Budget 2022: Everything HR and Employers Must Know

Earlier today, Finance Minister Tengku Zafrul Abdul Aziz tabled the Budget 2022 in the Dewan Rakyat.

Budget 2022 has a total allocation of RM332.1bil, the largest ever for Malaysia, and this surpasses Budget 2021 allocation of RM322.54bil.

Themed "Keluarga Malaysia, Makmur Sejahtera", Budget 2022 allocates RM31 billion specifically for subsidies, assistance and incentives.

Here are the highlights:

EPF Contribution Rate will stay reduced at 9%

The government will extend the period to reduce the Employees Provident Fund (EPF) contribution rate from 11% to 9% until June 2022. The minister said the initiative would involve about RM2 billion. He elaborated that the government understands the financial constraints faced by the people due to the Movement Control Orders (MCO), specifically in terms of cash flow management.

He said that extending the period to decrease the EPF minimum contribution rate until June 2022 would increase money in the hands of the people. 

Employment

The Malaysia Short Term Employment programme (MySTEP) intends to produce 80,000 job opportunities beginning January 2022.

Fifty thousand vacancies will be made available in the public sector. The remaining 30,000 job opportunities will be made at government-linked companies (GLCs).

The government also addressed unemployment by allocating RM4.8 billion to secure the provision of 600,000 job opportunities.

Meanwhile, through the Social Security Organisation (Socso), the government will continue its recruitment efforts via the JaminKerja employment incentive initiative, targetting of 300,000 people and allocating RM2 billion.

An incentive to employers hiring apprentices.

This initiative includes an incentive of 20% of the worker's salary in the first 6 months and 30% of salary in the next 6 months. It covers those with a monthly wage of over RM1,500.

The government allocated another RM1.1 billion for upskilling and training programmes, including a place for training with job placement attached.

The government also allocates RM70 million to enhance counselling, psychosocial and support services to address mental health issues.

Meanwhile, the government allocated RM30 million to encourage employees in the informal sector to save for retirement.

The government also supports career and talent development by calling employers to at least match its RM900 allowance offered for students undergoing industry training. 

The government also proposed double tax relief for companies that offer scholarships for students in higher learning institutions in all courses.

In encouraging high value-add industries, the government allocates RM80 million via the Trade Ministry to train 20,000 workers supporting cluster industries such as maintenance repair and operations, electrical and electronic, and chemicals.

The government also allocates another RM50 million to enhance vocational expertise for 5,000 workers in oil and gas welding, mechatronics, and industrial automation fields.

Financing initiatives

The finance minister said a key area of focus is enhancing business access to financing, mainly for micro-enterprises and the informal sector.

About RM40 billion will be allocated under the Semarak Niaga programme, which covers direct loans, financing guarantees and equity injections to help enterprises of all sizes.

Meanwhile, the government will channel RM1.8 billion into the microcredit schemes of numerous agencies such as Agrobank, TEKUN, Bank Simpanan Nasional (BSN), Bank Negara Malaysia (BNM), and Bank Rakyat.

This initiative includes TEKUN's Informal and Micro Financing Scheme, which will grant loans of RM10,000 maximum at zero interest and a 12-month moratorium.

BSN and Agrobank will also provide micro-financing of RM75,000 maximum at zero-interest for the first six months and a moratorium of up to six months.

The government will also promote equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms. Zafrul said that the government would continue to support these forms of financing with an RM80 million allocation through matching grants for the Malaysia Co-investment Fund, on top of Bank Pembangunan Malaysia Bhd's investment of RM100 billion.

The government will also assist companies facing gearing or leverage issues by providing RM2.1 billion in funding avenues through equity and quasi-equity investments.

A collaboration between SME Bank, TERAJU and BSN will spearhead this initiative. BPMB will also provide a Rehabilitation and Support Through Equity (RESET) scheme, whereas BNM will establish a Business Recapitalisation Fund of RM1 billion for the same goal.

There will be a special initiative to aid Bursa Malaysia-listed companies, which will see funds injection into companies affected by the pandemic through a government-owned Special Purpose Vehicle (SPV) in the form of equity or other related instruments.

Zafrul said the government gave Khazanah Nasional Bhd the mandate to help the government provide the infrastructure needed to manage a fund of at least RM3 billion.

Tax-related initiatives

To ensure that companies can follow the standard operating procedures (SOPs), the government has offered to extend the income tax deductions relating to premise renewal and renovation costs of up to RM300,000 until Dec 31, 2022.

For Micro SMEs, the government has proposed postponing tax instalment payments for 6 months until June 30, 2022. All micro SMEs can also revise the estimated income tax payable in the 11th month before Oct 31, 2022.

Owners of premises and buildings that have provided at least 30% rental discounts will also receive special tax deductions until June 2022.

The government also aims to extend individual income tax relief of up to RM3 million for nursery and kindergartens fee payments until the year of assessment 2023. 

The government will impose a service tax on e-commerce delivery services, excluding food and beverages. The government will also introduce sales tax for all overseas goods bought into the country online via air courier.

RM900 allowance for youths undergoing industrial training.

Extension of Wage Subsidy Programme

The government will continue the Wage Subsidy Programme for businesses in the tourism sector, which has endured losses by a minimum of 30%. With an allocation of RM600 million, the initiative will benefit 26,000 employers and 330,000 employees.

Special assistance is also allocated for over 20,000 tourism companies registered under the Ministry of Tourism, Arts and Culture for 3 months, totalling RM85 million.

Boosting women empowerment

As part of the government's agenda to empower women, Budget 2022 highlighted several initiatives, including encouraging female directorship composition in public listed companies (PLCs) by guaranteeing at least one female director is appointed in all PLCs starting Sept 1, 2022. 

The finance minister said the government also granted RM5 million to the Women Leadership Foundation (Yayasan Kepimpinan Wanita) to promote women's participation in the economic sector. 

The government will provide RM230 million in funding via MARA's DANANITA programme and TEKUN's TEKUNITA to help women entrepreneurs affected by the pandemic and increase their business capacity. 

Zafrul also said the government would implement the MyKasih Kapital Programme to encourage women to create income from home. It will provide incentives such as basic business capital assistance and mentoring programmes to promote online business.

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