HIGHLIGHTS FROM BUDGET 2011

• Service tax will be increased from 5% to 6% and to cover pay television services – bad news for Astro, restaurants and the hospitality sector;
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• EPF and Permodalan Nasional Berhad will undertake RM10bn Sungai Buloh housing projects and RM5bn 100 storey tower respectively – good for property sector;
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• First time house buyers will obtain a 100% loan without having to pay the 10% down payment for houses below RM220k through “Skim Rumah Pertamaku” and given stamp duty exemption of 50% for houses not exceeding RM350k – good for property sector;
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• Full import duty and 50% excise duty exemption was granted to franchise holders of hybrid and motorcycles up to 2010 and full excise duty exemption up to 2011 – good for UMW and Honda but bad for local manufacturer, Proton;
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• Import duty of 300 goods preferred by tourists and locals, at 5% to 30% will be abolished – good for retailers and shopping mall operators;
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• Sales tax of 10% will be abolished for all mobile phones – good for all the telecommunication companies;
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• RM6.4bn to build and upgrade schools, RM213m allocated to high performance schools, increase pre-school enrolment rate to 72% through additional 1,700 classes, RM575m for scholarships, RM213m to strengthen language skills – good for education sector;
• Government to introduce minimum wage rate and increase the levy for foreign workers – bad for businesses generally as cost will increase;
• Toll rates in 4 highways operated by PLUS Expressway will not be raised for the next 5 years – bad for toll operators, setting precedent that no toll hikes for other operators;
• Three new stock-broking licenses will be introduced for locals and foreigners – bad for stockbrokers as competition will intensify.