The Ministry of Finance (MOF) said it was considering introducing a new Public-Private Partnership (PPP) Masterplan in the upcoming Budget 2025. This is scheduled to be tabled in Parliament on Oct 18. The new PPP Masterplan will be aimed at encouraging private investments to fund the development for crucial public infrastructures. The new plan will also aim to achieve more effective sharing of risks and returns with the private sector to improve public services.
In 2022, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced in his Budget 2024 speech that the government will focus on public-private-philanthropy partnerships (PPPP) to implement projects for the rakyat.
Source: https://ms.wikipedia.org
Malaysia introduced the Privatisation Master Plan in 1991 to outline the private sector participation in public infrastructure development. Meanwhile, in 2021, former prime minister Datuk Seri Ismail Sabri Yaakob announced the Public Private Partnership (PPP) 3.0 model under the 12th Malaysian Plan.
MOF, in the pre-Budget 2025 statement, also noted that with Malaysia’s tax revenue currently standing at a low 12.6% of gross domestic products (GDP) in 2023 compared to its Asean counterparts. MOF wants to expand the tax base.
Budget 2025 will require measures to broaden the tax base, continuously ensure a progressive tax system, reduce tax leakages and enhance tax compliance, according to MOF. Budget 2025 will also initiate measures to better manage public expenditure in order to effectively and efficiently support Ekonomi Madani aspirations.
The government has yet to introduce the high-value goods tax which was announced in Budget 2024. Besides this, the global minimum tax (GMT) was also announced in 2023. The MOF on July 18 said that it will implement the GMT on revenue exceeding €750 million (RM3.82 billion) starting in 2025, with a 15% tax rate.
Budget 2025 will continue to explore areas to optimise budgetary allocations, including the defence industry, said the MOF, noting that this will address procurement weaknesses and promote the development of a domestic defence industry. Budget 2025 will continue to support energy transition efforts through a legislative framework that encourages investment while safeguarding the public interest. The government has launched the National Energy Transition Roadmap with six key drivers, namely the energy transition, renewable energy, hydrogen, green mobility and carbon capture utilisation and storage.
Recognising the vital role of micro, small and medium enterprises in the economy, the MOF said Budget 2025 will formulate financing schemes, including funds under the development financial institutions as well as co-funding and guarantee schemes with private financial institutions.
Meanwhile, to further enhance Malaysia's tourism industry, Budget 2025 will outline measures to elevate the country’s unique offering and better connectivity, to increase the spillover effect from tourism activities that will benefit local communities, said the MOF.
Beyond statements, the MOF should work with stakeholders on new tax revenues and try to reduce income inequalities. A case in point is the remuneration of bank CEOs and bank employees. It (remuneration for a CEO) is probably a 100x or more than the average earnings per year of an employee.
Reference:
Budget 2025: MOF mulls new public-private partnership masterplan, expansion of tax base, Anis Hazim, TheEdgeMalaysia, 30 July 2024
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