Following the theme of “MADANI Economy: Prosperous Country, Prosperous People”, Budget 2025 has been tabled on October 18, 2024, by Malaysia’s Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim.
If you missed it, here are the must-know topics for entrepreneurs and startups to note.
1. The government has allocated RM421 billion for Budget 2025
The 2025 budget is the highest ever announced at RM421 billion.
RM335 billion is going towards operating expenses, while RM86 billion as development expenditure, and RM2 billion is in contingency savings.
2. The government is introducing a new Investment Incentive Framework
The government agreed to introduce a new Investment Incentive Framework that focuses on high-value activities.
This framework is expected to be implemented in the third quarter of 2025. It involves the following points:
Tax incentives for high-added value activities in the electrical and electronics (E&E) sector, such as integrated circuit (IC) design services and advanced materials.
Special tax deductions for people in the fields of artificial intelligence (AI), robotics, internet of things (IoT), data science, fintech, and sustainable technology.
Incentives will be given to multinational enterprises (MNEs) spending up to RM2 million per year. There’ll also be an investment matching fund of more than RM100 million ringgit provided through an equity public funding platform for the development of local suppliers in the E&E, speciality chemicals, and medical devices sectors.
Economic groups to be created according to state specialities—such as renewable energy in Perlis and Sabah, and specialised chemical industry in Pahang and Terengganu—to reduce the economic gap between regions.
Income tax incentives are offered at a special rate for investment in 21 economic sectors in states such as Perlis, Kedah, Kelantan, Terengganu, Sabah, and Sarawak, subject to successful economic spillover.
To ensure investment based on ESG, tax incentives such as investment tax allowances or income tax exemptions are given for Carbon Capture, Utilisation, and Storage (CCUS) activities.
3. Government agencies to be combined
If you’re a startup founder, you’ve likely gotten confused by all the various government agencies that exist. Well, our Prime Minister announced that several governmental entities are being combined so that they can operate more effectively. This includes:
MAVCOM and CAAM
InvestKL and MIDA
Razak School of Government and INTAN
HDC and MATRADE
4. RM200 million for CoSIF and NIDF
Next year, a total of RM200 million will be provided, covering the Strategic Joint Investment Fund (CoSIF) and the NIMP Industrial Development Fund (NIDF).
Both of these will go towards supporting the growth of SMEs and mid-sized companies and encouraging innovation.
5. KWAP to receive RM1 billion for its Dana Perintis fund
KWAP, under its Dana Perintis fund, will be allocated RM1 billion to support the activities of local startup companies, with RM200 million specifically for 2025.
6. RM300 million for the National Fund of Funds under Khazanah in 2025
The National Fund-of-Funds (NFOF) will be established under Khazanah to operate with a fund of RM1 billion.
NFOF will support venture capital fund managers investing in start-up companies with RM300 million ringgit provided for 2025.
7. Cradle Fund gets an allocation of RM65 million
The Cradle Fund is allocated RM65 million to help start-up companies with the potential to expand to regional and global levels. This also includes a 15 million ringgit grant as an incentive for GLC to work with start-up companies through corporate venture capital efforts.
8. RM50 million for Madani Micro, Small, and Medium Enterprises (PMKS) Digital Grant
RM50 million is provided as PMKS’ digital matching grant and digital vendor grant under BSN for local entrepreneurs to remain competitive in the market.
9. MCMC to receive RM100 million for online entrepreneurship
MCMC will receive RM100 million over five years to enhance Nadi (National Information Dissemination Centre) nationwide as a community platform for online entrepreneurship.
10. Forest City gets a revamp in the Johor-Singapore Special Economic Zone (JSSEZ)
The government approved Forest City as a “Duty-Free Island” to support tourism and local economic activities. A tax incentive package for the Forest City Special Financial Zone was also announced to boost financial services activities such as financial global business services and fintech.
A Single Family Office Scheme has been launched for the Forest City Special Financial Zone to promote family fund management.
An Invest Malaysia Facilitation Centre – Johor (IMFC-J) is also being established to facilitate investment in JSSEZ. This centre aims to reduce bureaucracy at various levels to speed up approval.
