledge through upskilling and
reskilling. In this regard, I am pleased to announce the 1Malaysia Training Programme, which will
commence in January 2011 with an allocation of RM500 million.
68.The training programme comprises three components. First, a sum of RM200 million is
allocated to conduct part-time training in the evenings and weekends in selected training centres
nationwide. It will be conducted by Community Colleges, National Youth Training Institutes, Giat
Mara Centres and Industrial Training Institutes, utilising the existing facilities. Among courses to
be offered in the evenings include language classes in Bahasa Melayu, Mandarin, Tamil, English
and Arabic as well as music classes. During the weekends, skills and technical courses will be
conducted, including baking, tailoring, spa therapy, mechanical, electrical and welding.
69.Second, the 1Malaysia Training Programme also includes an allocation of RM200 million from
the Human Resource Development Fund to be used by companies to fund specific training
programmes for their employees. Third, the Ministry of Human Resource will provide RM100
million to enable employees to enhance skills in various technical fields.
Enhancing Employees Productivity
70.In tandem with the increase in productivity, employees should be remunerated with higher
salaries and wages to enable them to cope with the rising costs of living. I am pleased to announce
the establishment of a National Wage Consultation Council as the main platform for wage
determination. The Council will comprise representatives from employers, trade unions, nonunionised
employees, Government agencies, academia, NGOs and individuals. The Ministry of
Human Resource will be the Secretariat for this Council. 71.The National Wage Consultation
was raised to RM710 on 1 July 2010 from RM610 per month. With this adjustment, the monthly
salary of postmen including fixed allowances increased to RM1,285 from RM1,035. The
Government will enforce basic minimum wages for security guards, to between RM500 and
RM700 a month depending on location, compared with RM300 and RM400 currently. With this
increase, security guards will now enjoy a monthly salary including allowances exceeding
RM1,000. The increase will be effective January 2011.
72.The Government will continue to reduce the number of foreign workers by increasing in stages
the levy according to sector. It is also mandatory for employers to procure health insurance for their
foreign workers.
Expanding Women Participation
73.Women account for half of the population and play a very important role in family and national
development. Therefore, the Government recognises the role of women in the nation’s
development. To enhance women’s participation in entrepreneurship, the Government allocates
RM30 million, among others, to introduce the Single Mother Skill Incubator Programme and the
Prime Entrepreneur and Women Activist Award in conjunction with Women’s Day commencing
2011.
74. The Work Regulations (Part-Time Workers) 2010 was enforced by the Government effective 1
October 2010 to encourage the participation of more women as part-time workers. I urge the
private sector to hire female part-time workers, particularly those who are married. The
Government will also implement a pioneer Small Office Home Office programme to train disabled
women in various skills for a period of three months.
75. The Government will provide and re-brand 40 1Malaysia TASKA, managed by the Department
of Social Welfare to assist women to obtain quality childcare and early education for their children.
76.The Government is concerned with the career prospects and welfare of female civil servants as
they need to take care of their families, particularly newborn babies. To improve the maternity
leave facility for female civil servants, the Government will allow flexibility to self-determine
fully-paid maternity leave, not exceeding 90 days from the current 60 days. This facility is subject
to a total of 300 days of maternity leave throughout the tenure of service.
77.The Government continues to provide opportunities for qualified female civil servants to hold
key executive posts. As at end-2009, 30.5% of key posts in the public sector were held by women. I
urge the private sector to provide opportunities for more women to hold post at decision-making
level, particularly as Board of Directors and Chief Executive Officers.
Developing National Sports
78.The Government will continue to encourage sports research and development, organise more
international games, provide facilities and expertise to mould competitive athletes and develop
high-performance sports. For sports development and management, a sum of RM365 million is
allocated to the Ministry of Youth and Sports. To develop football, the Government will establish a
Football Academy in Pahang with an allocation of RM20 million to produce quality and highly
skilled football players.
79. I would like to take this opportunity to congratulate all athletes who took part in the 19th
Commonwealth Games in New Delhi. I would also like to congratulate the medal winners who
have made the nation proud at the international arena. They won 12 gold medals, surpassing the
target of 10 gold medals. This is Malaysia’s best achievement in the Commonwealth Games.
80.It is widely accepted that the main role of the Government is to enhance the well-being of the
rakyat. Achieving a developed and high-income economy is meaningless if the quality of life of the
rakyat deteriorates. In efforts to become a developed and high-income nation, we need to
strengthen socioeconomic development in an inclusive manner. It is important to attain a more
balanced development and ensuring a better quality of life.
