Malaysia's Budget 2022: Key takeaways for employers and HR to note

From the guarantee of 600,000 job opportunities, to targeted support for the recovery of COVID-impacted sectors, here's a brief look at what's on offer in Budget 2022.

Malaysia's Budget 2022 was announced in Parliament on Friday (29 October 2021), which Finance Minister Tengku Zafrul Aziz noted builds upon three key pillars - strengthening recovery, building resilience, and driving reforms.

As such, the Budget will cover three main focus areas:

• Goal #1: Rakyat's wellbeing;
• Goal #2: Resilient businesses, and
• Goal #3: A prosperous and sustainable economy.

This article's coverage will focus on the key aspects for employers to know:

Generating and sustaining jobs

This initiative falls under goal #1.

In 2022, the Government under the Jamin Kerja Keluarga Malaysia (JaminKerja) initiative will guarantee 600,000 job opportunities with an allocation of RM4.8bn.

It will also, via SOCSO, continue with the hiring incentive via the JaminKerja initiative, with a target of 300,000 people and an allocation of RM2bn. Under this initiative, for employers who hire Malaysians who have not been actively employed, the Government will provide an incentive of 20% of the monthly salary for the first six months, and 30% for the next six months, subject to jobs with a salary of RM1,500 and above.

In addition, to encourage employers to provide employment opportunities for targeted groups like the disabled, Orang Asli and ex-convicts, the Government will provide an incentive of 30% of the monthly salary for the first six months and 40% for the next six months for hiring from this category subject to jobs with a salary of RM1,200 and above.

To encourage women to return to the workforce, this incentive is also extended to employers who employ women who have been unemployed for more than 365 days, single mothers and housewives.

Further, the Malaysia Short-term Employment Programmes (MySTEP) initiative will be continued next year by offering 80,000 contract employment opportunities covering 50,000 jobs within the public sector and 30,000 jobs within Government Linked Companies from January 2022.

This budget, Tengku Zafrul noted, also targets 220,000 trainees to undergo various upskilling and reskilling programmes with a total allocation of RM1.1bn. Among the programmes that will be implemented is the place-and-train programme. In addition, the upskilling programme in collaboration with industries will be enhanced by prioritising digital skills such as the GLOW programme under MDEC.

The minister said: "It is hoped that through the implementation of the JaminKerja initiative as well as the economic recovery measures, the country's unemployment rate will reduce to 4% thus returning the nation to full employment. 

Apart from the above, to encourage Malaysians to pursue training programmes and acquire new knowledge, the limit of individual income tax relief for upskilling and self-enhancement course fees will be increased from RM1,000 to RM2,000 and extended to year of assessment 2023. Those who undertake courses with any professional bodies will also be eligible for a tax relief of up to RM7,000. Approved courses include professional courses in accounting, finance and ESG-related.

Women empowerment 

This initiative also falls under the wider umbrella of goal #1.

Tengku Zafrul said: "When we speak of women, they represent the best in this world and to be appreciated as our partner even in the hereafter. Women, if given the opportunity and space can be the main driving force for national productivity and economy. We should ensure that women are able to fulfil their potential in contributing to our shared wellbeing.

"The contribution of women in the economy has never been denied but needs to be strengthened. Currently, women hold 25% of Board positions on the top 100 public-listed companies. However, 27% or 252 companies listed on Bursa Malaysia still do not have any female directors."

In line with this, and "recognising the role of women in the decision-making process and to strengthen the governance and effectiveness of boards", the Government, through the Securities Commission, will make it mandatory for all public-listed companies to have at least one woman Board member. 

This initiative will take effect from 1 September 2022 for large cap companies, and from 1 June 2023 for the remaining listed companies.

Additionally, the Government will allocate RM5mn to the Women Leadership Foundation to boost women's participation in the economic sector through, among others, youth leadership training and entrepreneurship programmes.

To improve the existing support system for working mothers, RM30mn will be provided for childcare in Government buildings, especially in public hospitals and universities. The Government will also encourage private sector employers to adopt flexible working arrangements, as well as to provide childcare facilities at the office.

For this, other than through tax incentives, the Government will also amend guidelines to better facilitate childcare to operate above the first floor of office buildings.

