As Malaysia prepares for the unveiling of Budget 2025 Malaysia (Bajet 2025) on October 18, anticipation grows around the government’s fiscal plan and its potential impact on the nation’s economic trajectory. The budget 2025 Malaysia, set to align with the Ekonomi MADANI framework, aims to usher in sustainable economic reforms, improve governance, and elevate the quality of life for all Malaysians. 

This blog will explore the key focus areas of the budget, the government’s strategies for addressing critical challenges, and what we can expect moving forward.

Latest Update on Budget 2025 Malaysia (Bajet 2025) – Sept

What is e-Invoice?

As the government prepares to unveil Budget 2025 Malaysia (Bajet 2025) on October 18, several key sectors are expected to receive significant allocations, despite tight finances. Here are some of the main developments:

1. BM Greentech’s Call for SolaRIS Quota Extension

BM Greentech’s subsidiary, Tera VA Sdn Bhd, has advocated for a two-year extension of the SolaRIS solar program and gradual grid liberalization through the Corporate Renewable Energy Supply Scheme (CRESS). The SolaRIS program has seen increasing demand, exhausting its allocated quota by September 2024. Tera VA’s push for expanding the quota aligns with efforts to reduce pressure on the national grid and promote wider adoption of renewable energy​.

2. Expansion of Digital Grants for SMEs

Analysts have urged the government to broaden the scope of digital grants for small and medium-sized enterprises (SMEs) to accelerate the adoption of technologies such as cloud computing, cybersecurity, and AI. This move is expected to boost Malaysia’s digital transformation, especially in sectors like 5G and tech innovation.

3. PLUS Widening Project – Phase 3

The Works Ministry is advocating for the inclusion of the third phase of the PLUS North-South Expressway widening project, which aims to expand the section between Simpang Renggam and Yong Peng Utara. The proposed project is estimated to cost RM1 billion and will alleviate congestion during peak travel periods. This initiative aligns with the ministry’s broader goals of improving highway infrastructure.

4. Women, Family and Community Development Ministry’s RM3 Billion Request

The Women, Family and Community Development Ministry (KPWKM) is seeking an allocation of RM3 billion, with 80% intended for aid recipients under the ministry’s agencies. Additionally, the ministry plans to expand successful programs like Kembara KASIH, which have received positive feedback. Proposals for assistance to single mothers to claim maintenance from ex-husbands are also under consideration.

5. TA Securities’ RM403.7 Billion Budget Allocation Forecast

TA Securities projects that Budget 2025 will allocate RM403.7 billion, comprising RM305.7 billion for operating expenditure and RM97.9 billion for development expenditure. The budget is expected to focus on infrastructure projects like MRT3, sustainable development, and digital economy initiatives, while also addressing the cost of living through wage adjustments and tax reliefs.

6. Higher Allocation for Transport Infrastructure

Despite fiscal constraints, RHB Investment Bank predicts that Budget 2025 will prioritize transport infrastructure, with allocations potentially surpassing the 21.3% development expenditure from 2024. Key projects likely to benefit include the MRT3 and High-Speed Rail, especially in less developed regions like East Malaysia. This emphasis on infrastructure is crucial for supporting economic growth amidst global risks.

These developments highlight the government’s commitment to driving economic growth, improving infrastructure, and supporting vulnerable groups, while carefully balancing fiscal constraints.

Overview of the Ekonomi MADANI Framework

The Ekonomi MADANI framework is at the heart of the government’s vision for Malaysia’s future. It emphasizes economic empowerment, social justice, and sustainability. This framework seeks to create a thriving economy that benefits all citizens, while promoting inclusivity and long-term growth. Budget 2025 Malaysia is expected to be a crucial step in realizing this vision, with policies that balance economic reform and social welfare. 

The framework provides the foundation for the budget’s objectives of strengthening Malaysia’s global competitiveness while ensuring that no citizen is left behind.

Key Priorities of Budget 2025 Malaysia

1. Raising the Economic Ceiling

One of the top priorities of Budget 2025 Malaysia is to raise the economic ceiling by focusing on high-value industries, particularly the electrical and electronics (E&E) sector. As a key driver of Malaysia’s economy, the E&E industry has attracted significant investments and contributed to Malaysia’s position in the global value chain. The government aims to enhance this industry further through substantial investments in research and development (R&D), positioning Malaysia as a leader in innovation and technology.

By encouraging companies in regions like Kulim Hi-Tech Park to invest in R&D and move up the value chain, the government hopes to spur growth in other high-value sectors as well. Industries such as digital technology, green energy, and advanced manufacturing are expected to receive similar attention, driving Malaysia toward its goal of becoming a high-income nation.

2. Improving the Quality of Life

With the rising cost of living in Malaysia becoming a major concern for many Malaysians, Budget 2025 Malaysia will focus on solutions that directly address these issues. Despite efforts to control the prices of essential goods, many households still struggle with inflationary pressures. The government plans to implement targeted interventions, such as subsidies and financial assistance, to relieve these burdens.

