Highlights from Malaysia's Budget 2020

Below are the highlights from Malaysia's budget for 2020:

• 10 yr tax break for the electronics sector that shifts towards 5G and Industry 4.0.
• Shorten procedures to register a business.
• Allow delayed payments at customs to speed up trade.
• MYR 250m on rural connectivity.
• MYR 50m for the 5G ecosystem.
• MYR 550m grant for companies to automate, promote smart manufacturing.
• MYR 20m for e-sports.
• MYR 30 in credit to open e-wallet.
• MYR 500m guarantee for women entrepreneurs.
• Grants to improve financing access for Bumiputeras.
• MYR 2bn industry transformation.
• Special task force for Islamic Finance.
• Extension of the tax break for Sukuk issuance through 2025.
• Extends tax break for Syariah funds through 2023.
• Extends tax break for green tech investments through 2023.
• Solar industry 70% income tax break for 10 years.
• MYR 550m for palm oil farmers replant.
• MYR 810m for FELDA settlers.
• MYR 524m for the public R&D sector.
• A 10-year tax break for intellectual property.
• MYR 1.1bn on tourism targets 30 million tourists in 2020.
• Special investment incentive to attract Fortune 500 global companies.
• Incentives to help unemployed graduates for >12 months, top-up MR 500 for the employee, MYR 300 to the employer for hiring the employee.
• Increase maternity leave to 90 days.
• Higher minimum wage MYR 1,200/mth in main cities.
• SME tax threshold raised to MYR 600k (from MYR 500k), taxed at 17%.

Looking at the list, I felt that it has actually ignored the M40. A lot of the budget is for the B40 and companies. Nothing much for the rest of us. A reduction in income tax will be much appreciated. With living expenses on the rise, less income tax will be helpful. Only happy that we are getting RM30 in our e-wallet. Now, I wonder which e-wallet will the government transfer the RM30 to, since most of us have Boost, TnG eWallet, Bigpay, Setel, etc.

Still, if you already have a financial plan ready, just continue with the plan. Any additional stuff that the government gives is a bonus.

The Simple Path to Wealth by Jim Collins

The author of the book advocates a self-directed approach to investing and money management. In short, it tells you to avoid debts, save half of your income, invest your savings in low-cost index funds and ignore the news about the up and down of the stock market.

In the book, you will learn that the investment industry is interested in making you feel that the whole investment process is complex. For this reason, you would need help to be successful in the stock market and your only solution is to go for those advisers that, without you knowing, will earn money for themselves at your expenses.

The book also offers specific recommendations for self-directed investing, and carefully explains the rationale behind his conclusions. He also translates studies and stats into easy-to-understand English.

The only thing that the author said that an investor needs to do is to invest in the following two funds:

• VTSAX - Vanguard Total Stock Market Fund
• VBTLX - Vanguard Total Bond Market Fund

With these two funds, we are basically covered and the more we invest in it, the better. However, to invest in both of the above funds, big capital is needed. So, the author provided an alternative which is the equivalent ETF:

• VTI - Vanguard Total Stock Market ETF
• BND - Vanguard Total Bond Market ETF

It is possible for us to invest in both ETF but there will be more works that need to be done before we are able to buy it. I have a bit of experience in this and will share what I know in the near future.

Other information given may not be suitable for us, Malaysian. Stuff such as 401K, Roth and Malaysian low-cost index fund does not really exist in Malaysia. But still, it is a very good read to understand that investing can actually be very simple.

Personally, I have learned a lot from reading this book and my investment strategy is mainly based on the author's concepts of investing but with a tweak to suit our Malaysian market. If you are interested to read this book, you can buy it here.