Ease of doing business

Under goal #2, this initiative will include:

• A proposed extension of the tax deduction of up to RM300,000 on the cost of for renovating and refurbishing business premises until 31 December 2022, so firms can comply with relevant SOP requirements such as ventilation and customer seating.
  
  
• Additionally, for companies registered under Safe@Work, a further tax deduction of up to RM50,000 on rental expenses of employees' accommodation premises will be extended until 31 December 2022.
  
  
• To increase opportunities for participation in Government procurement, it will also simplify the requirements for registration where companies registering for the first time will only be required to pay RM150 compared to RM450 previously. Companies operating in SOHO business premises, shared partitions and co-working spaces are also allowed to register.
  
  
• To make it more convenient for business visitors and investors, a Business Traveller Centre was opened at Kuala Lumpur International Airport to facilitate the arrival of Short-term Business Visitors who are exempted from mandatory quarantine, subject to strict SOP compliance. Next year, a similar one-stop centre will be set-up in Johor for Short-term Business Visitors from Singapore at a cost of RM10mn.

Investments in key sectors

Under goal #2 as well, this initiative will include:

• A special fund for strategic investments up to RM2bn,  to attract strategic foreign investments by multinational companies, especially those that complement industry value chains and drive knowledge-based jobs creation as well as development opportunities for local SMEs.
  
  
• RM25mn allocated to explore high impact investments and new export markets through the Trade and Investment Mission.

• To fulfil skills requirements especially in high value-added industries, an allocation of RM80mn will be prepared through MITI to train 20,000 workers to support industrial clusters such as MRO in Subang, E&E in Kulim and Chemicals in Gebeng. An additional RM50mn will also be provided through state skills development centres, such as in Sarawak, Johor, and Penang, to improve the TVET skills of 5,000 workers in areas such as oil and gas welding, industrial automation and mechatronics.

Science, technology & innovation

Another initiative under goal #2, this will cover the following:

• In line with the aim of the Malaysia Digital Economy Blueprint, the MyStartup strategy will be executed in phases to benefit over 2,500 companies and create 5,000 job opportunities. 

• The Government will also allocate RM45mn as a technological transformation incentive for SMEs as well as mid-stage companies in the manufacturing and services sectors, in line with Industrial Revolution 4.0 or Industry4WRD.

Facilitating recovery in COVID-impacted sectors

As part of goal #3, this segment covers initiatives to support the tourism, creative, and retail sectors:

Tourism

Several initiatives, totalling RM1.6bn, will be implemented, including:

• The implementation of the Wage Subsidy Program (WSP) targeted for the tourism industry players. The Government will continue the WSP initiative specifically for tour operators whom experienced decline in revenue of at least 30%. With an allocation of RM600mn, this initiative will benefit more than 26,000 employers and 330,000 employees;

• Specific financing for the tourism sector of RM600mn under PENJANA Tourism Financing and BPMB Rehabilitation Scheme;
  
  
• Special Assistance to more than 20,000 tour operators registered under the Ministry of Tourism, Arts and Culture for a period of three months with an allocation of RM85mn;
  
  
• Maintenance of tourism infrastructure with an allocation of RM50mn including the Sultan Abdul Samad Building and Lembah Bujang in Kedah;
  
  
• Matching grants for repair purposes to 738 budget hotels registered under MOTAC as well as repair grants for registered home stay owners with an allocation of RM30mn;
  
  
• Matching grants to companies who organise programmes related to arts and culture with an allocation of RM50mn, and
  
  
• An incentive fund for the purpose of promotional activities as well as domestic tourism, with an allocation of RM60mn.

Creative

• A total of RM188mn has been provided to continue initiatives such as the Digital Content Fund, Digital Multimedia Content project, Film Incentive, Perkasa Modal Insan Program, and SOCSO protection for artists.
  
  
• In addition, the Government will make the Program Riuh Keluarga Malaysia a success through an investment loan matching fund amounting to RM20mn. The move is expected to provide 5,000 new job opportunities.

Retail

• For 2022, special focus will be given to help local social enterprises, halal, handicraft, agricultural and entrepreneurial enterprises to switch to digital services. The Government will also continue the Shop Malaysia Online and Go-eCommerce Onboarding campaigns, which havethus far benefited more than 500,000 local entrepreneurs, with an allocation of RM250mn.