Assisting the Less Fortunate
81.The Government is concerned with the difficulties faced by the less fortunate and will continue
to ensure their welfare. In 2011, the Government will allocate RM1.2 billion to the Ministry of
Women, Family and Community Development to carry out various welfare and community
programmes as follows:
First:Welfare assistance for senior citizens with an allocation of RM166 million. This group is
estimated to increase to more than 15% of the total population by 2030;
Second:Children’s assistance programme with an allocation of RM121 million to enable them to
receive quality childcare and early education. This programme will benefit 97,000 children;
Third:Assistance programme to benefit 80,000 disabled individuals with an allocation of RM218
million;
Fourth: Excise duty exemption be increased from 50% to 100% on national vehicles purchased by
the disabled; and
Fifth:Construction of an intervention centre for the homeless by providing employment
opportunities, housing facilities and counselling.
82. Since 2008, the Government provided a rebate on electricity bill payment for monthly
consumption of below RM20. The rebate has benefited more than one million consumers
nationwide. The Government will continue this rebate programme with an allocation of RM150
million to ease the burden of the low-income group.
83.Currently, tax relief on expenses incurred for parents is limited to medication in clinics and
hospitals including treatment in nursing homes as well as dental treatment. In an effort to lessen the
cost burden in caring for parents, the Government proposes that the existing tax relief of up to a
maximum of RM5,000 be extended to cover other expenses such as day care centre, cost incurred
to employ caretakers for parents and other daily needs such as diapers.
Increasing House Ownership
84.The Government empathises with the rakyat’s need to own affordable houses, particularly the
poor and low-income group. A sum of RM568 million is provided to build 300 units under Projek
Bantuan Perumahan Bandar, 79,000 units under Program Perumahan Rakyat and 8,000 units under
Projek Bantuan Rumah Sewa. To assist estate workers to own houses, the Government will provide
Skim Pembiayaan Perumahan Kos Rendah with an allocation of RM50 million, managed by Bank
Simpanan Nasional. The scheme is open to all Malaysian permanent estate workers to assist them
to obtain housing loans with a maximum of RM60,000 for the purchase of low-cost houses at 4%
interest rate and a repayment period up to 40 years extending to the second generation.
85.The Government is aware of the difficulties faced by the rakyat, particularly young adults who
group, the Government will introduce Skim Rumah Pertamaku through Cagamas Berhad which
will provide a guarantee on down payment of 10% for houses below RM220,000. This scheme is
for first-time house buyers with household income less than RM3,000 per month. In other words,
the house buyers will obtain a 100% loan without having to pay the 10% down payment.
86.In addition, first-time house buyers will also be given stamp duty exemption of 50% on
instruments of transfer on a house price not exceeding RM350,000. The Government also proposes
that stamp duty exemption of 50% be given on loan agreement instruments to finance such firsttime
purchase of houses.
Enhancing Quality of Life of Rural Population
87.Efforts to develop rural areas began a long time ago. At the end of Emergency, the Government
established the Ministry of Rural and National Development to lead efforts to bring development to
rural areas. The Government is still committed to this endeavour although today approximately
60% of the population of Malaysia live in urban centres. In efforts to transform the country towards
a developed nation, the Government will not neglect the rural population. Development projects
and programmes to improve the quality of life of the rural population will be given priority. A sum
of RM6.9 billion is allocated to implement basic infrastructure such as water and electricity supply
as well as rural roads. Among the main projects to be implemented are to:
First:Build and upgrade rural roads in Sabah and Sarawak with an allocation of RM2.1 billion and
RM696 million in Peninsular Malaysia;
Second:Provide water and electricity supply in rural areas of Sabah with an allocation of RM1.5
billion, Sarawak RM1.2 billion and Peninsular Malaysia RM556 million;
Third:Implement the housing assistance programme to provide comfortable houses for the poor and
hardcore poor in rural areas with an allocation of RM300 million. This programme will involve the
construction and repair of 12,000 houses nationwide, particularly in Sabah and Sarawak; and
Fourth:Provide Unit Khas Bergerak Jabatan Pendaftaran Negara to facilitate rakyat in the interiors
of Sabah, Sarawak and Peninsular, to register for citizenship.
Easing Burden of the Rakyat
88.To increase food production, the Government will allocate RM974 million as price subsidy for
paddy, fertilisers and paddy seeds as well as RM230 million for production incentives and
increasing paddy yield. The Government will also allocate RM170 million in incentives for
fishermen as well as boat owners and workers to increase fish landing.
