Our Take On The Federal Government's Budget For 2019

Budget announcements are always an exciting – or worrying – time of year, for people across all walks of life. There’s the chance that the government will introduce new relief measures, or in tough times put forward austerity measures. With everything from housing to education under consideration, it’s perhaps the second most important announcement to Malaysians after election results.

We’ve always taken particular interest in the policies that relate to our automotive industries and its peripheries. The largest announcement would be the fuel subsidy plan – one that is being heavily debated in the public sphere. The government has put forward a plan for a 30 cent subsidy on RON95 that only applies to single car owners with vehicles at or under 1500 cc of displacement, or 40 cents per litre of RON 95 for motorbikes under 125 cc of displacement.

The policy is limited to 100 litres per month for cars and 40 litres per month for motorbikes, which works out to a maximum of RM 30 or RM 12 saved respectively. The main issue that folks seem to have with this is that the policy is too straightforward in nature, with no consideration for the fact that manufacturers have largely downsized their engine capacities. A simple example is this: a Proton Iriz 1.6 would not qualify, but a Volkswagen Golf 1.4 TSI would.

With regards to toll charges, which have been the subject of much controversy as it was part of Pakatan Harapan’s manifesto, there has been some movement: an estimated budget of RM 700 million will be used to freeze all toll charges on highways within the city in 2019. Whether this will eventually work itself outwards to include inter-state highways remains to be seen, but it’s definitely a step forward.

Motorcyclists can look forward to toll abolishment on both bridges between Penang mainland and island, as well as the Second Link Expressway in Johor, which will take approximately RM 20 million a year, from the start of 2019.

More loosely related to the automotive industry is a new initiative by the Inland Revenue Board (LHDN) to investigate “extraordinary wealth”, which is essentially looking into individuals who possess luxury items without a clear explanation for how they came into possession. This is following in the footsteps of the U.K., which began these investigations in order to catch money launderers and those who commit other financial crimes. Luxury cars, of course, are to be regarded as a luxury item alongside jewellery, watches, handbags, and real estate.

Those who take public transport are also receiving aid in the form of cheaper monthly passes for unlimited trips on the RapidKL bus or rail services starting from January 2019. These will be available from the start of 2019 for RM 100, and a cheaper RM 50 option is available for those who wish to only take RapidKL busses.

Also of note for all users is the fact that the government has allocated RM 926 million for the building and improvement of new highways, roads, and bridges. While this sounds like an extremely large amount of money to allocate to roadworks, to maintain just one side of one kilometre of highway for a year costs around RM 1 million. It doesn’t take much maths before you realize that even the North South Expressway, at 772 kilometres long, can’t be maintained with that entire budget. Thankfully, however, the NSE is not owned and operated by the government, which means that they do won’t need to handle its upkeep – but perhaps now you can understand why removing tolls and buying back highways is no simple matter.

And finally, we come to biodiesel. In 2019, the government plans to implement the B10 biodiesel program for the transportation sector and B7 for the industrial sector in order to make more use of one of our biggest exports: palm oil. It’s also a measure in sustainability of energy resources as it’s largely renewable. B10 biodiesel is made from a blend of 10% palm oil and 90% diesel, and when you consider how many vehicles use diesel fuel, the scale makes sense.

That’s as much as we can glean from the budget announcement, and it seems to be fairly neutral on the whole. We neither benefit nor suffer come 2019, although fluctuating fuel prices remain a big question mark for the overall running costs of our vehicles.