Malaysia 2012 Budget - Nothing Much for Personal Finance

It seems to me nothing much from a personal finance perspective. Anyway, let's go through it which I think maybe useful to you personally...


(1) Exemption of Import Duty For Hybrid & Electric Cars

This is from the previous year and will be continue until 2013. I'm not sure if this is a good thing because the net spending in not decreasing if you buy hybrid & electric cars. So, think twice if you really want to go for Hybrid & Electric cars.


(2) Free Primary & Secondary Education Fees

I do not aware that we need to pay for primary & secondary education fees. All the while, I thought that is free! :) Perhaps I'm wrong now.  How much exactly is being save here? Anyone knows?


(3) RM500 for Households Monthly Income Less Than RM3K

It is one time payment. So monthly, you will have RM  41.67. Alright, this is still better than nothing especially if you have low income household. Besides that, there will be one-off RM100 schooling assistance for primary and secondary schools(up to form 5) and also one-off RM200 book voucher for private & public tertiary institution and form 6 as well.


(4) Additional Bonus for Civil Servants and Pensioners.

There will be 1/2 month bonus for all civil servants and RM500 bonus for all pensioners. Bonus to be paid by December 2012. This sounds good for civil servants.


(5) Increase to 10% for  Real Property Gains Tax.

Real Property Gains Tax (RPGT) will be increased to 10% from 5% if the property is sold within 2 years. The 5% remains as previously - if the property is sold between 2 to 5 years, there will be 5% RPGT and nil for 5 years and above. This may not be good for speculator but if you really want to sell, just wait for 2 years. Property investment is meant for long term anyway, in my opinion.

Sharing: Do you know the RPGT used to be 30% before 2010? Then later it was then revised to 5%. It seems to me the forming of property bubble is somehow indirectly caused by the government.  Don't you think so? Now, they're fixing it?


(6) Some other stuff...

• Retirement ages increases to 60 from 58 for civil servants. 
• Free Papilloma Virus immunization for cervical cancer prevention.
• EPF increases to 13% for Employer Contribution but that is only for those earning below RM5K.

Summary

Well, what? As usual, there is no beneficial to me at all. It is worst than last year! That's why I think this round for Malaysia 2012 budget is really nothing much at least to myself. Is that the reason why many of us are migrating to other countries? 

If you are civil servants and have low income household, this budget will be beneficial to you. Hope you can enjoy this benefits. If you wonder what are the previous years Malaysia budget, you can visit the following links:

• Malaysia 2011 Budget - Personal Finance Highlights
• Malaysia 2010 Budget - What should I do with it?

P/S: If I missed out any key items, feel free to share....

What Does GDP Growth Mean to You?

GDP stands for Gross Domestic Product. It represents the total value in the respective country currency of all goods and services produced over a specific time period. GDP is calculated will not be discuss here because that is kind of complicated. We will let those economist to do their job. What really important about GDP is, it help investor to tell how well a country is doing or how healthy is the economy.

GDP is usually expressed as a comparison to the previous GDP value in percentage. That is called “GDP Growth Rate”. It is either based on yearly or quarterly. For example 3% GDP growth rates in 2010 means the economy grows by 3% as compared to 2009. On the other hand, –3% GDP growth rates means the economy declines by 3%


What is recession?

When GDP growth rate is negative for 2 or more consecutive quarters, economist calls that as “Recession”. Let’s look at Malaysia GDP growth rate below, we’re having recession in the early of 2009.

Source: www.tradingeconomics.com 

(You can also get the GDP data for your country here) 

Now, let’s look at the KLCI index below. Do you see the similar trend with the GDP growth rate?

It basically tells you that when recession happens, stock market crashes. Usually significant change in GDP growth rate will affect on the stock market. Investor look at the GDP data very closely to understand the current economy situation and then react to their investment’


Discussion

Given all these high-level explanation of GDP, what is your take away? For me,  I use the GDP growth rate as a recession detector. When recession happens (i.e. 2 consecutive negative GDP growth rate), I will quickly withdraw my investments and then watch out the GDP growth rate very closely when the economy will recovered. When it happens or when I think when it will happen (i.e. economy start to recover), I will start investing again. :)

P/S: For most updated Malaysia GDP report, you can refer to www.statistics.gov.my.