Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697805659209.pdf (Malaysia)
Jilid I Bil.
6 Hari Selasa 12hb November, 1974 PENYATA RASMI PARLIMEN PARLIAMENTARY DEBATES DEWAN RAKYAT HOUSE OF REPRESENTATIVES PARLIMEN KEEMPAT Fourth Parliament PENGGAL PERTAMA First Session KANDUNGANNYA RANG UNDANG-UNDANG: Rang Undang-undang Perbekalan, 1975 [Ruangan 497] USUL: Anggaran Pembangunan, 1975 [Ruangan 523] MALAYSIA DEWAN RAKYAT YANG KEEMPAT Penyata Rasmi Parlimen PENGGAL YANG PERTAMA Hari Selasa, 12hb November, 1974 Mesyuarat dimulakan pada pukul 3.15 petang YANG HADIR: Yang Berhormat Tuan Yang di-Pertua, TAN SRI HAJI NIK AHMED KAMIL, D.K., P.M.N., S.P.M.K., S.J.M.K.
Yang Amat Berhormat Perdana Menteri, Menteri Luar Negeri dan Menteri Pertahanan, „ TUN HAJI ABDUL RAZAK BIN DATUK HUSSEIN, S.M.N., K.O.M.

(Pekan).

Timbalan Perdana Menteri, Menteri Kewangan dan Menteri Penyelarasan Perbadanan Awam, DATUK HUSSEIN BIN DATUK ONN, S.P.M.J., P.I.S.

(Sri Gading).

Yang Berhormat Menteri Pertanian dan Pembangunan Luar Bandar, TUAN ABDUL GHAFAR „ „ „ „ „ „ „ „ BIN BABA (Alor Gajah).

Menteri Buruh dan Tenaga Rakyat, DATUK LEE SAN CHOON, S.P.M.J., K.M.N.

(Segamat).
(Segamat).

Menteri Perhubungan, TAN SRI V. MANICKAVASAGAM, P.M.N., S.P.M.S., J.M.N., P.J.K.

(Pelabohan Kelang).

Menteri Tanah dan Galian dan Tugas-tugas Khas, DATUK HAJI MOHAMED ASRI BIN HAJI MUDA, S.P.M.K., S.P.D.K.

(Nilam Puri).

Menteri Perdagangan dan Perindastrian, DATUK HAJI HAMZAH BIN DATUK ABU SAMAH, S.M.K., D.S.R., S.I.M.P.

(Temerloh).

Menteri Kerajaan Tempatan dan Alam Sekitar, DATUK ONG KEE HUI, P.N.B.S.

(Bandar Kuching).
(Bandar Kuching).

Menteri Hal Ehwal Dalam Negeri, TAN SRI HAJI MUHAMMAD GHAZALI BIN SHAFIE, P.M.N., D.I.M.P., P.D.K.

(Lipis).

Menteri Kerja Raya dan Pengangkutan, DATUK HAJI ABDUL GHANI GILONG, P.D.K., J.P. (Kinabalu).

Menteri Kesihatan, TAN SRI LEE SIOK YEW, P.M.N., A.M.N., P.J.K.

(Ulu Langat).

Menteri Undang-undang dan Peguam Negara, TAN SRI ABDUL KADIR BIN YUSOF, P.M.N.

(Tenggaroh).

Menteri Kebajikan Am, PUAN HAJJAH AISHAH BINTI HAJI ABDUL GHANI (Kuala Langat).
Menteri Perancangan Am dan Penyelidikan Sosio-Ekonomi, DATUK HAJI ABDUL TAIB BIN MAHMUD, P.G.D.K.

(Samarahan).

Menteri Kebudayaan, Belia dan Sukan, DATUK ALI BIN HAJI AHMAD, S.P.M.J., S.M.J.

(Pontian).

Menteri Penerangan dan Tugas-tugas Khas bagi Hal Ehwal Luar Negeri, Y.M.

TENGKU AHMAD RITHAUDEEN AL-HAJ BIN TENGKU ISMAIL, P.M.K.

(Kota Bharu).

487 12 NOVEMBER 1974 488 Yang Berhormat Menteri Tenaga, Teknoloji dan Penyelidikan, TUAN HAJI MOHAMED BIN YAACOB, P.M.K., S.M.T.

(Tanah Merah).
(Tanah Merah).

Menteri Perumahan dan Kampung-kampung Baru, TUAN MICHAEL CHEN WING SUM (Ulu Selangor).

Menteri Perusahaan Utama, DATUK MUSA HITAM, S.P.M.J.

(Labis).

Menteri Pelajaran, DR MAHATHIR BIN MOHAMAD (Kubang Pasu).

Timbalan Menteri Hal Ehwal Dalam Negeri, DATUK ABDUL SAMAD BIN IDRIS, J.M.N., A.M.N., P.J.K.

(Kuala Pilah).

Timbalan Menteri Penerangan, TUAN SHARIFF AHMAD, J.M.N.

(Jerantut).

Timbalan Menteri Penyelarasan Perbadanan Awam, DATUK MOHAMED BIN RAHMAT, D.P.M.J., K.M.N.

(Pulai).
(Pulai).

Timbalan Menteri Pertanian dan Pembangunan Luar Bandar, DATUK HAJI MUSTAPHA BIN HAJI ABDUL JABAR, D.P.M.S., J.M.N., J.P. (Sabak Bernam).

Timbalan Menteri Buruh dan Tenaga Rakyat, TUAN HAJI HASSAN ADLI BIN HAJI ARSHAD (Bagan Datok).

Timbalan Menteri Pelajaran, TUAN CHAN SIANG SUN, J.S.M., A.M.N., P.J.K., J.P. (Bentong).

Timbalan Menteri Kewangan, TAN SRI CHONG H ON NYAN, P.S.M., J.M.N.

(Batu Berendam).

Timbalan Menteri Jabatan Perdana Menteri, DATUK ABDULLAH AHMAD (Machang).
Timbalan Menteri Pertanian dan Pembangunan Luar Bandar, TUAN MOKHTAR BIN HAJI HASHIM (Tampin).

Timbalan Menteri Kesihatan, TUAN ABU BAKAR BIN UMAR (Kota Setar).

Timbalan Menteri Kerja Raya dan Pengangkutan, TUAN RICHARD HO U NG HUN (Lumut).

Timbalan Menteri Tanah dan Galian, DR SULAIMAN BIN HAJI DAUD (Santubong).

Setiausaha Parlimen kepada Menteri Perhubungan, TUAN HAJI RAMLI BIN OMAR, P.M.P., K.M.N.

(Bagan Serai).
(Bagan Serai).

Setiausaha Parlimen kepada Perdana Menteri, TUAN ABDULLAH BIN MAJID, K.M.N (Raub) Setiausaha Parlimen kapada Menteri Buruh dan Tenaga Rakyat, TUAN S. SUBRAMANIAM (Damansara).

Setiausaha Parlimen kepada Perdana Menteri, DR GOH CHENG TEIK (Nibong Tebal).

Setiausaha Parlimen kepada Menteri Tenaga, Teknoloji dan Penyelidikan, DR NEO YEE PAN (Muar).

Setiausaha Parlimen kepada Menteri Perumahan dan Kampung-kampung Baru, TUAN MOHD.

ALI BIN M. SHARIF (Kuantan).


Setiausaha Parlimen kepada Menteri Kebudayaan, Belia dan Sukan, TUAN RAIS BIN YATIM (Jelebu).

Tuan (Timbalan) Yang di-Pertua, TAN SRI SYED NASIR BIN ISMAIL, P.M.N., D.P.M.J., D.M.M.P., J.M.N., P.I.S.

(Pagoh).

TUAN HAJI N IK ABDUL AZIZ BIN N IK MAT, K.M.N., J.P. (Pengkalan Chepa).

TAN SRI ABDUL AZIZ BIN YEOP (Padang Rengas).

489 12 NOVEMBER 1974 490 Yang Berhormat TUAN ABDUL JALAL BIN HAJI ABU BAKAR, A.M.N.

(Batu Pahat).

TUAN HAJI ABDUL RASHID BIN HAJI JAIS, A.D.K.


(Ulu Padas).

TUAN HAJI ABDUL WAHAB BIN YUNUS (Dungun).

PENGHULU ABIT ANAK ANGKIN, P.P.N.

(Kapit).

TUAN ABU BAKAR BIN ARSHAD (Hilir Perak).

TUAN HAJI AHMAD BIN HAJI ITHNIN (Jasin).

TUAN HAJI AHMAD SHUKRI BIN HAJI ABD.

