THE 2018 BUDGET SPEECH By YAB DATO’ SRI MOHD NAJIB TUN HAJI ABDUL RAZAK PRIME MINISTER AND MINISTER OF FINANCE INTRODUCING THE SUPPLY BILL (2018) IN DEWAN RAKYAT FRIDAY, 27 OCTOBER 2017 “PROSPERING AN INCLUSIVE ECONOMY, BALANCING BETWEEN WORLDLY AND HEREAFTER, FOR THE WELLBEING OF RAKYAT, TOWARDS THE TN50 ASPIRATION” Mr. Speaker Sir, I beg to move the Bill intituled “An Act to apply a sum from the Consolidated Fund for the service of the year 2018 and to appropriate that sum for the service of that year” be read a second time. 1 In the name of Allah, the Most Gracious, the Most Merciful. INTRODUCTION 1. There is no God but Allah, and Muhammad is the messenger of Allah. Send your blessings to our Prophet Muhammad SAW, and salute him with all respect. 2. Greetings, Salam Negaraku and Salam 1Malaysia to Mr. Speaker Sir, Members of Parliament, Ladies and Gentlemen and all Malaysians from Northern Perlis to Tanjung Piai in the South as well as Sabah and Sarawak. 3. Many may have predicted that the 2017 Budget was an Election Budget. 4. This is expected as there were many initiatives and allocations announced for the rakyat and in the interest of the nation. However, their predictions were untrue. 5. Last week, our Indian friends celebrated the Festival of Lights or Deepavali. We wish Happy Deepavali to all. As Friday being an important day for Muslims, let’s celebrate together. 6. As such, I would call upon the rakyat to rejoice in receiving the gifts, rewards and incentives, which will be presented in this Budget, subject to a condition. 2 And the condition is that you follow through this presentation from the beginning to the end. 7. I am standing here, on this day, 27 October 2017 or 7 Safar 1439 Hijri, to bring good and happy news, which will put smiles on every face. 8. This good news is for all beloved Malaysians to enjoy, regardless of race and background. 9. It is clear that every segment of society will reap the benefits from this Budget. 10. Hence, on behalf of the Government, let us first immerse and analyse on what I am about to present. Otherwise, you will miss the good news. 11. In building a civilised nation, we should always be gracious, forgive and forget. ECONOMIC PERFORMANCE AND CHALLENGES 12. First, let us be grateful to Allah SWT for the continued positive expansion of our economy. 13. During the first half of 2017, the economy recorded a sterling growth of 5.7%. 3 14. Therefore, we should not fall for lies and non-stop propaganda on social media by irresponsible parties, stating that the World Bank has issued negative reports on the nation’s economy. 15. In fact, the World Bank has revised their forecasts on the East Asia and Pacific region. 16. The World Bank has revised upwards Malaysia’s GDP forecast from 4.9% to 5.2% for 2017 and commended the country’s economic performance for its laudable policies. 17. In addition, the Government forecasts the Malaysian economy to record an annual growth between 5.2% and 5.7% in 2017, higher than the March estimates ranging between 4.3% and 4.8%. 18. For the past eight years, amid economic challenges, Malaysia has made significant development in two important aspects: First: Strengthening and deepening diplomatic and trade relations with the world’s largest economic powers such as China, India, Saudi Arabia and the United States. Furthermore, private investment has increased significantly to more than RM211 billion compared with RM81 billion in 2009. 4 Second: Since 2009, the country has been facing various external challenges such as plummeting global crude oil prices and international geopolitical tensions. Notwithstanding these uncertainties, we remain steadfast in managing country’s finances, practising efficient governance and prudent fiscal discipline. With systematic and organised plans and strategies, and initiatives, the nation’s fiscal deficit is estimated to be reduced to 3% of GDP in 2017 from 6.7% in 2009. We are confident that it will be further improved to 2.8% in 2018. As a result, three prestigious international credit rating agencies have maintained their ratings on Malaysia as ‘A-’ with a stable prospect. 19. Let us all work hard to ensure fruitful outcomes. 20. Most importantly, amid various external headwinds, we should maintain our strong economic growth momentum and dynamism. 21. Hence, the Government introduced several transformation programmes under the National Transformation Policy (NTP) in 2009. The policy emphasises on quality and efficiency of the public service delivery system, particularly in stimulating economic growth. 5 22. The NTP also encompasses the New Economic Model which is in line with both the 10 Malaysia Plan (10MP) and 11 Malaysia Plan (11MP). 23. Since 2009, economic initiatives have been the main focus of the Government, followed by other programmes, according to its importance, including the Political Transformation Programme. 