This presentation was made by Azlin ISMAIL, Malaysia, at the 13th Annual Meeting of OECD-Asian Senior Budget Officials held in Bangkok, Thailand, on 14-15 December 2017

1. 1
ANNUAL OECD-ASIAN SENIOR BUDGET
OFFICIALS MEETING
Bangkok, 14 – 15 December 2017
RECENT FISCAL & BUDGETING
DEVELOPMENTS IN MALAYSIA

2. 2
(6.7)
(5.3)
(4.7)
(4.3)
(3.8)
(3.4)
(3.2)
(3.1) (3.0)
(4.7)
(3.4)
(2.7)
(2.3)
(1.7)
(1.3)
(1.1) (1.0) (0.8)
2009 2010 2011 2012 2013 2014 2015 2016 2017 R
Fiscal balance (% GDP) Primary balance (% GDP)
Consistently delivering deficit reduction
Fiscal consolidation remains on track
% GDP

3. 3
Oct 2015 2016
Revenue base
expansion:
• GST
introduction
at a starting
rate of 6%
• Reduce
dependence
on oil-
related
revenue
Jul 2013 Sep 2013
Improving fiscal
administration:
• Fiscal Policy
Committee
established to
ensure visible
fiscal reform
measures are
being
implemented
effectively
Nov 2013
Subsidy
rationalisation:
• Removal of sugar
subsidy
Revenue
enhancement:
• Increase in Real
Property Gains Tax
• 14% rise in tobacco
excise duty
Jan 2014
Expenditure
optimisation:
• 5% scale-
back in
supplies and
services
Jan 2015 Apr 2015Oct 2014
Subsidy
rationalisation:
• Further
reduction of
subsidy by 20 sen
for RON95 and
diesel
Subsidy
rationalisation:
• Reduced
subsidy by 20
sen for RON95
petrol and
diesel
Dec 2014
Subsidy rationalisation
• Abolished subsidies for
RON95 petrol and
diesel, with prices fixed
monthly according to
an automatic managed
float
Mar 2015
Freeze in
civil service
recruitment
• Maintained
civil service
size at 1.6
million
Adoption of
the Medium-
Term Fiscal
Framework
(MTFF)
Revenue
enhancement
• Higher GST
collection expected
from higher
registrants
• Additional
dividends from
GLCs and GLICs
Expenditure
optimisation
• Scale-back in
supplies and
services
• Rationalisation of
grants and transfer
• Rescheduling of
purchase on non-
critical assets
Subsidy
rationalisation:
Toll hikes
• No additional
allocation for
toll
compensation
Medium-Term
Fiscal
Framework
(MTFF)
• Ensures
commitment
towards fiscal
consolidation
• Top-down
indicative
expenditure
ceilings
Major initiatives undertaken
 Establishment of the Fiscal Policy Committee
 Implementation of the Goods and Services Tax
 Adopting Outcome-Based Budgeting (OBB)
 The Medium Term Fiscal Framework (MTFF)
 Implementing Accrual Accounting
 Subsidy rationalisation programme
Subsidy
rationalisation
• Weekly price
setup for RON95
petrol and diesel
reflecting
market
movement
(replacing
monthly price
setup)
Mar 2017
Subsidy
rationalisation:
• Rationalisation
of cooking oil
subsidy for
1 - 5 kg bottle
packaging
Nov 2016
Fiscal Reforms: Growing track record of actions support commitment
to fiscal consolidation

4. 4
CONFIDENTIAL
4.5% 4.3% 3.6% 2.4% 2.0% 1.7%
21.2% 20.7%
19.8%
18.7%
17.1% 16.4%
2012 2013 2014 2015 2016 2017R
Subsidy (% GDP) Operating expenditure (% GDP)
Subsidy rationalisation has helped to contained the
growth of OE in proportion to GDP
Successful and proven track record of fiscal reforms by the government
Top Government Revenue in
2017
% contribution to Total Revenue
2015 2016 2017R
1 Companies Income Tax 29.1 30.0 30.1
2 Goods and Services Tax 12.3 19.4 18.4
3 Individual Income Tax 12.0 13.0 13.4
4
Interest and Returns on
Investments
15.0 10.1 10.1
5 Licenses and Permits 5.7 5.8 5.7
6 Excise Duties 5.4 5.5 5.2
TOTAL 79.5 83.8 82.9
GST has shown significant results since its
introduction in April 2015

5. 5
CONFIDENTIAL
Strengthening quality of spending
30.8% 34.8% 35.8%
15.7% 14.3% 14.8%
15.2% 11.7% 10.5%
10.3% 12.6% 13.1%
7.6% 10.0% 10.8%
20.4% 16.3% 15.0%
2010 2016 2017 R
Operating expenditure by object
Others
Retirement charges
Debt service charges
Subsidies & social assistance
Supplies & services
Emoluments
2017R
Development expenditure by sector 2010 vs. 2017R
Spending emphasised on inclusive growth
7.6%
39.6%
11.2%
5.2%
36.4%
2017R
Economic services
Social services
Security
General administration
Other Expenditures
Operating expenditure by sector 2017R
49.5%
39.4%
7.5%
3.6%
56.3%
26.4%
11.5%
5.8%
Economic services Social services
Security General administration
2010

6. 6
Invigorating Investment, Trade And Industries
Towards TN50 Aspiration
Empowering Education, Skills, Training And Talent Development
Driving Inclusive Development
Prioritising The Wellbeing Of The People And Providing Opportunities To Generate
Income
Fortifying The Fourth Industrial Revolution And Digital Economy
Enhancing Efficiency And Delivery Of Government-linked Companies And Public Service
1
2
3
4
5
6
7
Balancing Between The Par Excellence Of Worldly And Hereafter8
THEME: Prospering an Inclusive Economy, Balancing Between Worldly and
Hereafter, for the Wellbeing of the Rakyat, Towards the TN50 Aspiration
THRUSTS
6
8

7. 7
WHERE IT COMES FROM.. WHERE IT GOES
Income tax
42.6%
RM280.3b
Other direct tax
3.0%
Indirect tax
22.8%
Non-tax revenue
17.2%
Borrowings & use of
Government’s assets
14.4%
Debt service charges
11%
Emoluments
28.2%
General admin
1.1%
Security
1.8%
DEVELOPMENT EXPENDITURE
Economic
9.2%
Social
4.3%
Supplies & services
12%
Retirement charges
8.8%
Grants & transfers to
state govts
2.9%
Subsidies & social
assistance
9.5%
Other expenditure
11.2%
RM280.3b
Channeling Resources Towards Productive Spending

8. TERIMA KASIH
Thank You
AZLIN ISMAIL
Fiscal & Economic Division
Ministry of Finance
azlinismail@treasury.gov.my