SHUKOR (Padang Terap).

TUAN ARIFFIN BIN HAJI DAUD (Permatang Pauh).

TUAN AU HOW CHEONG (Telok Anson).

TUAN AZAHARI BIN M D. TAIB, J.S.M., A.M.N., S.M.K., J.P. (Kulim Bandar Bahru).

TUAN AZHARUL ABIDIN BIN HAJI ABDUL RAHIM (Batang Padang).
TUAN BUJA BIN GUMBILAI (Tuaran).

DR CHEN MAN HIN (Seremban).

TUAN CHIAN HENG KAI (Batu Gajah).

TUAN CHIENG TIONG KAI alias CHIENG SIE LUNG (Sarikei).

TUAN CHIN HON NGIAN (Rengam).

TUAN RICHARD DAMPENG ANAK LAKI (Serian).

TUAN EDWIN ANAK TANGKUN, A.B.S.

(Batang Lupar).

TUAN EMBONG BIN YAHYA, A.M.N.

(Ledang).

TUAN FAN YEW TENG (Menglembu).

TUAN FARN SEONG THAN (Sungai Besi).

DATIN HAJJAH FATIMAH BINTI HAJI ABDUL MAJID, J.M.N., P.I.S.

(Semerah).

TUAN HAJI HADADAK BIN HAJI D. PASAUK (Simunjan).


TUAN HASHIM BIN GHAZALI (Matang).

DATUK NIK HASSAN BIN ABDUL RAHMAN, S.P.M.T., P.S.D., K.M.N.

(Kuala Nerus).

TUAN SYED HASSAN BIN SYED MOHAMED (Arau).

DR HEE TIEN LAI alias HEE TEN LAI (Ayer Hitam).

TUAN HISHAMUDDIN BIN HAJI YAHAYA (Maran).

TUAN JA'AFAR BIN HAMZAH, P.I.S.

(Johor Bahru).

TUAN HAJI JAMIL BIN ISHAK, P.J.K.

(Tanjong Karang).

TUAN JAWAN ANAK EMPALING (Rajang).

TUAN JONATHAN NARWIN ANAK JINGGONG (Lubok Antu).


TUAN EDMUND LANGGU ANAK SAGA, P.B.S.

(Saratok).

TUAN LATIP BIN HAJI DRIS (Mukah).

TUAN LEE BOON PENG, A.M.N., J.P., P.J.K.

(Mantin).

TUAN LEE LAM THYE (Kuala Lumpur Bandar).

TUAN LEO MOGGIE ANAK IROKE (Kanowit).

TUAN LEW SIP HON, K.M.N.

(Shah Alam).

TUAN LIBEN ANAK KATO alias WAIRY LEBEN ANAK KATO (Betong).

TUAN LIM KIAM HOON (Padang Serai).

TUAN LIM CHO HOCK (Ipoh).

TUAN LIM KIT SIANG (Kota Melaka).

DATUK LIM PUI HO, P.G.D.K., J.P., B.K.


(Sandakan).

„ 491 12 NOVEMBER 1974 492 Yang Berhormat DR LING LIONG SIK (Mata Kuching).

TUAN WALTER LOH POH KHAN (Selayang).

DATUK PETER LO SU YIN, P.G.D.K.

(Gaya).

TUAN LUHAT WAN (Baram).

TUAN LUKMAN BIN ABDUL KADIR (Ulu Nerus).

TUAN MADINA BIN UNGGUT (Bandau).

DATUK ALBERT MAH, K.M.N., D.M.P.N., P.J.K.

(Bukit Bendera).

TUAN MAK HON KAM, A.M.P.

(Tanjong Malim).

TUAN MOHAMED SOPIEE BIN SHEIKH IBRAHIM, J.M.N.

(Kepala Batas).

TUAN MOHD.


BAKRI BIN ABDUL RAIS (Parit).

TUAN MOHD.

IDRIS BIN HAJI IBRAHIM (Setapak).

TUAN MOHD.

SALLEH BIN DATUK PANGLIMA ABDULLAH (Silam).

TUAN HAJI MOHD.

TAUFECK BIN O. K. K. HAJI ASNEH (Hilir Padas).

TUAN HAJI MOHD.

ZAIN BIN ABDULLAH (Bachok).

DATUK ENGKU MUHSEIN BIN ABDUL KADIR, D.P.M.T., J.M.N.

(Ulu Trengganu).

DATUK SYED NAHAR BIN TUN SYED SHEH SHAHABUDDIN, D.P.M.K., K.M.N.

(Jerlun-Langkawi).

RAJA NASRON BIN RAJA ISHAK, P.J.K.

(Kuala Selangor).
(Kuala Selangor).

TUAN NGAN SIONG HING (Kinta).

TENGKU NOOR ASIAH BINTI TENGKU AHMAD (Tumpat).

TUAN OH KENG SENG (Petaling).

PUAN OON ZARIAH BINTI ABU BAKAR, A.M.N., A.M.P., P.J.K.

(Kuala Kangsar).

TUAN OO GIN SUN (Alor Setar).

* TUAN PANG SUI CHEE alias ALEX PANG (Tawau).

TUAN K. PATHMANABAN, K.M.N.

(Telok Kemang).

TUAN RACHA UMONG (Limbang-Lawas).

TUAN RASIAH RAJASINGAM (Jelutong).

TENGKU RAZALEIGH BIN TENGKU MOHD.

HAMZAH, S.P.M.K., P.S.M.

(Ulu Kelantan).

TUAN S. SAMY VELLU, A.M.N.


(Sungai Siput).

TUAN SANUSI BIN JUNID (Jerai).

DATUK SENU BIN ABDUL RAHMAN (Kuala Kedah).

TUAN SHAARI BIN JUSOH, P.P.N., P.P.M.

(Kangar).

TUAN HAJI SHAFIE BIN ABDULLAH, A.M.N., B.C.K., P.B.S., J.P. (Baling).

TUAN SHAMSUDDIN BIN DIN, P.P.N.

(Gerik).

TUAN SHAMSURI BIN M D. SALEH, A.M.N., J.P. (Balik Pulau).

TUAN SIBAT ANAK TAGONG alias SIBUT MIYUT ANAK TAGONG (Ulu Rajang).

TUAN THOMAS SALANG SIDEN (Julau).


TUAN HAJI SUHAIMI BIN DATUK HAJI KAMARUDDIN (Sepang).

WAN SULAIMAN BIN HAJI IBRAHIM, S.M.K.

(Paisir Puteh).

TUAN SULAIMAN BIN HAJI TAIB (Parit Buntar).

TUAN SU LIANG YU (Beruas).

ill „ „ „ „ „ „ „ „ „ 493 12 NOVEMBER 1974 494 Yang Berhormat PENGIRAN TAHIR BIN PENGIRAN PATERA (Kimanis).

DR TAN CHEE KHOON (Kepong).

TUAN TAN CHENG BEE, A.M.N., J.P. (Bukit Mertajam).

TUAN WEE HO SOON (Bandar Sibu).

„ TUAN YANG SIEW SIANG (Miri-Subis).


DATUK STEPHEN YONG KUET TZE, P.N.B.S.

(Padawan).

TUAN HAJI YUSOF RAWA alias HAJI YUSOF BIN HAJI ABDULLAH, J.P. (Ulu Muda).

TENGKU ZAID AL-HAJ BIN TENGKU AHMAD, D.P.M.K., J.M.K., S.M.K.

(Pasir Mas).

WAN ZAINAB BINTI M. A. BAKAR, A.M.N, P.J.K.

(Sungai Petani).

TUAN ZAKARIA BIN HAJI ABDUL RAHMAN (Besut).

TUAN HAJI ZAKARIA BIN ISMAIL (Rantau Panjang).


YANG TIDAK HADIR: Yang Berhormat Timbalan Menteri Perhubungan, DATUK HAJI WAN ABDUL KADIR BIN ISMAIL, D.P.M.T., P.P.T.

(Kemaman).

Timbalan Menteri Jabatan Perdana Menteri, DATUK SRI HAJI KAMARUDDIN BIN HAJI MAT ISA (Larut).

Timbalan Menteri Ferusahaan Utama, TUAN PAUL LEONG KHEE SEONG (Taiping).

Setiausaha Parlimen kepada Menteri Perdagangan dan Perindastrian, TUAN MUSTAPHA BIN ALI (Kuala Trengganu).
DATUK PATINGGI HAJI ABDUL-RAHMAN BIN YA'KUB, D.P., P.N.B.S., S.I.M.P.

