The Budget 2012 and Its Focus on Education

Under the present administration, our Prime Minister leads with the guiding philosophy of 1Malaysia “People’s First, Performance Now”. This was followed by the implementation of the Government Transformation Programme (GTP) with seven National Key Result Areas (NKRAs), the Economic Transformation Programme (ETP) with 12 National Key Economic Areas (NKEAs) and the New Economic Model with eight Strategic Reform Initiatives (SRIs). More recently, the Political Transformation Programme was introduced to enable major changes in legislation that will allow Malaysia to become a modern, progressive and a functional democracy. To complement this, the Government will introduce several other transformation programmes. All these will culminate into the National Transformation Policy or DTN, effective from 2011-2020.

In line with these transformation programmes, the highlights of the Budget 2012 themed “National Transformation Policy: Welfare for the Rakyat, Well-Being of the Nation” as tabled by Prime Minister Datuk Seri Najib Tun Razak in Parliament on 7 October 2011 are that our FDI growth last year was the strongest in Asia and in the first 6 months of this year have already reached RM21.2 billion. It was also stated that GDP in the first 6 months of 2011 was 4.4%, driven by strong domestic consumption. In 2011, the economy is forecast to grow by 5-5.5%.

In 2012, private investment is forecast to climb 15.9%, supported by foreign and domestic investment. Also, the service sector is expected to grow 6.5%, the construction sector 7% and Gross Domestic Product (GDP) is forecast to be between 5 and 6%.

Overall, RM232.8 billion will be allocated to implement all government development plans, focusing on the well-being of the rakyat, with RM181.6 billion for
operating expenditure and RM51.2 billion for development expenditure.
In the first focus of the Budget 2012, that is ‘ACCELERATING INVESTMENT’, it was stated that the services sector is the largest contributor to the nation’s economy, accounting for almost 58% of GDP. Under the 10MP, the Government targets this sector to contribute 60% of GDP by 2015. As a result, the Government will further liberalise 17 services subsectors in phases in 2012 which include private hospital services; medical and dental specialist services; architectural, engineering, accounting and taxation, legal services; courier services; education and training services; as well as telecommunication services. This initiative will allow up to 100% foreign equity participation in selected subsectors.

In particular, the budget also outlined several changes for the education sector and sectors related to education. During his speech, the Prime Minister said, “Knowledge is the pillar of civilisation and the foundation for excellence. Therefore, to achieve the aspiration of becoming a developed and high-income country, the Government continues to give priority to the development of the education system to produce talented, highly-skilled, creative and innovative workforce.”

First, RM50.2 billion has been allocated for the education sector in 2012 to develop talented, creative and innovative people. This is coupled with a development allocation of RM1.9 billion for the Education Ministry to be spent on all types of schools, namely, national schools, national-type Chinese and Tamil schools, mission schools and Government-assisted religious schools.

Second, RM13.6 billion will be allocated to the social sector, which includes education, training, health, welfare, housing and community development
  Third, RM1 billion will be provided through a special fund for the construction, improvement and maintenance of schools, particularly to cater to their immediate needs.

Next, in order to provide a brighter future for all Malaysian children irrespective of their socioeconomic background, the Government will ensure quality and affordable access to education. Currently, students in primary and secondary schools are still required to pay RM24.50 and RM33.50, respectively, for co-curriculum, internal test papers, Malaysian Schools Sports Council fees and insurance premium. To ease the burden on parents, it is proposed that these payments be abolished commencing the 2012 school year. With this announcement, for the first time in history, primary and secondary education is provided free. The abolition of these payments would involve an allocation of RM150 million.

Fifth, the Government proposes that private schools registered with the Ministry of Education and who complies with stipulated regulations be given the following incentives:

* Income tax exemption of 70% or Investment Tax Allowance of 100% on qualifying capital expenditure for a period of 5 years;
* Double deduction for overseas promotional expenses to attract more foreign students; and
* Import duty and sales tax exemptions on all educational equipment.

It is hoped that the savings accrued to the private school operators will subsequently result in the reduction of school fees to ease the burden of parents.

Sixth, the 2012 Budget focuses on developing human capital, creativity and innovation and 2012 will be the National Innovation Movement year. As such, the Government has allocated RM100 million to promote innovation including the 1Malaysia Award (C1PTA) for innovative student inventions.

Next, in terms of taxation, financial contributions from companies and individuals to upgrade school facilities will be eligible for tax deductions. This is aimed at encouraging more charitable initiatives. Further, to encourage human capital development from the private sector, incentives including a double deduction on scholarships will be offered.

To allow civil servants and teachers to have a better career path and brighter promotion prospects, the Government will offer tuition fee assistance to further their studies on a part-time basis. In 2012, the Government with the cooperation of public institutions of higher learning will offer 5,000 master and 500 doctoral scholarships for eligible civil servants, including teachers with an allocation RM120 million. The Government will also offer 20,000 places for diploma teachers to pursue their undergraduate studies.

Lastly, as part of its efforts to ease the burden of the rakyat’s high cost of living, a one-off book voucher worth RM200 will be given to all Malaysian students in public and private local institutions of higher learning, matriculation as well as Form 6 students nationwide. This assistance is expected to benefit 1.3 million students with an allocation of RM260 million.