KUALA LUMPUR, Oct 29 — The Ministry of Finance (MoF) has announced the RM332.1 billion Budget 2022, with federal revenue projected to achieve RM234 billion, or 5.9 per cent more than 2021.

This figure has been forecasted to potentially rise to RM240.1 billion.

Three-quarters of its revenue, as detailed in MoF’s Fiscal Outlook and Federal Government Revenue Estimates 2022 report, is expected to come from just tax revenue worth RM171.3 billion, or 73.2 per cent of the total estimated revenue.

Income tax is expected to contribute 35.7 per cent, indirect taxes with 13.3 per cent contribution, and other direct taxes to contribute 2.6 per cent of the total revenue.

These include collections from taxes and levies on petroleum products, from high-grossing companies, individual taxes, import and export duties, sales and services tax (SST), and excise duties.

“In 2022, petroleum-related revenue is forecasted to register RM43.9 billion or 18.8 per cent of total revenue, with Petronas dividends accounting for more than half of the total.

“Non-petroleum revenue is also projected to increase by 6.5 per cent to RM190.1 billion, reflecting better revenue diversification on the back of a favourable economic outlook,” read the report.

Non-tax revenue is expected to contribute to 26.8 per cent of the overall income, coming from avenues such as the issuance of licences and permits across industries and dividends from investments.

MoF included that annual dividends in 2022 from Bank Negara Malaysia are expected to be at RM25 billion, and those from the Retirement Fund Incorporated (KWAP) at RM5 billion.

A total of RM10.9 billion is projected to come from the issuance of licenses and permits, RM3 billion from motor vehicles licences and RM1.9 billion from foreign workers levy.

Overall, a forecast of RM234 billion in revenue is a 5.9 per cent increase compared to 2021’s estimated income of RM221 billion.

To make up the remaining 29.5 per cent of Budget 2022’s RM332.1 billion value, borrowings and the use of government assets, which amounts to RM97.9 billion, has been budgeted in by MoF.

MoF also estimates Malaysia’s gross domestic product (GDP) to expand between 5 and 6 per cent in 2022, with a total valuation of RM1.474 trillion.

The ministry also revealed its projection for the government’s current account balance surplus at RM55.6 billion or 3.5 per cent of the gross national income in 2022.

Data included showed the current account’s surplus to be at RM60 billion in 2020, and estimated to reach RM56.6 billion this year.

As for 2021’s GDP, that has been valued at RM1.391 trillion, with a growth of 3 to 4 per cent compared to last year.

Domestic economic outlook

MoF projects for sectorial expansions across the board, namely in the services sector which is expected to see a 7 per cent expansion, contributed by growth in sub-sectors such as wholesale and retail trade, information and communications, finance and insurance, transportation and storage, food and beverages, and accommodation.

“With these encouraging developments, the tourism industry is projected to rebound strongly by 28.9 per cent with the resurgence of tourist arrivals and domestic tourism,” read an excerpt from MoF’s Economic Outlook 2022.

Other sub-sectors that are expected to see growth include real estate and business services (8.6 per cent), utilities (6.7 per cent), and the government services sub-sector which is forecasted to expand by 5.3 per cent.

The manufacturing sector is expected to see growth of at least 4.7 per cent in 2022, the agricultural sector around 3.9 per cent, while the construction sector is expected to see an expansion of around 11.5 per cent next year.

A 0.3 per cent contraction, however, is expected in the mining industry which is influenced by the prolonged uncertainties brought on by the Covid-19 pandemic, while also attributing lower crude oil and condensates production.

MoF predicts that pent-up demand will drive expansion in domestic demand volumes by up to 6.6 per cent, along with private consumption (7.3 per cent), private investments (2.6 per cent), and public consumption (1.1 per cent).

Additionally, gross exports are expected to rise by 1.5 per cent across all sectors, while gross imports are expected to also increase by 1.7 per cent.