(Payang).

PENGIRAN AHMAD BIN PENGIRAN INDAR (Kinabatangan).

TUAN AJAD BIN O. T. OYUNG (Lubuk Sugut).

TUAN STEPHEN ROBERT EVANS (Keningau).

TAN SRI SYED JA'AFAR ALBAR, P.M.N., D.P.M.J.

(Panti).

DR LIM CHONG EU (Tanjong).

TUAN LOH FOOK Y EN (Kluang).

TUAN HAJI MOHAMED KHIR JOHARI (Kuala Muda).

TAN SRI MOHAMED SAID BIN KERUAK, P.M.N., S.P.D.K.

(Kota Belud).

TUAN MOHD.

ZAHARI BIN AWANG (Kuala Krai).


TUN DATU HAJI MUSTAPHA BIN DATU HARUN, S.M.N., P.D.K., K.V.O., O.B.E.

(Marudu).

TUAN PATRICK ANEK UREN- (Bau-Lundu).

TUAN JAMES STEPHEN TIBOK, A.D.K.

(Penampang).

TUAN TING LING KIEW (Bintulu).

„ „ „ „ „ „ „ „ „ Yang Berhormat Timbalan Menteri Undang-undang, DATUK ATHI NAHAPPAN, D.P.M.S.

(Dilantik).

YANG HADIR BERSAMA: 495 12 NOVEMBER 1974 496 DEWAN RAKYAT PEGAWAI-PEGAWAI KANAN Setiausaha Dewan Rakyat, Datuk Azizul Rahman bin Abdul Aziz.
Timbalan Setiausaha, Haji A. Hasmuni bin Haji Hussein.

Penolong Setiausaha, Mohd.

Salleh bin Abu Bakar.

Penterjemah Melayu Kanan/Pemangku Penolong Setiausaha, Ghazali bin Haji Abd.

Hamid.

BAHAGIAN PENYATA RASMI PARLIMEN Penyunting, Yahya Manap.

Penolong Penyunting, P. B. Menon.

Penolong Penyunting, Osman bin Sidik.

Pemberita-pemberita: N. Ramaswamy.

Louis* Yeoh Sim Ngoh.

Abdul Rahman bin Haji Abu Samah.

Rani bin Rahim.

Suhor bin Husin.

Jamaludin bin Haji Ali.

Amran bin Ahmad.

Mohd.


Saleh bin Mohd.

Yusof.

Margaret Chye Kim Lian.

Quah Mei Lan.

Puan Kong Yooi Thong.

Juliah binti Awam.

Supiah binti Dewak.

Ismail bin Hassan.

BENTARA MESYUARAT Mejar (B) Musa bin Alang Ahmad.


497 12 NOVEMBER 1974 498 DOA (Tuan Yang di-Pertua mempengerusikan Mesyuarat) RANG UNDANG-UNDANG RANG UNDANG-UNDANG PERBEKALAN, 1975 Bacaan Kali Yang Kedua Perdana Menteri, Menteri Timbalan Kewangan dan Menteri Penyelarasan Per- badanan Awam (Datuk Hussein bin Datuk Onn): Tuan Yang di-Pertua, di samping saya bercakap dalam Bahasa Kebangsaan, saya mohon izin bercakap dalam bahasa Inggeris dalam ucapan saya ini.
supaya "Suatu Akta sejumlah wang Tuan Yang di-Pertua, saya mohon men- cadangkan bagi daripada menggunakan Kumpulanwang Disatukan untuk perkhid- matan bagi bagi Iain-lain memperuntukkan wang wang dibenar dikeluarkan untuk perkhidmatan bagi tahun itu" dibaca bagi kali yang kedua.
1975 itu dan telah sebagaimana tahun yang dan Ini ialah ucapan belanjawan saya yang sulung dan percayalah bahawa ucapan ini adalah yang paling sukar bagi saya membuat- kedudukan nya, memandangkan kepada ekonomi dan kewangan dunia yang luar biasa pada masa ini.

tanggungan Tun Tan Siew Sin yang patut kita puji di atas usahanya memperkukuhkan ekonomi dan mempersetabilkan kewangan negara kita tentulah merasa lapang oleh kerana terlepas daripada memikul ini dan menengok saya pula memikul tanggungan itu.
Saya ingin mengambil peluang ini memberi- kan kepadanya setinggi penghargaan atas "leadership" dan pimpinannya yang bijak- sana mengenai hal ehwal ekonomi dan kewangan negara kita selama beberapa tahun ini (Tepuk).

Saya yakin dengan tradisi yang telah dimulakannya itu serta kebijaksanaan Kerajaan mengendalikan rakyat masaalah ekonomi dan kewangan kita akan berjaya menenmpoh masa hadapan yang susah itu.
dan (Dengan izin) Tuan Yang di-Pertua, as I was saying, this is my first Budget Speech and believe me it is a difficult one to make, in view of the rather extraordinary world economic and financial circumstances.

Tun Tan to whom credit is due for much of our financial stability, economic strength and must be relieved to see me in his shoes.

I would like to pay him a warm tribute for his wise leadership and guidance in the economic and financial affairs of our country for so many years.
I am confident that with the tradition that he has set and with the intrinsic qualities of economic endeavour and financial prudence of our Government and people, we will be able to ride successfully through the difficult times ahead.

in the instrument active and the Budget financial position.
On I want to emphasise at the outset that I do not regard traditional sense as the means of accounting for the the Government's contrary, the Budget is and will be used as an of dynamic Government's economic, fiscal and monetary policies, so as to effectively achieve our country's socio-economic aspirations.

It will not be just a plan on paper but will seek actually to implement the objectives of the Second Malaysia Plan and the Perspective Plan, within financial stability.
In short, the Budget will give the nuts and bolts to the practical realisation of plan objectives which would otherwise be mere macro designs.

the framework of to that we will be able I will ensure that the Budget is a dynamic document that is both pragmatic and flexible so respond expeditiously and effectively to the economic and financial developments as they arise.

The Budget will in effect be an Annual Economic Plan.

It is with this philosophy that I have approached the Budget for 1975.
Indeed I would like to regard the 1975 Budget as a rolling economic plan that will anticipate the developments and needs, not only for next year, but for 1976 and the years ahead.

We in Malaysia are not unfamiliar with the business cycle which reflects the ups and downs in economic performance.
The basic approach of our economic management in the short the term, as evidenced ECONOMIC REPORT that will be tabled, is geared to managing the business cycle, which is largely determined by the economic performance in the industrial world.

Thus, when the industrial countries prosper, we gain from their demand for our exports.

But when or experience recession, we too lose out.


We their economies down from slow 499 12 NOVEMBER 1974 500 have experienced these problems in the past, therefore, not overwhelmed or and are, rattled by the recession and inflation that the industrial countries are now facing.

The major difference this time, however, is that the present recession is more serious and it is being accompanied by rampant inflation as well.

For instance it is expected that all the industrial countries, i.e.
including the United States, the countries of Western Europe and Japan will register economic growth rates in real terms, averaging about minus half per cent in 1974 and about 3 per cent in 1975, while the inflation rates will be in the region of 12 per cent this year and 7 per cent in 1975. in the We confidence in Malaysia will undoubtedly be affected by these international developments.

Nevertheless we will not be as adversely affected as most other countries.
In fact, it was refreshing for me to return home recently from Ottawa and Washington, to a climate of continuing economy although many countries were affected by economic gloom and a sense of foreboding and hopelessness.

I do not doubt, however, that there will be a recession in Malaysia and that there will also be continuing inflation.

This could also be accompanied by some increase in unemployment as well.

However, we will still have economic growth and financial stability.
We will have enough to eat and sustain ourselves; there will be no starvation like there will unfortunately be in some countries.

There will also be no mass the unemployment.

availability of land, adaptable labour and our accessibility to domestic finance and foreign exchange to alleviate the worst effects of the recession that is expected in 1975. resources, we will be able Indeed, because of What is more encouraging is that these difficult times will not last indefinitely.
It is our considered view that the world wide recession will ease somewhat in the industrial economies, sometime towards the end of 1975 and early 1976, when the Malaysian economy will also regain its growth momentum after the usual lag of a few months.

In essence troubled then, we are approaching some waters but we have the means to sail through on an even keel.
Tuan Yang di-Pertua, the challenge before us then is, to summon our resources and our best efforts collectively, to face up to the the that times to overcome lie ahead and to gear hard In the difficulties.

ourselves doing so we need to take stock of our economic strengths and our weaknesses so that we will be on firm ground and in full appreciation of total economic and financial perspective, before we evolve and enunciate economic and financial policies that will affect us all.
It is in this context that economic performance this year.