In addition, a key aspect of the budget will be addressing monopolies and cartels that have contributed to inflated prices in several sectors. The government is expected to tighten regulations and introduce policies aimed at dismantling such practices, ensuring that economic gains are distributed more equitably across society.

3. Enhancing Public Service Delivery

A commitment to improving governance and public service delivery underpins Budget 2025 Malaysia. By enhancing transparency and efficiency in government operations, the budget seeks to reduce waste, improve public trust, and ensure that resources are used effectively. Public service reforms will also include efforts to digitize government services, making them more accessible and efficient for citizens.

Focus on High-Value Industries | E&E

The government has identified high-value industries as critical pillars of Malaysia’s future economic success. At the forefront is the E&E sector, which has already established itself as a global player. 

The recent engagement session in Kedah, for example, underscored the importance of this industry to Malaysia’s growth strategy. Industry leaders from the E&E sector were consulted to ensure that the budget adequately supports their needs, with particular attention to boosting R&D and innovation.

Beyond E&E, the budget is expected to encourage growth in sectors such as renewable energy, digital technologies, and advanced manufacturing. These industries are seen as essential for diversifying Malaysia’s economy and securing its place in the global marketplace.

Tackling the Rising Cost of Living in Malaysia

The issue of rising living costs has been a persistent challenge for the government. Budget 2025 Malaysia is expected to introduce a series of measures designed to alleviate this burden. Initiatives may include expanding subsidies for essential goods, increasing financial aid for low-income families, and implementing stricter regulations to curb monopolistic practices.

Furthermore, the government is likely to explore policies that promote competitive pricing in key markets such as food, housing, and transportation. Addressing cartels and monopolies in these sectors is a priority, ensuring that Malaysians are not unfairly disadvantaged by price manipulation and market control.

Public Engagement in the Budget Process

Public participation is a core element of Budget 2025 Malaysia’s formulation. The government has launched a series of nationwide engagement sessions, gathering input from various stakeholders, including industry leaders, civil society, and ordinary citizens. These sessions ensure that the budget reflects the needs and concerns of all Malaysians.

For instance, the engagement session in Kulim Hi-Tech Park brought together representatives from the E&E sector to discuss how Budget 2025 Malaysia can support further industry growth​. The feedback from these sessions is vital in shaping a budget that is both comprehensive and inclusive.

Additionally, the public has been invited to provide feedback through the Budget 2025 Malaysia portal. This open platform allows citizens to share their suggestions, ensuring that the budget is crafted with the input of the people it is meant to serve​.

Economic Reforms for Long-Term Growth

Malaysia’s commitment to long-term economic reforms remains a focal point of Budget 2025 Malaysia. The government’s introduction of the Fiscal Responsibility Act, combined with ongoing efforts to strengthen governance and reduce leakages, aims to create a more sustainable and resilient economy​.

Tax reforms are also on the horizon, with the potential for new policies designed to boost revenue while minimizing the burden on low- and middle-income earners. These reforms are expected to fund essential services, infrastructure projects, and social protection programs that will benefit all Malaysians.

Balancing Growth and Inclusivity

While promoting economic growth, the government is equally committed to ensuring that the benefits of this growth are shared across all levels of society. Budget 2025 Malaysia will emphasize policies that support marginalized communities, ensuring that economic gains translate into real improvements in quality of life for everyone.

This includes targeted support for low-income families, improved access to healthcare and education, and initiatives designed to close the income gap. The government’s goal is to create a more inclusive economy, where growth leads to tangible benefits for all Malaysians.

Environmental and Sustainability Initiatives

In line with global trends, Budget 2025 Malaysia is expected to feature significant environmental and sustainability measures. These may include incentives for renewable energy projects, support for green technology development, and investments in sustainable infrastructure. Climate action is a growing priority for the government, and Budget 2025 Malaysia is likely to include measures aimed at reducing Malaysia’s carbon footprint and promoting eco-friendly practices across industries.

Looking Back on Budget 2024 Malaysia: Key Focus Areas and Highlights

Budget 2024 Malaysia, presented by Prime Minister Datuk Seri Anwar Ibrahim, marks a significant milestone with a record-breaking allocation of RM393.8 billion. With the theme “Economic Reforms, Empowering the People,” Budget 2024 Malaysia continues the government’s commitment to economic growth, social welfare, and sustainability. This budget reflects the broader goals of the Ekonomi MADANI framework, aiming to balance economic development with inclusivity and social equity.