24. Hence, all the initiatives implemented by the Government for the past eight years have been successful. These include: First: About 2.26 million jobs were created, which is 69% of the 3.3 million job opportunities targeted by 2020; Second: In August, exports peaked to one of its highest levels, exceeding RM80 billion and recorded a double-digit growth; and Third: Currently, the international reserves amounted to USD101.4 billion or RM428.7 billion, which is sufficient to finance 7.5 months of retained imports compared with USD21.7 billion or RM59.1 billion during the Asian Financial Crisis in 1997. 25. In addition, the 2016 Report of Household Income and Basic Amenities Survey has highlighted our achievements, which include: 6 First: Income per capita has increased from RM27,819 in 2010 to RM40,713 in 2017 and is expected to increase further to RM42,777 in 2018; Second: Monthly median income has also increased from RM4,585 in 2014 to RM5,288 in 2016; Third: For the B40 household income, the monthly median income has increased from RM2,629 to RM3,000 between 2014 and 2016; and Fourth: Household income distribution in Malaysia has improved with the Gini coefficient reduced from 0.441 in 2009 to 0.399 in 2016, the lowest in the history of Malaysia. This reflects narrowing income gap as the country progresses towards a more equal distribution. 2018 BUDGET ALLOCATION 26. In the interest and prosperity of the rakyat, the 2018 Budget will allocate a sum of RM280.25 billion, an increase in allocation as compared with RM260.8 billion in the 2017 Budget. 27. Of which, RM234.25 billion is allocated for Operating Expenditure (OE), while RM46 billion for Development Expenditure (DE). This allocation does not include Contingencies which amounts to RM2 billion. 7 28. Under the OE, a total of RM79.15 billion is for Emolument and RM33.62 billion for Supplies and Services. 29. Meanwhile, a sum of RM119.82 billion is allocated for Fixed Charges and Grants. A sum of RM1.08 billion is allocated for Other Expenditures, while RM577 million for the Purchase of Assets. 30. Under the DE, the economic sector will receive the highest share of RM26.34 billion. The social sector is allocated a sum of RM11.72 billion. Meanwhile, the security sector will be allocated a sum of RM5.22 billion and the general administration RM2.72 billion. 31. For 2018, the Federal Government’s revenue collection is expected to record RM239.86 billion. 32. Of significance, the Government is committed to implement fiscal consolidation measures and to ensure that the Government’s financial position continues to be resilient, and debt level remains low in the medium- and long-terms. 33. This Budget is most vital as it summarises all the initiatives that has spurred the economy since I took office in 2009. 34. Indeed, it is one of my main report cards to the rakyat and the Government under my leadership during my two-term administration. 8 35. Hence, this document will chart the course in building a Malaysian Nation for the next 30 years crafted on a new canvas based on SHARIAH REQUIREMENT FRAMEWORK. 36. Since we declared Independence, we have been fortunate as our forefathers have governed and administered this country embedded with shariah requirements. This framework emphasises on five aspects, namely religion, life, intellectual, lineage and wealth in each of Government’s plan and policy. 37. This was clearly mentioned in Surah al-Mumtahanah verse 12, of the importance to provide basic necessities for the rakyat (Dho’ruriyat). 38. Meanwhile, through interpretation of Surah al-Hajj and Hadith Riwayat Ahmad, Haajiyat refers to matters relating to easing the burden of the rakyat and providing a comfortable life. Third, Tahsiniyat means luxurious needs. 39. Therefore, for the past six decades, all Barisan Nasional’s efforts have been inspired by Allah SWT to ensure that leaders are guided by the shariah requirement framework. This framework is further solidified with Federal Constitution; Rukunegara; 1Malaysia People’s First, Performance Now philosophy; and the latest TN50 9 aspiration. These reflect the continuity of Government’s administration, practising moderation and rejecting extremism. 40. Hence, the alternating leadership of this Party has structured its entire policies and strategies based on the shariah requirement framework. 41. While this framework has not been written in any Government documents, but its practices are reflected in all inter-related national philosophies and policies. 42. In a nutshell, the shariah requirement framework adopted by the Government is targeted to benefit the rakyat as a whole, taking into account of Government’s capabilities, following the three priorities namely Dho’ruriyat, Haajiyat and Tahsiniyat. 43. It is then proven that the Barisan Nasional Government has the wisdom and experiences of 60 years, which are fundamental in developing and building a proud nation state. 44. Therefore, based on these principles and philosophies, and with the blessings of Allah, I present you the 2018 Budget. 45. The 2018 Budget was formulated in line with the 11MP and this is the third Budget under the Plan. In order to ensure the nation’s wealth and prosperity to be enjoyed equitably 10