I shall be berif in my review as the detailed economic analysis and all the facts and figures are set out in my Economic Report for 1974/75, which should be regarded as the Supplement to my Budget Speech.

I wish review the to the energy crisis In the 1974 Budget Speech, the assessment of the economic outlook for this year was one of cautious optimism.
The Treasury was little uncertain cautious and perhaps a because of that had emerged last October just before the Budget.

However, when most people were already talking about economic gloom and some people were prophesising even doom, the Treasury estimated "a high growth rate of about 7 per cent at constant prices".
We were confident that our rubber prices would hold out at a high level, ironically because of the energy crisis, that synthetic rubber, which is a by-product of petroleum, would become more costly to produce.

We could have done better this year but for the decline in most of our commodity prices in the second half of the year, and the consequent economic slowdown that followed.
since we calculated The recession coupled with the continuing high inflation in the industrial countries, not only dampened demand for our exports, but also boosted the import bill considerably for 1974.

Thus, whereas exports expanded by about 50 per cent last year, they increased by only about 30 per cent this year.

Conversely, imports grew by about 30 per cent last year but shot up by nearly 50 per the external sector, cent unlike last year, did not provide the boost to economic growth this year.
this year.

Thus the main sector demand, Instead, private both private consumption and private investment, for economic provided growth in investment particular performed well in achieving about 37 per cent growth in current prices, although in real terms the growth rate was thrust for 1974.

Private 501 12 NOVEMBER 1974 502 estimated at about 13 per cent.

The impress ive growth in private investment was due mainly to the increase in the investment in machinery and equipment by 20 per cent.
This is certainly encouraging and reflects the expansion of the industrial sector and in particular the manufacturing sector.

forms Private consumption, which the largest component of the GNP at 61 per cent, also increased substantially by 26 per in current prices this year.

This is cent typical during and after a boom year, as evidenced from the significant increase in the import of cars, motor cycles, bicycles and clothing.
This economic indicates prosperity was enjoyed by the lower income groups as well, particularly by those who benefitted from the high prices for our export commodities.

that With the continuing pressure on prices, for the better part of this year, from the export and private sectors, the Government found it necessary to hold back spending, in order to reduce the pressure on inflation.
This was very difficult to accomplish, particularly for public consumption, as inflation also reduced the purchasing power of the lower and fixed income employees.

The Government, there fore, provided for increases in the wage bill public to employees.

Mainly because of this significant increase in the wage bill therefore, public consumption increased by about 19 per cent in current prices and about 8 per cent in real terms this year.
problems alleviate the of Public however, investment, registered slow growth of about 16 per cent in current prices and a decline of nearly 7 per cent in real terms.

This was because some projects or lower priority were dropped with postponed.

Furthermore, there were bottle necks and shortages of building materials.
The details for this slowdown in public investment are discussed more fully in the Economic Report for 1974 and 1975. implementation capacity in Tuan Yang di-Pertua, the balance of payments in 1974 will certainly not perform as well as last year.

This is chiefly because of the decline in export commodity prices and is to be expected during a slowdown in the economy.
However, the overall balance of payments will remain healthy in that it is estimated that there will be surplus of about foreign $100 million.

This will to exchange reserves, which will be able sustain a high level of 5 months retained imports.

increase it Although the economy performed satis that despite is unfortunate factorily, Government's best efforts, inflation grew to be worse than last year.

In many respects the high inflation rate estimated at about 18 per cent this year has been unavoidable.
Malay sia's imports constitute about 48 per cent of the G.N.P.

and the import price index in the first 7 months of 1974 had already increased by 42.5 per cent on an annual basis.

Its impact on our domestic prices therefore cannot be overemphasised.
Furthermore, the export earnings also added pressure to prices, especially earlier the inflation rate as reflected in the consumer price index for Peninsular Malaysia this year, is estimated to increase by about 18 per cent over last year's 10.5 per cent rate of increase.

In Sabah and Sarawak the inflation rate is estimated to increase by about 15 per cent this year.

the year.
the year.

Thus in the consumer price It is striking that food items which have a weightage of about 47 per cent in the calculation of index, registered an increase of 30 per cent for the first nine months of this year.

It is clear therefore stress imperative to ensure that our campaign to increase food production is successful.

imperative, that is it I The Government on its part is giving high priority to this campaign to increase food production.
Thus it is intended to open up another 500,000 acres of food cultivation, about half of which will be in Peninsular Malaysia.

land for Tuan Yang di-Pertua, sebagaimana yang saya terangkan tadi memandangkan kepada kenaikan harga barang-barang makanan, maka mustahaklah bagi kita menentukan iaitu kempen kita menambahkan makanan dalam negara kita ini berjaya.

Bagi pihak Kerajaan, ia akan memberi priority yang tinggi kepada kempen menaikan atau me- atau menambahkan makanan.
ninggikan Oleh yang demikian, Kerajaan adalah berniat untuk membuka tanah seluas 500,000 ekar kerana penanaman makanan dan setengah daripada ini ialah di Semenanjung Malaysia.

tanah 503 12 NOVEMBER 1974 504 Tuan Yang di-Pertua, the Government is also examining the possibilities of introducing large scale cultivation of padi on an estate basis and about 260,000 acres of this new land will be provided for padi cultivation.
I do not see why we should import beef, when we have the land and climate to expand this industry.

Plans are therefore being drawn up for the country to be self-sufficient in beef in 15 years time.

Consequently, programmes are also being finalised for the development of pastures and animal feeds which should also be produced them.

After here, that considerable research we are satisfied maize, sorghum and tapioca can be processed for animal feeds on a commercial scale.
instead of importing long there Similarly is also a term perspective plan for the development of the fishing industry.

There are unexplored fishing resources off the East Coast of Peninsular Malaysia, which will be exploited.

This would not only increase protein consumption but also raise the livelihood of the low income fishermen and bring about better regional balance in economic development.
Tuan Yang di-Pertua, these are some of Government's plans and I would like to see the private sector play its role too.

In fact I would like to urge the private sector to take up the challenge and expand and modernise the food production industry.

What we need is more drive, imagination and some sense of urgency to give effect to the food production campaign.
This is a fundamental objective of our anti-inflation programme and I am prepared to give sympathetic consideration to any problem that the private sector may have in helping to implement the Govern ment's policy of increasing food production.

import and excise duties, The Government as you know has taken to counter a whole series of measures inflation.
These have the from, ranged imposition of export surcharges, the exemp tion of the provision of subsidies and wage allowances, to the measures to restrain the increase in money supply.

All these measures have had a dampening effect on inflation which, how ever, has persisted largely because it is a world-wide problem.
I wish to add, however, further that we will not hesitate to take measures to restrain inflation so long as they do not conflict with our objectives of promoting economic growth and employment.

1974 BUDGET OUTTURN Tuan Yang di-Pertua, having reviewed the economic performance this year, I now would like to report on the financial position of the Federal Government.

that The 1974 Budget estimated there would be a $67 million surplus on its current account.
I am glad to say, however, that the surplus for this year is now estimated at about $660 million (Tepuk) which is about 10 times more than the Budget estimate.

This impressive budgetary outturn was primarily due to the striking increase of about 30 per cent the 1974 Budget increases were obtained estimates.
These mainly from the doubling of export duty the receipts by about $440 million and significant growth of 26 per cent or $215 million in income tax collections, based on the boom year of 1973 and of course the new oil revenues.

in' revenue over is feature Another outstanding is estimated that to Development Expenditure increase by nearly 40 per cent to about $1,548 million, over the 1974 Budget estimate.
Despite this increase, however, the overall deficit is estimated to be the lowest since 1971 largely because of the very healthy perfor mance of the current account.

The 1974 Budgetary position is, therefore, very strong.

THE OUTLOOK FOR 1975 Tuan Yang di-Pertua, I would now like to give our views on the economic outlook for 1975 before I get into the 1975 Budget.

It rubber.
It rubber.

that of The economy is expected to continue to slowdown next year due to the recession in the industrial world, which will adversely affect Malaysia's export commodity prices, is always especially difficult to estimate rubber prices.

Last year's Budget estimated that rubber prices would average 60 cents per pound or 132 cents per kilo actual average is now estimated at about 81 cents per pound or 178 cents per kilo!
Estimating rubber prices is a matter on which the best informed opinion is divided.

It is true that .external demand will depress the weak rubber prices next year.