• Micro SME entrepreneurs are eligible to receive benefits of up to RM2,000 for e-commerce implementation activities, training in marketing and digital payments. As an initiative to support the recovery of the tourism sector, the Government encourages the use of Shop Malaysia Online vouchers at business premises and for the purchase of tickets in tourist attractions such as zoos and theme parks.

• The Government, through PERNAS, will provide RM74mn, among others, for training programmes and business guidance and a simple zero financing scheme for the first six months together with a moratorium.

Access to public healthcare facilities

In efforts to prioritise public health and build national resilience as the country moves to an endemic phase, RM32.4bn will be allocated to the Ministry of Health for its operating and development expenditure.

This, Tengku Zafrul shared, is the second largest allocation after the education ministry's.

As a first step in this initiative, an additional RM4bn will be provided specifically to continue the agenda on managing COVID-19, which includes RM2bn to fund the vaccination programme.

Additionally, another RM2bn will be provided to enhance the capacity of public health service facilities including the purchase of medicine, consumables, personal protective equipment (PPE) and health kits.

In order to continue the fight against COVID-19, the Government also intends to procure antiviral drugs that have been found to be effective against various viruses including COVID-19.

Most importantly, the National COVID-19 Immunisation Programme will be further enhanced to provide the third dose of the COVID-19 vaccine as a booster shot to all adults as well as continuing the vaccination of children aged 12 to 17 years old.

"The Government has signed agreements to procure 88 million doses, which is equivalent to 140% of our population and this is sufficient to provide a third dose to all residents aged 12 years old and above," Tengku Zafrul pointed out. This will cost RM6bn.

"At this juncture, I would like to express my appreciation to all Yang Berhormat, who have unanimously approved the amendment to the Act, to allow the usage of Kumpulan Wang Amanah Negara funds to finance the procurement of COVID-19 vaccines. With the amendment, the Government will optimise its resources to fulfil the vaccination needs of the nation in ensuring our recovery and build resilience of the rakyat and businesses."

For next year, he added, the Government proposes to provide individual tax relief and tax deduction to employers on costs associated with the adoption of self-funded booster vaccines.

Apart from the above, public health aspects will also be "given due attention."

• To foster a culture of healthy living as well as address non-communicable diseases such as diabetes, high blood pressure and obesity, the Government will continue to drive the national health awareness programme, Agenda Nasional Malaysia Sihat.

• It will also strengthen the clinical management of patients with rare diseases in Malaysia, such as lysosomal.
  
  
• In support of a healthy lifestyle, the Government proposes to expand the imposition of excise duty on sugary drink products in the form of pre-mixed chocolate or cocoa, malt, coffee, and tea. The Government also plans to impose excise duty on liquid or gel products containing nicotine that are used for electronic cigarettes and vaping.
  
  
• To support the effectiveness of public health services, the Government will work with the Red Crescent Society and St. John Ambulance to improve access and responsiveness of ambulance services.

• The Government has agreed to extend the contracts of more than 10,000 medical, dental and pharmaceutical officers for a maximum of four years after their two-year compulsory service period to ensure continuity of their service and also as preparation for their specialist training.
  
  

• The Government has also agreed to approve the sponsorship of medical specialist programmes with an allocation of RM100mn, for the benefit of 3,000 medical and dental contract officers.

Beyond these, Tengku Zafrul also shared a greater focus on mental health issues, with an allocation of RM70mn to ensure these issues are "continuously given due priority, by among others, to strengthen mental health support services, counselling and psychosocial support, increase mental health advocacy programmes, and strengthen the role of NGOs as partners on mental health programmes."

The Government is also proposing to expand the scope for individual income tax relief for full medical check-up expenses to cover the cost of check-up or consultation service related to mental health, from registered psychiatrists, clinical psychologists, and counsellors. 

Further initiatives include:

Direct cash assistance and welfare

First, in the coming year, cash assistance initiative will be enhanced. The Government will introduce the Bantuan Keluarga Malaysia (or BKM) cash assistance with specific enhancements to "ensure that those who are really affected, will be given greater attention."

Tengku Zafrul noted: "These improvements have taken into account suggestions received from the public via the publication of the Public Consultation Paper on improving assistance to the rakyat.