89.The Government is concerned with the issue of higher prices of goods faced by the rural
population, particularly in Sabah and Sarawak as well as selected areas in Peninsular Malaysia due
to high transportation costs. To standardise the prices across areas, the Government introduced the
Distribution of Essential Goods Programme for goods such as rice, cooking oil, sugar, flour, gas,
petrol and diesel in 2010 with an allocation of RM100 million. For 2011, a sum of RM200 million
is allocated for the programme.
90.In the Government’s dealings with the rakyat, the prices of retail good is often highlighted. In
this context, the Government will establish a “1Malaysia Smart Consumer” portal to help the
rakyat keep abreast with price movements of goods in almost 7,000 business premises nationwide.
Through this portal, consumers have the option to purchase goods at competitive prices.
Consumers can also utilise short messaging services (SMS) to obtain latest information on prices of
91.To strengthen the wholesale and retail sector, the Government will also introduce the Retail
Shop Transformation Programme (TUKAR), Automotive Workshop and Community Market
projects to upgrade and modernise facilities with an allocation of RM73 million.
92.The assumption that the Government is ignoring small contractors is unfounded. The
Government will continue implementation of Projek Penyelenggaraan Aset Awam or better known
as PIA/PIAS with an allocation of RM500 million. Among the activities are repairing and
upgrading of public amenities, drains, drainages, small bridges and rewiring as well as construction
of agriculture and kampung roads. The implementation of these small projects will assist Class F
contractors nationwide.
Appreciating Contributions of Community Leaders
93.The Government has always appreciated the role and contributions of community leaders. In
line with this, the Government will increase the monthly allowance for the Chairman of
Jawatankuasa Kemajuan dan Keselamatan Kampung (JKKK) and Persekutuan (JKKP), Tok Batin,
Chairman of JKKK Orang Asli, Chairman of Kampung Baru to RM800 compared with the RM450
currently.
94.To ensure this allowance is enjoyed by all community leaders, this allowance will also be
extended to the Ketua Kampung Baru Rangkaian and Ketua Kampung Bagan. The Government
will also increase the meeting attendance allowance to all committee members from RM30 to
RM50.
95.Effective January 2011, the monthly allowance of Imam will be increased from RM450 to
RM750, while the monthly allowance for KAFA teachers will be increased to RM800 compared
with the RM500 currently.
Development of Orang Asli and Pribumi
96.As we are aware, Malaysia is made up of multi ethnicity and cultures. We have never
discriminated the minority for they are also citizens of the country. Efforts to accelerate the nation
to a developed and high-income economy will be implemented inclusively by enhancing the
socioeconomic status of Orang Asli and Pribumi. A sum of RM100 million is allocated to
implement various programmes, including resolving Orang Asli land rights and border settlement
issues as well as formulating a new development model for Orang Asli. In line with this, Jabatan
Hal Ehwal Orang Asli will be restructured and strengthened as Jabatan Kemajuan Orang Asli.
Reducing Transport Cost
97.The Government is very concerned with the rising transport cost borne by the rakyat. To
alleviate the burden of highway users, I am pleased to inform that the toll rates in four highways
owned by PLUS Expressway Berhad will not be raised for the next five years, effective
immediately.
Expanding Public Health Services
98.The Government is committed to ensure that access to quality healthcare is available to all
rakyat. To achieve this objective, a total of RM15.2 billion is allocated to construct new hospitals,
increase the number of doctors and nurses as well as to obtain supplies of medicines and
equipment. Since 2009, 51 1Malaysia Clinics are in operation and the Government will provide an
additional 25 1Malaysia Clinics. Combating Crime, Securing Safety
crime index declined 38% while overall crime index declined 16%. In line with this, the
Government will allocate RM350 million to implement various programmes to combat crime,
including burglary, motorcycle and car thefts as well as promoting safe townships and Voluntary
Patrol Scheme in high-risk areas. The Government will establish an additional 25 special courts to
expedite prosecution.
Empowering Non-Governmental Organisations
100.The Government appreciates the contribution of civil society in providing services which
always been under the purview of the Government. This has to be viewed positively and as a
complimentary effort and should be encouraged further. The Government recognises the
contribution of Non-Governmental Organisations (NGOs) in overcoming social problems in
assisting the less fortunate and providing shelter facility as well as conducting training and
generating income.