However, it is also for RSSI; however, the 505 12 NOVEMBER 1974 506 rubber.

Already possible, as in the case of this year, that synthetic rubber prices will remain high, because of the continuing high oil prices.
Consequently there could be a shift in demand to natural the synthetic rubber called SBR 1500, which is equivalent to RSS3 natural rubber, costs about 67 cents per pound or 147 cents per kilo as compared to the RSS3 October price of 52 cents per pound or 114 cents per kilo.

SBR 1500 is therefore well above the price for RSS3.

There are many in the rubber market, under standably, who are confident that the rubber prices will remain about 65 cents per pound or 143 cents per kilo for RSS1 in 1975.
However, there are some who think it might average about 55 cents per pound or 121 cents per kilo.

So much for in forecasting rubber prices and the variety of these forecasts!

As Minister of Finance, however, I can have only one estimate—and one estimate only—to make my calculations.

I have, therefore, decided on an average of 60 cents per pound or 132 cents per kilo for RSS1, for 1975 as a whole.
If the price turns out to be higher, well and good; but I hope that the average for the whole year will not be lower!

the difficulties On this basis our exports in 1975 are projected to decline by about 6 per cent in current prices compared to the 30 per cent growth this year.

At the same time our imports will increase at about 9 per cent compared to the decline in exports.
For next year therefore, the external sector will not to economic growth; provide instead the export sector will be the main cause of the slowdown in economic growth in 1975. the boost Private consumption and private invest ment for next year are also not expected to perform as impressively as this year.
How ever, the anticipated growth rates of about 12 per cent and 13.5 per cent respectively in current prices compare favourably with the average of 6 per cent for private consumption and 9 per cent for private investment, that was realised for the 10 year period ending 1973.
I would add, that the estimates for private investment for 1975 which are based on the encouraging import data for machinery and Government's confidence that the economic prospects for private be comparatively good in 1975 and 1976 despite the recession.

investors will continue to equipment, reflect In view of the slowdown in exports and private sector demand, the 1975 Budget has been planned to play a counter cyclical role.
Thus, Government expenditures will be stepped up to counter the recessionary trends.

At the same time we will ensure that there is inflation.

Government impact on minimal consumption and Government investment have therefore been planned to increase by about 12 per cent and 17 per cent respectively in order to provide the thrust and lead for economic growth, .and with the hope and expectation that the private sector will also respond.
Taking all these projections into account, it is estimated that Malaysia's Gross National Product will grow by about 5 per cent in real terms in 1975 compared to about 6 per cent this year.

Next year's growth will therefore, be fairly respectable since it will be much higher than the low level of 2\ per cent growth projected for the industrial countries.

in the The inflation industrial rates countries are expected to slow down to an average of 7 per cent for the whole of 1975.
The external influence on domestic inflation, therefore, will continue to be felt, although less strongly, through our imports for next year as well.

However, the decline in export earnings and the reduction in the increase in bank lending and private spending, would dampen our rate of inflation.

In this regard, increased help considerably to reduce food prices.

Thus the consumer price index for 1975 can reasonably be expected the 1974 estimated average of 18%.
to be well below production would food Tuan Yang di-Pertua, given this kind of economic outlook, the 1975 Budget Strategy will be, to gear the economic, fiscal and monetary policies of the country so as to counter recession and restrain I inflation.

shall now outline the specific measures:— I would like to refer to the monetary measures that need to be taken to achieve this budget strategy.
Honourable Members are aware that several measures were introduced during the year to mop up excess liquidity in the economy.

These measures have proved to be effective in that they curbed money supply which increased on an annual basis by only 13.2% at the end of September this year, as compared to the annual increase of about 37% as at the end of December 1973.
507 12 NOVEMBER 1974 508 expansion Although monetary has slackened considerably as a direct result of the gradual tightening of monetary policy, the time is not yet opportune for a general easing of present measures.

Inflation is still very much with us and we must not allow the monetary situation in any way to fan the ambers of inflation.
However, there is a need for some selective relaxation to ensure that productive projects, especially in the priority sectors of the economy, are assured of adequate financing.

I have therefore decided to after consultation with Bank Negara double the growth ceilings for loans and advances to the manufacturing sector and for individual housing loans, that is, from 20 per cent to 40 per cent above the loans and advances outstanding to these sectors, at the end of December 1973.
The 20 per cent ceiling will now apply only to growth in the total loans and advances for all purposes, except these two that I have mentioned as well as loans to (a) Bumiputras, (b) Govern ment, corporations and agencies, and (c) small borrowers under the Credit Guarantee Scheme.

At the same time, the credit growth loans by borrowing companies ceiling for during the year will be raised from 25 per cent to 30 per cent above the base 1973 levels.
Loans by the commercial banks and finance companies must continue to be restricted to productive purposes only and loans for speculation, loans for hoarding and loans consumption will continue to be discouraged.

To ensure that the credit needs of small borrowers are the adequately met, commercial a minimum of 5 per cent of their total savings deposits in small the Credit Guarantee Scheme, is now raised to 10 per cent.
that should maintain for unnecessary the requirement loans under banks times of Tuan Yang di-Pertua, I am aware that many businessmen are not in a position to have all the credit that they have requested from their bankers as a result of our policies.

In inflation, each of us must shoulder our share of the sacrifice that must be made in order to contain the present growth in consumer prices.
I will see to it that the burden which they have been asked to bear is not heavier than necessary nor longer than appropriate.

Our policies have been, and will continue to be, flexible enough the to ensure productive capacity of our industries will not that projects that add to be denied adequate financing.

The Govern ment is watching the current situation very closely and the present policies are being reviewed regularly in consultation with Bank Negara.
The Government will not hesitate to act to promote monetary stability and a influence sound financial structure, and to the direction of the credit situation towards the objectives of national policy.

A key factor in solving any inflationary situation is to avoid unnecessary expenditure, especially the consumption of luxury goods.

We must step up savings and we must inculcate the savings habit in our people not only as part of the Budget Strategy but for the longer term.
the encouragement of launch The Government attaches great importance savings.

The to Prime Minister will the National Savings Bank on December 5.

The National Savings Bank will retain some of the better features of the Post Office Savings Bank and will also introduce innovations to make it a more dynamic savings institution.

At the same time plans are underway for the Employees Provident Fund rates of contribution and dividends to be revised, in order to improve the welfare of our workers.
increase savings as well as to to rural areas and reach all in those I would also urge bankers identify themselves more and more with the aspira tions and financial needs of the country, in order to sustain a higher level of investment, through increased savings.

The Banks could launch an extensive Savings Campaign which levels of should the public, including the rural areas.

Bank branches should be dispersed more widely in towns.
the Facilities in these smaller banks should be made more attractive and the atmosphere must blend with the environment, so that the people would feel "at home" in dealing with those banks.

Much more could be done to the promotion of savings.

I would therefore like to see early and concrete evidence of the banking community's efforts, to promote greater savings on a national scale.
the smaller intensify Tuan Yang di-Pertua, in this connection I would also like to clarify some doubts that may exist regarding the implementation of one aspect of our foreign exchange regula tions.
Honourable Members will recall that 509 12 NOVEMBER 1974 510 in to locally on May 8 last year, the then Minister of Finance announced that, in order to deter foreign companies from operating this country, with a minimum of capital resources and borrowing the maximum, companies which were controlled by non to seek Exchange residents were required Control approval for their loans from local sources if such loans exceed M$500,000.
It was then envisaged, however, that permission would freely be given up to an amount to a company's paid-up capital, equal reserves and longterm loans from abroad.

The intention was that while Malaysians and Malaysian-controlled companies would not be subject to any restrictions whatever, there would be some restriction to local borrowing by non-resident controlled companies.

However the monetary situation has changed.


Honourable Members are aware that in order to restrain the growth of money supply during inflation, certain measures were introduced on 23rd April this year to restrain bank credit.

These restraints had to apply to all borrowers whether resident or non-resident.

Thus borrowing by non-resident controlled companies had also to be curbed, despite the announcement on 8th May, 1973 that they could borrow freely, under the conditions that I have outlined earlier.
The point, therefore, is that, monetary policy will change to meet changing circumstances and that, the policy in existence at a particular time must be overriding.

recession and Tuan Yang di-Pertua, I now come to the 1975 Budget.

I mentioned earlier that the Budget would play its counter cyclical role to counter inflation.

Con sequently the Ordinary Expenditure for 1975 has been allowed to increase by about 21% to $4,595 million, while $2,306 million has been appropriated for Development Expendi ture.
This represents an increase of 26% over the 1974 development budget appropria tion.