11. RM1 billion for Khazanah to launch the Mid-Tier Company Programme
Khazanah will launch the Mid-Tier Company Programme with a fund of RM1 billion, aimed at providing financing that supports the building of local companies’ capabilities.
12. RM40 million for Malaysian exporters promoting locally made products internationally
RM40 million is also provided under MATRADE as a “refund grant” to help Malaysian exporters promote Malaysian-made products and services on the international stage, particularly exploring new markets in Africa, Latin America, and the Middle East.
13. RM20 million for i-Tekad
According to the Prime Minister, the i-TEKAD programme offered by 13 banks and 70 implementing partners has helped more than 8,000 low-income micro-entrepreneurs.
Next year, RM20 million matching grants will be provided, with RM5 million specifically to contribute to insurance or takaful contributions for micro-entrepreneurs.
This will be matched with contributions from insurance companies or takaful operators to benefit small traders and hawkers, shippers of goods and food, as well as People’s Income Effort participants whose crops were damaged due to disasters.
14. RM40 million in matching grants for social impact investments
Supporting various social impact investments, including Shariah-compliant P2P financing and public equity financing under the MyCIF programme, the government is providing a matching grant of RM40 million.
15. RM40 billion in total for loan facilities for businesses
In total, RM40 billion is allocated as loan facilities as well as business financing guarantees under government agencies.
Micro-sized loans are available up to RM3.2 billion ringgit, among them by TEKUN and BSN to help small vendors, including the disabled, Chinese, and Bumiputera communities.
Meanwhile, Bank Pembangunan Malaysia Berhad will be providing funding of RM6.4 billion to support the financing of the infrastructure development sector, digitalisation, tourism, logistics, and transport, as well as renewable and transitional energy.
The government, through the Syarikat Guarantee Financing Perniagaan (SJPP) will continue to guarantee SME financing of up to RM20 billion, including an RM5 billion guarantee for Bumiputera SMEs.
An SME loan fund of RM3.8 billion, provided by BNM, will support entrepreneurs to move towards digital and automation in addition to continuing to help the agro-food sector and sustainable practices.
RM650 million will also be earmarked to support women and youth in entrepreneurship.
RM130 million is provided specifically to implement various programmes, including community business financing for Indian entrepreneurs.
16. Various allocations for Bumiputera entrepreneurs
For 2025, RM800 million in funding under MARA and PUNB is available for more Bumiputera entrepreneurs, including to support local artisans.
The government will also allocate RM1.3 billion to empower G1-G4 contractors (referring to the different grades of contractors), especially Bumiputera.
This gives contractors the opportunity to carry out small and medium projects such as road construction as well as the repair and maintenance of public infrastructure.
17. Minimum wage has increased to RM1,700
The government agreed to increase the minimum wage rate from RM1,500 per month to RM1,700 per month, to come into effect on February 1, 2025.
For employers with less than five employees, the government will postpone the effective date for a period of six months, making it effective on August 1, 2025.
18. RM470 million financing for female entrepreneurs
A total of RM470 million in financing funds are provided by SME Bank, BSN, Bank Rakyat, and MARA to support women MSMEs to obtain working capital, purchase assets, and further increase business capacity to a higher level.
19. Proposed tax incentives for better work-life balance
To promote work-life balance, the government is providing an additional 50% tax deduction on the cost of capacity development and software procurement incurred by employers in implementing flexible work arrangements.
An additional 50% tax deduction will be given for additional care leave facilities paid by the employer for up to 12 months to employees who care for sick or disabled children or family members.
20. RM25 million to provide financing for creative social entrepreneurs
MyCreative Ventures also provided RM25 million to support the creative industry through equity injection to high-potential companies and provide financing for creative social entrepreneurs.
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At the beginning of his presentation, the Prime Minister quoted Aristotle’s Nicomachean Ethics: “The virtue of wealth is not to have it but to use it rightly.”
Truly, it’s important to make sure that funds are being allocated appropriately in order to propel Malaysia forward. We hope that with all the strategic measures, initiatives, incentives, and policies tabled at the Budget 2025, we will be able to do just that.
Read other articles we’ve written about Budget 2025 here.
Featured Image Credit: Prime Minister Anwar Ibrahim
