Malaysia Malaysia ( ; ) is a country in Southeast Asia. The federal constitutional monarchy consists of thirteen states and three federal territories, separated by the South China Sea into two regions: Peninsular Malaysia and Borneo's East Mal ...

, federal budgets are presented annually by the

Government of Malaysia The Government of Malaysia, officially the Federal Government of Malaysia ( ms, Kerajaan Persekutuan Malaysia), is based in the Federal Territory of Putrajaya with the exception of the legislative branch, which is located in Kuala Lumpur. Malays ...

to identify proposed government revenues and spending and forecast economic conditions for the upcoming year, and its

fiscal policy In economics and political science, fiscal policy is the use of government revenue collection ( taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variabl ...

for the forward years. The federal budget includes the government's estimates of revenue and spending and may outline new policy initiatives. Federal budgets are usually released in October, before the start of the

fiscal year A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many ...

. All of the Malaysian states also present budgets. Since state finances are dependent on money from the federal government, these budgets are usually released after the federal one. The federal budget is a major state financial plan for the fiscal year, which has the force of law after its approval by the Malaysian parliament and signed into law by the

Yang di-Pertuan Agong The Yang di-Pertuan Agong (, Jawi: ), also known as the Supreme Head of the Federation, the Paramount Ruler or simply as the Agong, and unofficially as the King of Malaysia, is the constitutional monarch and head of state of Malaysia. The o ...

. Revenue estimates detailed in the budget are raised through the Malaysian taxation system, with government spending representing a sizeable proportion of the overall

economy An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...

. Besides presenting the government's expected revenues and expenditures, the federal budget is also a political statement of the government's intentions and priorities, and has profound

macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, an ...

implications.

Budget process

The budget is announced in the Dewan Rakyat (House of Representatives) by the Minister of Finance, who traditionally wears baju Melayu while doing so. The Budget is then voted on by the House. Budgets are a

confidence Confidence is a state of being clear-headed either that a hypothesis or prediction is correct or that a chosen course of action is the best or most effective. Confidence comes from a Latin word 'fidere' which means "to trust"; therefore, having ...

measure, and if the House votes against it the government can fall, although never happened to Prime Minister to date. The governing party strictly enforces

party discipline Party discipline is a system of political norms, rules and subsequent respective consequences for deviance that are designed to ensure the relative cohesion of members of the respective party group. In political parties specifically (often refe ...

, usually expelling from the party caucus any government

Member of Parliament A member of parliament (MP) is the representative in parliament of the people who live in their electoral district. In many countries with bicameral parliaments, this term refers only to members of the lower house since upper house members o ...

(MP) who votes against the budget. Opposition parties almost always vote against the budget. Since 2008, the opposition bloc used to prepare a complete alternative budget and present this alternative to the Malaysian people along with the main budget. In cases of minority government, the government has normally had to include major concessions to one of the smaller parties to ensure passage of the budget. Malaysia follows the conventions of the Westminster system. For example, the

prime minister A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister is ...

must have the support of a majority in the

Dewan Rakyat The Dewan Rakyat (English: 'House of Representatives'; ) is the lower house of the bicameral Parliament, the federal legislature of Malaysia. The chamber and its powers are established by Article 44 of the Constitution of Malaysia. The Dewan ...

(House of Representatives), and must in any case be able to ensure the existence of no

absolute majority A supermajority, supra-majority, qualified majority, or special majority is a requirement for a proposal to gain a specified level of support which is greater than the threshold of more than one-half used for a simple majority. Supermajority r ...

against the government. In relation to the budget, that requires that if the House fails to pass the government's budget, even by one ringgit, then the government must either resign so that a different government can be appointed or seek a

parliamentary dissolution The dissolution of a legislative assembly is the mandatory simultaneous resignation of all of its members, in anticipation that a successive legislative assembly will reconvene later with possibly different members. In a democracy, the new assemb ...

so that new general elections may be held to re-confirm or deny the government's mandate. The process of creating the budget is a complex one which begins within the working ranks for the Federal Government. Each year, the various departments and agencies that make up the Government submit what are called 'The Main Estimates' to The Treasury Board Secretariat. These documents identify the planned expenditure of each department and agency, linking these proposed expenses to programs, to objectives and ultimately to the priorities of the current ruling Government. The Treasury Board Secretariat combines these budget estimates and compile an initial proposed budget. From there, the Cabinet and Prime Minister's Department adjust the budget based on a series of economic, social and political factors. In reality, decisions are usually made with the primary intend of re-election and so often include advantages for key regions and lobby groups. The government reserves the right to submit "supplementary supply bills", which add additional funding above and beyond what was originally appropriated at the beginning of the fiscal year. Supplementary supply bills can be used for things like disaster relief and to update its agencies' spending totals for the current financial year and report any governmental re-organisations.