Given is estimated that $1,800 million will be the actual amount spent on development next year.

This will be about 14% above the estimated actual expenditure for this year.

It is clear, therefore, that the appropriations for Government expenditures reflect Govern ment's expansionary policies at this time.
I will not go these expenditures as they are fully covered in the details of the usual shortfalls, into it Command Paper No.

21 of 1974 and the Economic Report, which supplements my speech.

low I would like to add however, that Develop ment Expenditure will be given high priority especially for those projects which will have high employment potential, import content, and which will not take long to complete.
Since these large allocations are being made for development to counter recession, it is imperative to ensure that these expenditures will be utilised for meaningful that will and carefully conceived projects really contribute the adverse effects both of recession and inflation.

to reducing take allowed Despite these large expenditure increases, Honourable Members will be glad to know that the 1975 Budget is estimated to record a surplus of about $280 million in its current account.
This surplus does not into account the new tax measures which I will announce shortly.

The expansion in develop ment expenditure will increase the overall to reach about deficit which is estimated $1,490 million for 1975, before the new taxes.

Although this increase is large, it has been counteract in order recessionary trends.

This deficit would be the high current much if not for account surpluses which will be used to finance some of the development expenditures.
The resulting overall deficit will be financed by increased domestic and foreign borrowing, new taxes and some drawdown of reserves.

Domestic borrowing, estimated at about $1,200 million will be largely obtained from non-inflationary the source Employees Provident Fund and the National Savings Bank.

Foreign borrowing will also be increased to about $210 million which will be shared about equally between market and project loans.
larger such as to TAX CHANGES FOR 1975 take that will be just outlined did not Tuan Yang di-Pertua, the overall financial position of the Federal Government which I have into account any new taxes.

I have mentioned the measures the in and monetary expenditure accordance with the budget strategy and now I shall introduce tax measures within the context of this strategy.

Tuan Yang di-Pertua, the Budget, like tooth extraction, is never painless (Ketawa).
However, I have ensured taken on fronts 511 12 NOVEMBER 1974 512 that it clear revenue yield or that I use sufficient anaesthetics to deaden I the pain.

Before proceeding, however, the figures of should make additional loss resulting from tax changes proposed refer to an estimated revenue yield or loss in a full year so as to avoid my having to repeat the words "per annum" every time.

I shall deal first with direct taxes.


revenue the EXCESS PROFIT TAX ON COMPANIES AND OTHER PERSONS reduced further by As Honourable Members are aware, the Government has taken several tax measures in the past to curb inflation.

The inflation increasing could be saving.

With this objective in mind it is now proposed to introduce a new tax measure.
With effect from the year of assessment 1975, it is proposed to levy a tax known as Excess Profit Tax, on the excess of the chargeable income of any company or any other person including an individual, at the rate of 5%.

Copies of the Bill to amend the Income Tax Act, 1967 for this purpose will be distributed the to Honourable Members shortly.
For purposes of (not including a non-resident company operating in Malaysia through a branch, establishment, office or agent) having chargeable income in excess of 25% of its shareholders' funds as defined in the Bill or $200,000, whichever is the greater, will be regarded as making excess profit and on this excess profit the tax will apply.

Chargeable income will be tax the amount as computed for purposes.
Like tax, no credit will be given to shareholders of resident companies in respect of the Excess the company.

As Profit Tax paid by if Honourable Members will appreciate, credit is allowed, it will render the tax less effective in achieving its objective.
tax, a company the development income this taking into account I should explain that the 25 per cent ratio of profit to shareholders' funds is proposed after the position of industries with high risks and the need to maintain attractive investment climate of the country in view of the Government's present to accelerate industrialization.
With efforts regard the amount of exemption of to $200,000, it is found necessary to introduce some fixed amount as an alternative basis for the existence of branches of non-resident companies operating this tax in view of in the country.

These branches have only working capital or they carry on through a current account with their headquarters.
Even though the consolidated balance sheet of the company will show shareholders' funds, the figures will not be entirely relevant the non to the Malaysian branch, since resident company may also have branches or activities elsewhere outside Malaysia.

For these branches of non-resident companies a comparison of the funds will not be quite shareholders' appropriate and so only the exemption limit of the fixed amount of $200,000 will apply.
the branch profit to ' At present the highest marginal rate of individual income tax is 50% on chargeable income exceeding $50,000.

In addition, a 5% development tax is leviable on development income which is defined as income from business and letting of properties situated in Malaysia.

It is also proposed to impose a 5% excess profit the chargeable income of any person, including an individual, a company, which exceeds apart from $75,000.
Assuming an in individual that all personal reliefs up to the maximum limits available under the income tax law are made, this would mean that an individual earning more than $7,000 per month only will be liable to pay the tax on the income in excess of $75,000.

the case of tax on the the provisions of It should be made clear that this tax will not apply to certain companies by virtue of the fact that they are exempt from income tax.
These include pioneer companies which are exempt from income tax in accordance Investment with Incentives Act, 1968.

In any case, the exclusion of such companies from the scope of this tax is not one of permanent feature.

The tax relief granted to pioneer companies is for a limited period and on expiry of this period tax.
Petroleum companies which are engaged in the exploration and production of petroleum are governed by the Petroleum Income Tax Act, 1967, whereby they are excluded from the Income Tax Act, 1967 under which this Excess Profit Tax is to be introduced.

Therefore, they will not be liable to this tax.

The provisons of the Petroleum Agreements concluded with these companies imposition of income tax on them.
The petroleum income tax legislation provides for the rate of tax at also preclude they will be scope of liable this the to 513 12 NOVEMBER 1974 514 50%.

I should mention that there is only one petroleum company in commercial produc tion at the moment and this company has agreed to pay petroleum income tax at the rate of 55% in line with the increase in income tax in the Persian Gulf countries.
income from As Honourable Members are aware, persons who are engaged in the production of tin or in the extraction of timber are at present subject to Tin Profits Tax and Timber Profits Tax respectively.

It is proposed that the timber extraction be also excluded from the scope income, of the Excess Profit Tax.

Any institutions, authorities, persons and funds exempt from income tax under the provisions of the Income Tax Act, 1967, will also be exempted from the Excess Profit Tax.
tin mining and The estimated yield of additional revenue from this new tax is about $15 million from companies and about $3.5 million from other persons.

SEPARATE WORKING WIVES INCOME TAX ASSESSMENT FOR it to for is now proposed Tuan Yang di-Pertua, under the present system, the income of a wife is aggregated with that of her husband for the purposes of income tax assessment.

The system has merits from the point of view of revenue and equity.
In the light of several representations received, the Government has reviewed this system, particularly from the point of view of its possible disincentive effect on wives to work.

On balance, therefore, it is considered that there is a case for this system to be revised and introduce a separate assessment the purposes of income tax and the proposed excess profit tax for a wife having income from employment only, that is salaries, wages, etc.

as defined in the Income Tax Act.


Income from other sources will continue to be aggregated with that of her husband and assessed jointly as at present.
Under this new system the wife will be entitled to claim a personal relief of $2,000, earned income relief on her employ ment limit being apportioned proportionately between her employment income and her other earned income, and fund contribution and insurance premium paid by her subject the present maximum limit of $3,000 in that respect between the wife and the husband or to an apportionment of the maximum for provident income, relief (Ketawa).
Child the wives separately assessed and among relief will be husband.

allowed only to the father.

(Ketawa).

It will be appreciated that it will be difficult to spilt the child reliefs between the husband and the wife without causing domestic upheaval.

Since it is the responsibility of the father to maintain the family, it is proposed that child reliefs will continue to be allowed to the husband only as at present.
The exemption limit of $75,000 applicable to Excess Profit Tax will also be apportioned between the wife and the husband or among the wives separately assessed and the husband in the proportion of the chargeable income of each.

It is possible that there may be cases among taxpayers in the lower income brackets where separate assessment will result in the wife having to pay more tax on her income than the under the the husband's reliefs available to him.
For this reason, it is proposed that separate assessment on the wife be made only on her option to do so.

joint assessment, because income cannot absorb all If this allowed, (Ketawa).

This The proposed separate assessment will not, in the however, apply to wives employed husbands' businesses is absolutely necessary on revenue considera tions.
it will create a loophole for the husbands to use the wives' names as their employees although the wives are not really working and pay her high salaries in order to take the tax advantage of this system.