101.In appreciation, the Government will allocate RM70 million for programmes and activities
involving selected NGOs to assist the Government in strengthening family institution and
addressing social ills such as baby dumping, mat rempit and gangsterism. The selected NGOs will
undertake an integrated programme with Government agencies, particularly in high-risk crime
areas to prevent crime at its root cause.
Preservation of Environment
102.To preserve, sustain and protect the environment, the Government will allocate RM1.9 billion
to finance environmental preservation projects, including implementing the River of Life
Programme and greening of Kuala Lumpur. The Government will also undertake efforts to
preserve marine sources and coastal areas including Pantai Siring in Melaka, Pantai Sabak in
Kelantan, Teluk Lipat in Terengganu and Rompin in Pahang.
Corporate Social Responsibility
103.Corporate Social Responsibility (CSR) is important in the implementation of community
projects. In 2011, Khazanah Nasional Berhad (Khazanah) in collaboration with the Ministry of
Education, will establish 10 Trust Schools which will be managed more professionally to ensure
students obtain quality education. Apart from the normal Government allocation, the Trust Schools
will also receive contributions from Khazanah.
104. To assist children, particularly those from the low-income group excel academically, the
1MDB will provide multi-vitamins for primary school students. It is hoped this programme will
enhance the mental development and strengthen the immune system of students.
105. Following a proposal from the youth lab, 1MDB will provide RM20 million to the 1Malaysia
Youth Fund. This fund will be utilised to instil the 1Malaysia spirit. In addition, 1MDB will
implement 1Malaysia Mobile Clinics with four buses as mobile clinics in collaboration with the
Ministry of Health.
FOURTH:STRENGTHENING PUBLIC SERVICE DELIVERY.
106.In steering Malaysia towards a developed nation, the Government, comprising 1.2 million civil
servants needs to continuously improve to enhance productivity.
Facilitating Dealings with Government Agencies
Government agency should be made easy. The Government will ease private sector dealings with
its agencies. Towards this, the MyCoID Gateway initiative utilising the Companies Commission of
Malaysia’s single reference number has been implemented. This initiative will be extended to other
ministries and agencies.
108.The Government will introduce a point system to facilitate applications for permanent resident
status (PR). The application for PR may be submitted after 5 years of residence compared with 10
years previously. With this system, applications for PR will be more transparent, expeditious and
objective based on clear criteria.
109.To expedite the process of property registration, the Stamp Act 1949 was amended to enable
the Valuation and Property Services Department assess properties after the payment of stamp duty
to the Inland Revenue Board. This improvement will reduce the property registration process from
30 days to one day.
Refining Appraisal System
110.Civil servants are an important component in the nation’s effort to realise its vision. Without
efficient, effective and dynamic policy formulators, the nation’s vision will remain a dream. In
relation to this, in our continuous effort to provide a more responsible, relevant and holistic
framework of assessment as well as taking into account the feedback from civil servants, the
Government agrees to abolish the Competency Level Assessment or PTK and replace it with a
more suitable evaluation system by June 2011, which is acceptable to civil servants.
Appreciating Civil Servant’s Contributions
111.The Government appreciates the contribution and full commitment of civil servants in ensuring
the success of Government initiatives including the GTP and the ETP. The Government will:
First:Reduce the burden of civil servants in coping with schooling expenses by providing a Special
Financial Assistance amounting to RM500. This assistance will be provided to all civil servants
from Grade 54 and below, including contract officers and retirees. The payment will be made in
December 2010;
Second:Increase the rate for Funeral Arrangement Assistance to RM3,000 from the current
RM1,000 in line with rising funeral expenses. This assistance is also extended to retired civil
servants; and
Third:Extend the services of Pegawai Khidmat Singkat (PKS) for an additional period of one year
from December 2010. However, Ministries and agencies are not allowed to increase the number of
PKS.
112.To facilitate civil servants in owning houses as well as improving the terms and conditions for
housing loans, the Government will:
First:Allow the purchase of properties from parents, children and siblings;
Second:Raise the amount of loan from RM10,000 to RM20,000 for additional works on low-cost
houses for Support Group II; and
Third:Raising the maximum loan eligibility to RM450,000 compared with RM360,000 currently.
2011 BUDGET ALLOCATION
113.The Government is committed towards accelerating the transformation process by ensuring
projects and programmes under the 10MP, NKRA and NKEA are implemented successfully. To
implement these strategies and measures, I propose an allocation of RM212 billion for the 2011
Budget, which is 2.8% higher than the allocation for 2010. Of this, RM162.8 billion is for
Operating Expenditure and RM49.2 billion for Development Expenditure.
