Malaysia risks a brain drain - 2008 Budget

While the Budget contained measures to help the poorest Malaysians but the lack of income tax cut may let Malaysia risks a brain drain.

The Prime Minister said the main thrust of the Budget was aimed at enhancing the nation’s competitiveness, strengthening human capital development and ensuring the well being of all Malaysians.

Designed to propel the country into becoming a competitive global player, Datuk Seri Abdullah Ahmad Badawi said the budget was to improve the quality of life of every Malaysian.

He said a total of RM12bil has been allocated to implement the Higher Education Strategic Plan, launched on Aug 27 this year.

He opted to cut the corporate tax rate another one percentage point to 25 percent from 2009, adding to previously announced reductions which have lowered it from 28 percent.

The government cut corporate tax rates and property stamp duty in the 2008 Budget unveiled today, in an attempt to spur the economy, which is imperiled by an uncertain global outlook.

Malaysiakini reported Chua Hak Bin, an economist with the Singapore-based Citigroup Global Capital Markets, said that while the Budget contained measures to help the poorest Malaysians, the lack of an income tax cut was regrettable.

"Yes there is disappointment. Other countries like Singapore have cut personal taxes, with their highest tax rate at 20 percent. By not cutting personal tax, Malaysia risks a brain drain," he said.

But with an eye to elections, which are tipped to be held well before a 2009 deadline, Abdullah announced that school fees would be axed, and that a free books scheme currently offered to poor students would be extended to everyone.