This will considerably erode the loss of tax base resulting revenue to the Government, a position which the Government can ill afford, not to mention the problems of enforcement against such avoidance.

in substantial This new system will be made effective as from the year of assessment 1975.
In agreeing to this proposal from Kaum Wanita the Government incurs a loss of about $7 million.

ABATEMENT OF INCOME TAX IN SABAH AND SARAWAK according Tuan Yang to di-Pertua, paragraph 24 of the Report of the Inter- Governmental Committee of 1962, the level of taxation in Sabah and Sarawak should be brought up to that of Peninsular Malaysia in graduated stages.
With regard to income tax, when Malaysia was formed, an individual in Sabah and Sarawak with a taxpayer 515 12 NOVEMBER 1974 516 less chargeable income of not more than $50,000 per year was entitled to an abatement of 40% of the tax.

In other words, he was paying 40% income tax than an individual taxpayer in Peninsular Malaysia.

In the 1966, 1971 and 1973 Budgets, this tax abatement to 30%, 20% and 10% was respectively.
It is now proposed to remove income tax abatement completely so this that an individual taxpayer anywhere in Malaysia will be liable to the same amount of income tax.

reduced The removal of this tax abatement is estimated to bring in about $2 million of additional revenue.

REDUCTION DEDUCTIONS IN CERTAIN ALLOWANCES AND The income tax law at present provides for certain allowances or deductions to be allowed for income tax purposes.
Whilst it is recognized that such allowances or deduc tions should be given where expenses are wholly and exclusively in the production of income of a business, it is considered that some restriction is necessary in respect of certain types of expenses to ensure that the Government does not lose revenue.

It is, therefore, proposed to restrict for motor cars and capital allowances deduction for excessive bonus payment as expenditure.
incurred (a) Capital allowances in respect of motor cars used in business is to allow an In respect of any motor vehicle owned and used for the purpose of a business, the current practice initial allowance of 20% of the full cost of the vehicle and an annual allowance of 20% of the written down value.

It is recognized that motor vehicles are a necessary requirement in the operation of a business.
This is certainly true in the case of motor vehicles transportation of licensed for commercial goods and passengers such as lorries, buses, vans and so on, and for such motor vehicles a full allowance of their costs is justifiable.

However, in respect of motor cars, whilst it is conceded that they are also required in the they need not operation of a business, necessarily be of the expensive types.
It should be noted that, unlike taxis and hire cars, these motor cars can also be used for private purposes and that motor cars used for private purposes do not qualify at all for any deduction for tax purposes for the owners.

to restrict the It is, therefore, proposed allowances, cars purchased on or after the first day of the basis period for the year of assessment 1975 to a maximum value of $15,000 only.
for motor permitted ' (b) Bonus Payment by an employer to an employee Under the present income tax legislation, any amount paid by an employer to an employee by way of bonus, qualifies for a deduction as an expenditure the employer's income.

It is proposed to limit to a maximum of two- such deduction twelfths of the wages or salary paid to each employee so that deduction is not allowed to excessive bonus payment.
This change will be effective from the year of assessment 1975. from BENEFICIAL VALUE OF LIVING ACCOMMODA TION PROVIDED TO AN EMPLOYEE At present, if an employee is provided with a living accommodation by his employer either rent free or otherwise, the value of such accommodation as defined in the income tax law is assessable as benefit in kind to the employee, but not exceeding 20% of the employee's emoluments.
In the case of the employer, he is getting a full deduction for the actual rent paid to the owner.

This has been the practice for several years.

It will that rental value has also be appreciated increased considerably since the recent past.

It is, therefore, proposed that this provision relating to the beneficial value assessable on the employee in respect of the accommoda tion be revised.

The maximum limit of 20% is to be increased to 30%.
This change will be effective from the year of assessment 1975.

LAND SPECULATION TAX Honourable Members will recall that a Land Speculation Tax was introduced in the last Budget with the objective of curbing speculation in land.

It was considered that such speculative activities were one of the main factors contributing to the rise in land prices.
The tax at the rate of 50% is imposed on any disposal of lands and in Malaysia, and any buildings situated interest, option and other rights in or over 517 12 NOVEMBER 1974 518 land if such disposal is made within two years after the date of acquisition of the asset, and if the amount or value of the consideration for the disposal of the asset is $200,000 or more.
the During the debate on this proposal in this House, I remember that many Honourable Members expressed the view that the exemp tion limit of $200,000 was too high.
In his reply, former Minister of Finance explained that as this was a new tax, it was necessary to proceed with this tax cautiously at the initial stage, partly to enable the Inland Revenue Department to gain some experience in the administration of the tax, and partly, to ensure that the tax would not hit those whom the tax was not designed to include.

He went on to say that the Govern ment would review the position from time to time with the view to making it more effective.
In the light of the experience gained in the operation of this tax, the time has now come for a change to be made in order that the tax be more effective.

Statistics have also shown that a larger proportion of transactions in lands and buildings fall below $200,000 in value.

It is, therefore, proposed to lower the exemption limit from $200,000 to $100,000 with effect from 13th November, 1974.

The disposal period of two years will, however, remain unchanged.
It is estimated this change will that generate about $5 million of additional revenue.

INDIRECT TAXES ROAD TAX ON MOTOR VEHICLES Tuan Yang di-Pertua, it is proposed to restructure the road tax on some categories of motor vehicles with the objectives of bringing about a greater equity in the tax system, an improvement in public transporta tion, and at the same time to raise additional revenue for the Government.
(a) Tax an Buses At present, a seat tax is imposed on buses at the rate of $10 per authorized capacity per month.

For example, a bus with a capacity of 40 passengers will have to pay $4,800 per year.

This represents a fixed cost to the bus company, irrespective of the number of passengers each bus carries.

Thus, a bus companies operating in a sparsely populated area has to pay the same amount of tax as that payable by a bus of similar size operating in a densely populated area.
Obviously, this tax favours bus densely populated areas.

Moreover, since the tax is it discourages bus fixed companies from expanding.

This is certainly not desirable in view of the present need to improve the public transport system.

for each bus operating in is the With this objective in mind, it is now proposed to modify the present seat tax system.

The new tax will be $10 per authorized capacity per month or 12% of the gross collection, whichever lesser.
Under the latter basis, the tax is payable on the gross collection made in a quarter.

For the purpose of this tax, taxable quarter means January to March, April to June, July to September and October to December of each year.

The tax is required to be paid within 28 days in the month following each quarter.

For this purpose, a company has to submit a. return on the gross collection of each quarter together with the payment of the tax.
Under this new system, a bus company operating the same fleet of buses in a less lucrative area, will pay less tax than under the present system.

Similarly, a bus company operating in urban areas will not be paying more tax than what it is paying now.

1975 since 1st February, It is proposed to make this change effective from some amendments will have to be made to the road transport legislation.
It is realized that there may be bus companies which have made payment in respect of any month of the taxable quarter January to March, 1975.

For such cases, provisions will be made for such companies to adjust to the new system.

This change will result in a loss of revenue of about $8 million.

(b) Road Tax on Private Passenger Cars Tuan Yang di-Pertua, as a revenue measure, it is proposed to revise the motor vehicle licence fees, or commonly known as the road tax, on private passenger cars.
At present, the road tax on motor cars using petrol is imposed at a flat rate of 12 cents per cubic centimeter of cylinder capacity.

In respect of motor cars using diesel, the road tax is 44 cents per c.c.

or 32/3 times of that to petrol powered cars.

The applicable 519 12 NOVEMBER 1974 520 proposal now is to introduce a graduated scale of road tax to replace the existing flat rate.

The rates for petrol powered cars will be 13 cents on the first 1,000 c.c.
and there after the marginal rate rises by 1 cent per c.c.

for every subsequent 500 c.c.

increase until the cylinder capacity reaches 3,000 c.c.

After this level, the rate will be 18 cents per c.c.

To state it in another way, the new rate structure will be 'as follows: On the first 1,000 c.c.

On the next 500 c.c.

On the next 500 c.c.

On the next 500 c.c.

On the next 500 c.c.

the balance On 13 cents per c.c.

14 cents per c.c.

15 cents per c.c.

16 cents per c.c.

17 cents per c.c.


18 cents per c.c.

to diesel powered cars, With regard the amount of road tax payable will be increased to four times that which is payable on petrol powered cars.

At present, tax payable on diesel powered cars is 32/3 times and we are increasing it only by an additional the road Under the new road tax structure, the increase in the amount of the tax payable in respect of petrol powered cars, for example, will be $10 for a 1,000 c.c.

car, $35 for a 2,000 c.c.


car, and $80 for a 3,000 c.c.

car.