"For 2022, the BKM will channel assistance of RM2,000 to households earning less than RM2,500 per month with three or more children. This assistance is an increase compared to the previous Bantuan Prihatin Rakyat (or BPR) where the highest assistance rate was RM1,800."

Next, as an enhancement for 2022, the Government will also provide an additional assistance of RM500 to single parent households earning a monthly income of up to RM5,000. An additional assistance of RM300 will also be provided to senior citizen households.

This means that a single mother or father with three or more children is eligible to receive a maximum BKM of RM2,500, the minister shared.

In total, BKM is expected to benefit more than 9.6mn recipients with an allocation of RM8.2bn, up from 8.6mn recipients and an allocation of RM7bn under the BPR (Bantuan Prihatin Rakyat).

In relation to the welfare assistance that is managed by the Social Welfare Department (JKM), the income eligibility requirement will be increased in line with the 2019 Food Poverty Line Income at RM1,169, compared to the 2016 Poverty Line Income of RM980.

"Therefore, with this increase, more people will enjoy the welfare benefits from JKM resulting in an expected increase in allocation of RM200mn. In total, RM2.4bn will be provided for the distribution of welfare assistance to benefit more than 440,000 households in need."

Last, in 2022, the Government will provide RM25mn to Yayasan Keluarga Malaysia to lead the efforts to protect the welfare, education and future of children who have lost their parents to COVID-19. In addition, the Government will also encourage all parties, especially the corporate sector, to contribute towards their welfare.

Quality education for all

The Ministry of Education Malaysia will continue to receive the largest allocation of RM52.6bn (16% of the total estimated Federal expenditure), while the Ministry of Higher Education will be allocated a total of RM14.5bn.

The Government has agreed to provide an Early Schooling Assistance of RM150 per student, an increase from the previous RM100. A total of RM450mn will be allocated, which is expected to benefit 3mn eligible students.

An allocation of RM1bn will also be provided for school maintenance and upgrading works, and the Government will continue to upgrade dilapidated schools with an allocation of RM746mn. The bulk of this allocation will go towards upgrading 112 and 165 dilapidated schools in Sabah and Sarawak respectively.

To strengthen the agenda for special needs education, the Government will provide RM50mn, among others, to fund the purchase of teaching aids and to improve the facilities in special needs schools.

In addition, a total of eight new blocks for special needs education will also be built, among them at SMK Tuanku Lailatul Shahreen in Perlis and SMK Agama Alor Gajah in Melaka.

Further, to ensure students from low-income families receive their daily nutritional intake for wholesome physical and mental development, the Government proposes to provide daily milk as part of the Supplementary Food Programme, with an allocation of RM400mn. Part of the procurement under this programme will be earmarked for local milk producers.

Tengku Zafrul added: "In appreciation of the services rendered by teachers who went the extra mile for their students during the pandemic period, this Budget provides an RM100 one-time Special Incentive for Teaching Aids to more than 400,000 teachers under the Ministry of Education."

For the TVET sector - to strengthen this area, the Government will provide RM6.6bn to implement various initiatives under the relevant ministries and agencies. Emphasis will be on meeting the current needs of the industry.

Accordingly, an additional allocation of RM200mn will be provided for collaboration with industries including the National Dual Training System and industry certification programmes.

View a summary of all measures here, as well as Tengku Zafrul's full speech here.

According to Tengku Zafrul, Budget 2022 is aligned to the framework of the 12^th Malaysia Plan, and has been formulated as a continuation of the past economic assistance and stimulus packages.

It is also equipped with new initiatives to deliver an inclusive, sustainable and balanced Budget 2022. "Taking into account the aspirations, dreams and needs of Keluarga Malaysia, and together with projected higher Government revenue at RM234bn in 2022, the Government will maintain an expansionary budget," he noted. 

Budget 2022 will be the largest budget to-date, with an allocation of RM332.1bn. From this allocation, the Government will provide RM233.5bn for operating expenditure, RM75.6bn for development expenditure, and RM23bn under the COVID-19 Fund.

A total of RM2 billion was also provided as contingency reserve advance warrant. Even with an expansionary budget in place, the fiscal deficit is projected to reduce to 6% to GDP compared to a fiscal deficit of 6.5% to GDP in 2021, Tengku Zafrul shared.

Photo / Kementerian Kewangan Malaysia's Facebook page