Economic Report 2016/17: Govt revenue to fall 3% in 2016

PETALING JAYA: The government's revenue in 2016 is expected to decline 3% to RM212.6 billion from RM219.1 billion in 2015 mainly due to the lower collection of petroleum-related revenue by 34.4% following lower crude oil prices, according to the Economic Report 2016/17.
However, this is expected to be cushioned by better collection of the Goods and Services Tax (GST) and additional revenue from measures announced during the budget recalibration. Thus, total revenue as a percentage to gross domestic product (GDP) is estimated at 17.2%.
Tax revenue remains the main source of the government's revenue, accounting for 78.6% of total revenue. It is projected to increase marginally by 1% in 2016 to RM167.1 billion or 13.6% of GDP.
Non-tax revenue is anticipated to decline 15.2% to RM45.5 billion due to lower receipts from investment income mainly from Petroliam Nasional Bhd's dividend of RM16 billion.
The government's total expenditure in 2016 is estimated to decrease 2.2% to RM252.1 billion with a share of 20.5% to GDP. A sum of RM207.1 billion is allocated for operating expenditure, while RM45 billion is for development expenditure. Government expenditure continues to focus on programmes and projects with high multiplier effect to the economy amid a challenging environment, while ensuring the well-being of the rakyat.
Operating expenditure is expected to decline 4.5% to RM207.1 billion with its share of GDP at 16.8% on account of measures to optimise and rationalise supplies and services, grants and subsidies as well as purchase of assets.
Emoluments remain the largest component, constituting 35.7% of operating expenditure. It is expected to grow 5.4% to RM73.9 billion contributed mainly by special financial assistance in January and June 2016 to ease the cost of living as well as a salary increment in July 2016 and the implementation of Minimum Wages Order 2016.
Development expenditure for 2016 is projected to increase 10.4% to RM45 billion and accounts for 17.3% of the total 11th Malaysian Plan ceiling. In terms of sectoral allocation, the economic sector accounts for the largest allocation (61.4%), followed by the social (24%), security (11.2%) and general administration (3.4%) sectors.