Prime Minister Najib Razak yesterday unveiled a slew of giveaways for civil servants, home buyers and taxi drivers, as well as cash handouts totalling RM6.8 billion (S$2.3 billion) for more than half of Malaysian households, in a Budget speech that pointed to impending national elections.
He projected higher revenues next year to allow his government to increase spending while still holding to its commitment to trim its fiscal deficit.
Federal government debt has nearly doubled since Datuk Seri Najib took power in 2009, bringing his commitment to fiscal discipline into focus.
"As the saying goes, save for a rainy day, we have laid strong foundations for the country's long-term financial and economic position," said Mr Najib, in a speech that was telecast live over radio and television.
He then announced raising the popular 1Malaysia People's Aid cash handouts for lower-income Malaysians to a maximum of RM1,200 per household.
Malaysian Budget highlights
•The 2017 Budget allocation of RM260.8 billion (S$87 billion) is 3.4 per cent higher than the previous year's.
•The economy is expected to grow 4 per cent to 4.5 per cent this year, and 4 per cent to 5 per cent next year.
•Fiscal deficit is at 3.1 per cent of gross domestic product this year, and 3 per cent next year.
•Malaysians listed as T20 (Top 20 per cent of population), M40 (Middle 40) and B40 (Bottom 40). B40 has household income of below RM3,900 a month; M40, between RM3,900 and RM8,300; and T20, above RM8,300.
•Government aims to raise disposable incomes of B40 and M40 groups.
•Goods and services tax (GST) of 6 per cent to be maintained next year.
•Government collected RM30 billion in GST payments as of Wednesday, helping offset revenue losses of RM30 billion from global drop in oil prices.
•Annual direct cash handouts via BR1M will total RM6.8 billion, from RM5.9 billion this year.
•1.6 million civil servants will get one-off RM500 "special assistance" cash, and higher housing and motorcycle loans.
•30,000 homes will be sold to civil servants at 20 per cent below market prices.
•30,000 homes to be built and sold at below market prices to first-time buyers.
•RM1.3 billion to subsidise seeds and fertilisers for padi farmers.
•RM4,000 rebate for those who do not own a car, if they buy the compact Proton Iriz.
•Grant of RM5,000 to taxi drivers to buy new vehicles; retirement schemes for them to be introduced.
•440,000 rubber tappers and smallholders to get RM200 each in November, December and January due to rainy season, and 57,000 fishermen to continue getting RM200-RM300 a month.
•11,250 homes being built for the "very poor" to be sold at between RM35,000 and RM42,000.
Increase in 2017 Budget allocation, of RM260.8 billion, over the previous year.
Rate of GST to be maintained next year.
The measure, which will cost RM6.8 billion, will reach more than half the country.
The country's more than 1.6 million civil servants will get special bonuses. They will also get loans to buy smartphones as well as bigger loans to purchase motorcycles and homes.
They will be also offered houses at below-market prices.
There will be discounts on repayment of student loans as well as tax relief on the purchase of smartphones and tablets.
First-time home buyers will get more stamp duty exemptions while small businesses will get tax cuts.
The opposition decried the populist spending, calling the giveaways one-off measures.
"This is an attempt to buy votes and the hearts of the people ahead of the elections," said Parti Keadilan Rakyat vice-president Nurul Izzah Anwar.
The elections, which are due by August 2018, are expected next year.
In a reference to graft claims against Mr Najib, she said: "Without real meaningful reforms and the country's No. 1 kleptocrat doing this, we have to be prepared for harder times ahead."
Mr Najib, however, said: "This government has delivered, we are still delivering and most importantly, we will continue to deliver."
He added that the Budget deficit, which was 3.1 per cent of gross domestic product this year, can be cut to 3 per cent next year.
A projected 3 per cent bump in government revenues - mostly corporate tax and petroleum-related income - allows the government to increase spending.
As the saying goes, save for a rainy day, we have laid strong foundations for the country's long-term financial and economic position.
DATUK SERI NAJIB, on having fiscal discipline.
This is an attempt to buy votes and the hearts of the people ahead of the elections.
PARTI KEADILAN RAKYAT VICE-PRESIDENT NURUL IZZAH ANWAR, on the slew of giveaways.
A combination of the oil price crash and damaging allegations that Mr Najib took billions of ringgit from troubled state investor 1Malaysia Development Berhad has weighed down the country's economic prospects. The value of the ringgit has shrunk by as much as 40 per cent against the US dollar.
But the government is predicting better days ahead.
It projects 4 per cent to 5 per cent economic growth next year, likely accelerating from the 4.1 per cent recorded so far this year.