Budget | small businesses in malaysia to get 2025 budget boost

Small businesses in Malaysia to get 2025 Budget boost

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The Malaysian government has announced it Budget 2025 plans, which includes a raft of measures to boost small and medium sized businesses (SMEs) and the country’s entrepreneurs.

It includes RM200 million (£36m) of funding for the Strategic Joint Investment Fund (CoSIF) and the NIMP Industrial Development Fund (NIDF), which support the growth of SMEs and mid-sized companies and encourage innovation.

A further RM50 million has been earmarked for the Micro, Small, and Medium Enterprises (PMKS) Digital Grant, to help entrepreneurs to remain competitive in the market.

The government also announced that the Malaysian Communications & Multimedia Commission (MCMC) is to receive RM100 million for fund online entrepreneurship. It will receive the funding over the next five years to enhance the National Information Dissemination Centre nationwide as a community platform for online entrepreneurship.

Sovereign wealth fund 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.

Other measures announced include:

  • the Malaysia External Trade Development Corporation is to receive a loan facility of RM40 million 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.
  • Bank Pembangunan Malaysia Berhad is to provide 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 SJPP, will continue to guarantee SME financing of up to RM20 billion, including an RM5 billion guarantee for the country’s SMEs. SJPP was formed to administer and manage government guarantee schemes that enable SMEs to access to financing facilities from financial institutions.
  • An SME loan fund of RM3.8 billion, provided by Bank Negara Malaysia, will support entrepreneurs to move towards digital and automation in addition to continuing to help the agro-food sector and sustainable practices.
  • RM650 million has been earmarked to support women and youth in entrepreneurship. And RM470 million in financing funds will be provided by SME Bank, BSN, Bank Rakyat, and MARA to support women MSMEs to obtain working capital, purchase assets and further increase business capacity.
  • RM130 million is provided specifically to implement various programmes, including community business financing for Indian entrepreneurs.
  • For 2025, RM800 million in funding will be allocated to building contractors, to give them the opportunity to carry out small and medium projects such as road construction as well as the repair and maintenance of public infrastructure.
  • MyCreative Ventures will be provided RM25 million to support the creative industry through equity injection to high-potential companies and provide financing for creative social entrepreneurs.

The government has also announced plans 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 includes:

  • 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.
  • Income tax incentives will be offered at a special rate for investment in 21 economic sectors.
  • Tax incentives, such as investment tax allowances or income tax exemptions will given for Carbon Capture, Utilisation, and Storage (CCUS) activities, to help organisations achieve their environmental, social and governance (ESG) goals.

 Minimum wage has increased to RM1,700

The government also 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.

And 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.