Classification of revenue

The Federal Government’s revenue is classified into four general categories, namely

tax revenue Tax revenue is the income that is collected by governments through taxation. Taxation is the primary source of government revenue. Revenue may be extracted from sources such as individuals, public enterprises, trade, royalties on natural resour ...

, non-tax revenue, non-revenue receipts and revenue from the Federal Territories.

Tax revenue

Tax revenue is classified into

direct tax Although the actual definitions vary between jurisdictions, in general, a direct tax or income tax is a tax imposed upon a person or property as distinct from a tax imposed upon a transaction, which is described as an indirect tax. There is a di ...

revenue and

indirect tax An indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST), excise, consumption tax, tariff) is a tax that is levied upon goods and services before they reach the customer who ultimately pays th ...

revenue. Direct tax revenue includes revenue from: * income tax and supplementary income tax (individual, company, petroleum, withholding and cooperatives); * estate duty; * stamp duty; * real property gains tax (RPGT); * Labuan offshore business activity tax; and * miscellaneous direct taxes. Indirect tax revenue includes revenue from: * Goods and Services Tax (GST); * export duties; * import duties; * excise duties; * levies; and * miscellaneous indirect taxes.

Non-tax revenue

Non-tax revenue consists of: * licences, registration fees and permits: inclusive of all charges imposed on the granting of rights to individuals, corporations, businesses including petroleum royalty, and other enterprises as well as motor vehicle licences for purpose of regulation or control and levy on foreign workers; * service fees: inclusive of receipts from services rendered by the Federal Government to the public; * proceeds from sales of goods: inclusive of receipts from the sales of physical assets owned by the Government including lands, buildings, office equipments, storage facilities and the sale of miscellaneous goods to the public; * rentals: inclusive of rentals from land, buildings, vehicles and machineries; * interests and proceeds from investments: inclusive of proceeds from sale of investments, dividends earned from bonds or shares (PETRONAS dividend, Bank Negara dividend, Khazanah dividend), bank interests and interests on loans granted by the Government; * fines and penalties: inclusive of out-of-court settlement fees as well as fines and forfeitures; * contributions and compensations received from home and abroad; * income from exploration of oil and gas: income from petroleum operation Malaysia-Thailand Joint Authority (MTJA); and * other non-tax revenue.

Non-revenue receipts

Non-revenue receipts include: * refunds of expenditures: inclusive of payments in previous years and refunds of salaries arising from resignations and training expenses, trust fund refunded and unclaimed funds; and * inter-departmental credits: inclusive of transfer of funds between ministries or departments for services rendered between Government agencies, reimbursements of the Government’s contributions under the Employees Provident Fund Scheme and contributions from Government departments, statutory bodies or Government owned enterprises.

Revenue from the Federal Territories

Revenue from the Federal Territories consist of tax and non-tax revenue including receipts from licences and permits, premiums, quit rent, sale of assets, rentals, service fees and entertainment duties.

Example Budget

Projected revenues

Official sources
(''In million

MYR The abbreviation Myr, "million years", is a unit of a quantity of (i.e. ) years, or 31.556926 teraseconds. Usage Myr (million years) is in common use in fields such as Earth science and cosmology. Myr is also used with Mya (million years ago). ...

'')

Projected expenditures by object

Official sources
These tables are in million

Projected expenditures by budget function

Official sources
These tables are in million

. The budget for the 2016 fiscal year (also demonstrating the basic budget structure) can be found below.

List of Malaysian budgets by year

Supply Bills - Second Reading

;1960s
1960
�
1961
�
1962
�
1963
�
1964
�
1965
�
1966
�
1967
�
1968
�
1969
;1970s
1973
�
1974
�
1975
�
1976
�
1977
�
1978
�
1979
;1980s
1980
�
1981
�
1982
�
1983
�
1984
�
1985
�
1986
�
1987
�
1988
�
1989
;1990s
1990
�
1991
�
1992
�
1993
�
1994
�
1995
�
1996
�
1997
�
1998
�
1999
;2000s
2000
�
2001
�
2002
�
2003
�
2004
�
2005
�
2006
�
2007
�
2008
�
2009
;2010s
2010
�
2011
�
2012
�
2013
�
2014
�
2015
�
2016
�
2017
�
2018
�
2019
· ;2020s
2020

References

External links

Ministry of Finance