From the equity point of view, the element of progression contained in the new road tax means that people who own bigger cars should be able to pay more tax.

However, I should make it clear that the new rate structure will not apply—repeat, not apply—to all classes of taxi and hire cars so as not to increase the tax burden on the public transport services.
They will, therefore, continue to be liable to the present rates of road tax, that is 12 cents per c.c.

for petrol powered cars and 44 cents per c.c.

for diesel powered cars.

It is estimated tax structure will generate an additional revenue of about $9.5 million.

this new road that (c) Road Tax on Motor Cycles The existing road tax on motor cycles is $40 per year.

This rate has been in force since 1959.

It is now proposed, as a revenue measure, to increase it by $10 to $50.
The increase will yield about $5.5 million of additional revenue.

CUSTOMS DUTIES As a revenue measure, it is proposed to import duties on make some changes in unmanufactured tobacco, cigarettes, cigars and liquor and in excise duties on some items, IMPORT DUTIES At present, unmanufactured tobacco attracts an import duty of $9.40 per lb.

This duty is now to be increased by $1.80 to $11.20 per lb.

The import duty on cigarettes is to be increased from $12.50 to $15.00 per lb.
and the import duty on cigars from $16 to $20 per lb.

The estimated yield of additional revenue from these duty increases is about $20 million per annum, of which $19 million will be from unmanufactured tobacco.

The import duties on wines and liquor are to be increased by 10%.

Honourable Members will be able to see the details of this proposal in the Customs Orders, copies of which will be circulated to Honourable Members in a short while.
Malt liquors—that means beer as well—are, however, not affected by this change.

These duty increases are raise about $2 million of estimated additional revenue.

to EXCISE DUTIES The excise duty on cigarettes is to be increased from $1.30 to $1.50 per lb., an increase of 20 cents.

The additional revenue yield is about $4 million.

Tuan Yang di-Pertua, at present, there is an excise duty on condensed milk at the rate of 1 cent per lb.
It is proposed to remove this duty as this item can be regarded as essential.

The loss in revenue is about $1.7 million, which Honourable Members would be aware is a form of indirect subsidy to this commodity.

The excise duty on plywood and veneer at the rate of 1 cent per square foot is also these are building to be abolished since materials.

The estimated loss in revenue from the removal of is about $1.6 this duty million.
GAMING TAX Under the Gaming Tax Act, 1972, a person participating form of gambling activity, except the social welfare lottery and toto is liable to pay a gaming tax at the rate of 5%, subject to a minimum of 5 cents.

in any 521 12 NOVEMBER 1974 522 the chips in Where a gambling activity involves the use of tickets, coupons or receipts, there is no difficulty in the administration and collection of the tax.
However, there are some forms of gambling activities such as those found in a casino which make use of chips.

The itself does not purchase of constitute in law a bet, but merely provides the means by which a bet is made.

A bet takes place only when the chips are used and only at tax can be this stage is administratively collected.

Obviously difficult to collect the tax at this stage— everytime somebody puts the chips on the table, the Customs officer will have to say "I am going to tax on the chips".
It is therefore proposed to amend sention 2 of the Gaming Tax Act, 1972, to provide that where chips or other articles are used in a gambling activity, leviable and tax becomes collectible at the time when the chips or other articles are purchased.

that it the the It is estimated that this change will yield about $7 million of additional revenue.

SERVICE TAX the services sector As Honourable Members are aware, the services sector of our economy accounts for a significant proportion of our G.N.P.
With the rapid growth of industrial and economic is also development, growing in importance, and will provide a potential source of revenue.

It is, therefore, proposed to introduce a new legislation to enable the Government to tax this sector, and the new tax is called Service Tax.

Copies of the Bill for this purpose will be circulated to Honourable Members.
This tax will be levied on all charges in respect of any prescribed services and all sales or provisions of prescribed goods made by or in any prescribed establishment.

Like the Customs Act, 1967, the Minister of Finance will be empowered to fix the rate of Service Tax to be levied by way of an order published in the Gazette, and to amend it from tax will be to time.

This administered by the Department of Royal Customs and Excise.
time Under this new legislation, it is proposed to impose a Service Tax at the rate of 5% on certain in hotels and similar establishments, such as motels and rest houses.

For the purpose of this tax, the services provided services which will be taxed are confined to and accommodation, other services provided by such establish ments.
food, entertainment Proprietors of hotels and similar establish ments referred to as taxable persons, will be responsible for charging and collecting the tax and filing monthly returns in respect of the taxable services to the Department of Royal Customs and Excise.

Taxable persons will be required to pay all taxes collected is a during each calendar month, to the Department within twenty-eight days in the month following each taxable period.
taxable period, which For purposes of control and ease of administration, a taxable person will be required to apply and obtain a licence from the Department of Royal Customs and Excise.

This licence will be issued free of charge.

Application forms for such a licence can be obtained from all customs stations throughout the country.

It is proposed to make this tax effective as from 1st February, 1975.

It is estimated that this new tax will yield about $5 million of additional revenue in a full year.
Tuan Yang di-Pertua, I should like to mention that as this new source of revenue is to be derived from, among others, hotel services, which the form tourist industry, an arrangement will be made by the Treasury to give sufficient funds out of this revenue to the Tourist Develop ment Corporation to enable it to promote further the tourist industry in the country.

part of All the proposed tax and duty changes that to I have mentioned are expected generate about $60 million of net additional revenue.
OVERALL DEFICIT With the additional revenue of $60 million the tax and duty changes expected from mentioned earlier, a current account surplus of about $340 million and an overall deficit of $1,430 million are anticipated for 1975.

CONCLUSION I would like to conclude my speech with an affirmation of my faith in the readiness of our people, in all walks of life, to face the hard times ahead with fortitude and self- reliance.
As I have said earlier, the issue 523 12 NOVEMBER 1974 524 bahawa usul di atas nama saya berkenaan Anggaran Perbelanjaan Pembangunan, 1975, dalam Aturan Urusan Mesyuarat hari ini diserahkan kepada Jawatankuasa sebuah- buah Majlis yang berbunyi: Bahawa Dewan ini membuat ketetapan iaitu satu jumlah wang sebanyak tidak lebih daripada $2,406,598,777 dibelanja- kan Pem daripada Kumpulanwang bangunan bagi tahun 1975, dan bagi maksud kepala dan pecahan-pecahan kepala perbelanjaan pembangunan yang dinyatakan di bawah Kepala Pembangunan atau senarai Belanjawan Persekutuan, 1975 yang dibentangkan sebagai Kertas Perintah 22 tahun 1974, adalah diuntukkan di bawah kepala-kepala yang berkenaan jumlah-jumlah yang se- tentang dengan pecahan-pecahan kepala itu di ruangan enam dan tujuh senarai tersebut.
"P" dalam Perdana Menteri: Tuan Yang di-Pertua, saya mohon menyokong.

perbahasan Tuan Yang di-Pertua: Ahli-ahli Yang Ber- hormat, atas bacaan kali yang kedua Rang Undang-undang Per- bekalan, 1975 dan Usul yang telah dike- mukakan oleh Yang Berhormat Menteri Kewangan akan dimulakan pada minggu hadapan.

Sekarang saya ini sehingga pukul 2.30 petang, hari Khamis, 14hb November, 1974. tangguhkan Dewan Dewan ditangguhkan pada pukul 5.00 petang.
before us is to summon our abundant resources and our best efforts collectively, and thereby gear ourselves to meet the challenges and hard times ahead.

The Government has done a great deal to combat inflation and recession.

It will not hesitate to take sterner and firmer measures, if such measures are necessary.

The Government's efforts must, however, be supplemented and supported by the people themselves.
The business community must play their part in keeping prices down and reducing their profit margins.

Similarly, the labour unions must help times by restraining their demands for excessive wage increases which would inevitably lead to in production, aggravation of reduction inflation and increase in unemployment.

The farmers must increase their food production, the manufacturers must expand theirs, and above all, the people must start inculcating the savings habit and save as much as they can.
Let us then face these challenges and trying times with a united voice and a united action, so that together, we the Government and the people, will weather the storm that is ahead of us.

these difficult in Tuan Yang di-Pertua, saya mohon men- cadangkan.

(Tepuk) Perdana Menteri: Tuan Yang di-Pertua, saya mohon menyokong.

USUL ANGGARAN PEMBANGUNAN, 1975 Datuk Hussein bin Datuk Onn: Tuan Yang saya mohon mencadangkan di-Pertua, 16734—3-5-75.