114.Under Operating Expenditure, RM45.6 billion is allocated for Emoluments, RM28.2 billion is
for Supplies and Services, RM86.4 billion is allocated to Fixed Charges and Grants, and RM1.4
billion is for the Purchase of Assets and RM1.2 billion for Other Expenditures.
115.As for Development Expenditure, a sum of RM28.3 billion is allocated to the economic sector
for infrastructure, industrial, agricultural and rural development. A total of RM15.5 billion is
allocated to the social sector, including education and training, health, welfare, housing and
community development. A sum of RM4.4 billion is allocated for development of the Security
Sector, RM955 million for General Administration and RM2 billion Contingencies.
116.Federal Government revenue collection is estimated to increase 2.3% to RM165.8 billion in
2011, compared with RM162.1 billion in 2010. Taking into account the estimated revenue and
expenditure, the Federal Government deficit for 2011 is expected to further decline to 5.4% of
GDP, compared with 5.6% in 2010.
CONCLUSION
117.The strategies and programmes in this Budget have been designed to meet the aspirations of
the rakyat. We want to build a nation where every rakyat will be able to enjoy the benefits of
development. We want a Malaysia where everyone can attain success through hard work and
perseverance.
118.This Budget has taken into account the needs of the rakyat. This Budget is possible due to the
efficient and prudent financial management thus far.
119.My Cabinet members and I share the vision to continue the noble tradition of bringing
prosperity to all segments of society. This is not impossible, neither is it wishful thinking. Facts and
history have proven that the Government is capable of bringing development.
120.We have successfully transformed the nation from a low-income agriculture-based to a modern
middle-income industrial-based economy.
121.We succeeded in increasing the income per capita from USD260 during early independence to
more than US$D8,000 today.
122.We have reduced poverty from 60% to 3.8% and are on target to eliminate hardcore poverty as
well as succeeded in creating a dynamic middle class.
123.In fact, prudent financial management has enabled us to weather the 1997/1998 financial crisis
through firm and unorthodox measures. As a result, criticism has turned to praise and prejudice to
admiration. Also, in 2008 the Government took immediate measures to revive the economy by
introducing the stimulus packages and mini budget when we were hit by the economy’s tsunami.
Again the people were insulated from a difficult time and they only felt minimum impact.
on our record of excellent performance.
124.Despite challenges, we will not retreat from this noble mission, as truth is in our favour basedThe above improvements to housing loans will be effective 1 January 2011.107.It is clear that the role of the Government is to facilitate and not frustrate. Dealings with any99.Public safety is important in creating a safe environment. In the first 9 months of 2010, the streetgoods.have just joined the workforce with income less than RM3,000, to own a house. To assist thisTHIRD STRATEGY:ENHANCING QUALITY OF LIFE OF THE RAKYATCouncil will determine the rate and mechanism of minimum wage. The basic salary of postmen64.Strengthening institutions of higher learning to be world-class is a key agenda of theIntensifying Efforts to Attract TalentDepartment as a one-stop centre to formulate policies and strategies for a conducive ecosystem to40.The Government will extend the investment allowance period for the last mile broadbandSeventh:Extend income tax deduction incentive for investors and income tax exemption forAdvancing Green Technology26. To further promote innovation in Islamic securities products, the Government proposes that21. The Mass Rapid Transit (MRT) in Greater KL (Klang Valley) will be implemented beginningFirst:Reinvigorating Private Investment;same period last year. The global economy is also expected to recover 4.8% compared with -0.6%
125.We are not dreamers. We are realists. Our success is not mere coincidence but the result of
125.We are not dreamers. We are realists. Our success is not mere coincidence but the result of
clear and careful planning as well as firm implementation.
126.The Government will not take the easy way out or sacrifice the nation’s long-term interests for
short-term popularity. Rest assured, we will not leave a country laden with problems to the future
generations.
127.Thus, the rakyat must realise that they and their children’s future is invaluable to be
surrendered to irresponsible parties.
128.Indeed, this Budget is the 53rd Budget after Independence tabled by the same Government.
Through 53 Budgets, 10 Development Plans, three Outline Perspective Plans and one National
Mission, the 2011 Budget is crucial and is the first step towards positioning Malaysia as a
developed and high-income economy.
129.We must remember that Malaysia is our blessed homeland where we were born, where we
were raised, where we seek opportunities, where we achieve success and here we shall be laid to
rest.
130.To Allah, we seek His blessings.
Mr. Speaker Sir,
I beg to propose.
Full text of PM’s Budget 2011 speech
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