Putrajaya defers electricity tariff hike, national service as it cuts expenditure



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PUTRAJAYA (Jan 20): A postponement in the electricity tariff hike and a halt to the National Service Training Programme (PLKN) this year are two highlights in Putrajaya's revised budget that will bring some cheer to Malaysian consumers.

The scheduled gas price hike for the industrial sector has also been postponed, Prime Minister Datuk Seri Najib Razak announced today in revisions to the national budget for 2015.

Deferring the national service training programme for one year will save some RM400 million as government tries to trim expenditure and stimulate investment and consumption.

Overall, the government's operating expenditure is expected to be reduced by RM5.5 billion through reprioritising spending, Najib said.

Spending on development will be maintained at RM48.5 billion, as originally tabled in October last year.

Najib said this would include people-centric projects such as public housing, flood mitigation, water supply, electricity and public transport infrastructure such as the Pan-Borneo Highway.

His revisions are in view of falling oil prices which are now around US$50 per barrel.

Budget 2015, when tabled in October last year, had a projected expenditure of RM273.9 billion in expenditure and RM235.2 billion in revenue. It was pegged to oil prices of around US$100 per barrel.

The slide in prices, which has drastically affected the ringgit's value as Malaysia is an oil exporter, has seen calls by economists for Putrajaya to revise the budget.

The following are the main points of Najib's announcement at a special session at the Putrajaya International Convention Centre today.

To boost exports of goods and services, as well as domestic consumption:

* Promote import-substitution services, such as shipping, port, education and professional services.

* Improve logistics and trade infrastructure.

* Reviewing the levy on foreign workers.

* Free entry visas for visitors, including those from China.

* Priority in project tenders to local contractors registered with the Construction Industry Development Board (CIDB).

* Local contractors to repair and rebuild in flood-hit areas. (Contractors in the G1, G2 and G3 categories.)

* More promotion of Malaysian-made goods.

* Extending the frequency and period of Mega-sales nationwide.

* Encourage domestic tourism through competitive pricing of domestic flights.

To speed up private investment:

* Set up a Services Sector Guarantee Scheme amounting to RM5 billion for SMEs in the services sector, with maximum financing of RM5 million and a 70% government guarantee.

* Encourage GLCs and GLICs to invest domestically.

* Further reduce the cost of doing business by postponing the scheduled electricity tariff hike, and for the industrial sector, the gas price hike.

* Allocate 30% of the annual procurement budget of government agencies and GLCs for goods and services to local SME producers.

* Increase local goods and services in government procurement.

For rebuilding in flood-stricken states, welfare assistance for flood victims and aid for affected businesses:

* RM800 million for repair and reconstruction of basic infrastructure such as schools, hospitals, roads and bridges;

* RM500 aid for each household affected by floods

* RM5,000 for families who suffered a death caused by the floods.

* Bank Negara special relief facility of RM500 million with interest rate of 2.25%.

* Repayment of loan to only begin after a six-month grace period by Bank Simpanan Nasional (BSN), Agrobank, SME Bank, Tabung Ekonomi Kumpulan Usaha Niaga (Tekun) and Amanah Ikhtiar Malaysia (AIM).

* RM893 million for flood mitigation measures.

* To build stilt houses up to 8 feet (2.4m) for flood victims who lost their homes on their own land.

* Hand over 1,000 low-cost houses which have already been built in Gua Musang

* An additional RM100 million each to Tekun and AIM to support small and medium-scale businesses affected by floods.

* Bank Negara to introduce a Special Relief Facility of RM500 million to provide loans to SMEs with a concessionary interest rate of 2.25%.

* Bank Rakyat will offer special personal loans at 3.9% interest with loan repayment installments to begin six months after disbursement.

* RM500 million by financial institutions with a 70% guarantee under a Flood Relief Loan Guarantee Scheme.

* Small and medium-scale enterprises in flood affected areas exempted from levy payment to the Human Resources Development Fund (HRDF) for a period of six months with effect from February 1, 2015.

To increase revenue:

* Encourage companies to register with Customs for Goods and Services Tax (GST) implementation, which will contribute an additional RM1 billion in GST collection.

* Increase collection of dividends from GLC and GLIC, expected additional revenue of RM400 million.

To cut expenditure:

*Defer the PLKN for 2015 which will save RM400 million.

* Review government's overseas travel, events and functions and use of professional services, resulting in potential savings of RM1.6 billion.

* Review transfers and grants to statutory bodies, government-linked companies (GLCs) and government trust funds. This will result in savings of RM3.2 billion.

* Reschedule procurement of non-critical assets, such as office equipment, software and vehicles, with an expected savings of RM300 million.