1. Economic Reforms in Budget 2024 Malaysia

Budget 2024 Malaysia introduces several economic reforms aimed at enhancing revenue and supporting the country’s development:

• Service Tax Increase: The service tax will rise from 6% to 8%, excluding sectors like food, beverages, and telecommunications​.
• High Value Goods Tax (HVGT): Budget 2024 Malaysia introduces a High Value Goods Tax (HVGT) of 5-10% on high-value items, such as jewelry and watches​.  However, the implementation of the HVGT, initially scheduled for May 1, has been deferred to allow for further engagement with stakeholders. 
• Capital Gains Tax: Starting in March 2024, the disposal of unlisted shares will be subject to Capital Gains Tax (CGT). This tax will be applied at a flat rate of 10% on the net gains from the disposal, or alternatively, at a rate of 2% on the gross sales value.
• E-Invoicing: To improve transparency and efficiency, Budget 2024 Malaysia mandates e-invoicing for companies with annual revenues exceeding RM100 million by August 2024.

2. Social Welfare Initiatives in Budget 2024 Malaysia

Addressing the rising cost of living in Malaysia is a key priority in Budget 2024 Malaysia, with various measures targeted at low-income groups and vulnerable communities:

• Rahmah Cash Aid Program: Budget 2024 Malaysia allocates RM10 billion for the Rahmah cash aid program, benefitting around 60% of Malaysian adults​.
• Support for the Disabled and Orang Asli: The budget allocates RM1.2 billion for disabled individuals and RM333 million for Orang Asli development programs​.
• Social Security for Housewives: A dedicated RM50 million under the e-Kasih program will support social security for housewives, furthering inclusivity.

3. Infrastructure and Development in Budget 2024 Malaysia

Infrastructure development continues to be a strong focus in Budget 2024 Malaysia:

• Road and Bridge Repairs: RM2.8 billion has been allocated for the maintenance of federal roads and bridges​.
• Regional Development: Budget 2024 Malaysia dedicates RM5.8 billion for Sarawak and RM6.6 billion for Sabah to promote regional development and address infrastructure gaps​.

4. Education and Healthcare in Budget 2024 Malaysia

Education and healthcare receive substantial funding in Budget 2024 Malaysia, aiming to improve the well-being of the nation:

• Education Funding: The Ministry of Education receives RM58.7 billion, with RM1.9 billion directed towards school upgrades​.
• Healthcare Improvements: The Ministry of Health is allocated RM41.2 billion, which includes provisions to tackle public health issues such as the increase in sugar tax from 40 sen to 50 sen per liter.

5. Environmental Sustainability in Budget 2024 Malaysia

Budget 2024 Malaysia places a strong emphasis on sustainability and green initiatives:

• Biodiversity Conservation: RM200 million has been set aside for biodiversity conservation under the Ecological Fiscal Transfer for Biodiversity Conservation (EFT)​.
• Electric Vehicle Incentives: Tax relief for electric vehicle (EV) charging facilities has been extended through 2027 to encourage green transportation.

6. Tourism and Creative Industry in Budget 2024 Malaysia

Tourism and the creative industries are crucial sectors for economic diversification in Budget 2024 Malaysia:

• Tourism Promotion: RM350 million has been allocated to promote tourism, in preparation for Visit Malaysia Year 2026​.
• Creative Industry Support: RM160 million will support the local creative industry, with tax incentives provided for international film productions in Malaysia​.

How YYC taxPOD Can Support Your Business in Navigating Budget 2025 Malaysia’s Tax Reforms and Compliance

As Malaysia prepares for the introduction of Budget 2025, ensuring your business is aligned with new tax reforms and compliance requirements is crucial. YYC taxPOD, developed by YYC, is a comprehensive online learning platform that offers invaluable resources to help businesses stay on top of the latest tax regulations. From e-invoicing mandates to advanced tax planning, YYC taxPOD provides SMEs and MNCs with the tools they need to successfully navigate the changing tax landscape.

Benefits for SMEs

•  Cost-Effective Training: With Budget 2025 introducing new tax regulations, many SMEs may struggle to afford specialized tax professionals. YYC taxPOD offers an affordable alternative, providing thorough tax education and real-time updates at a fraction of the cost.
• Stay Informed: YYC taxPOD ensures that SMEs remain up-to-date with the latest tax developments, including critical updates from Budget 2025 Malaysia. Live classes and webinars cover new e-invoicing requirements and other compliance-related changes.
• Convenient Learning: Business owners and finance teams can take advantage of YYC taxPOD’s flexible learning resources, such as masterclass videos, bite-sized modules, and webinars, to learn at their own pace while managing other responsibilities.

Benefits for MNCs

•  Strategic Tax Planning: With Budget 2025 Malaysia set to introduce new fiscal policies, MNCs can rely on YYC taxPOD’s advanced tax planning strategies to optimize their tax positions and navigate complex regulatory changes.
• Comprehensive Coverage: From transfer pricing to tax reviews and the latest e-invoicing requirements, YYC taxPOD offers a wide range of tax topics relevant to multinational operations, ensuring businesses are prepared for any new compliance measures from Budget 2025.
• Expert Guidance: With access to YYC’s seasoned tax professionals, MNCs receive expert advice on implementing new tax policies and ensuring compliance with the latest reforms introduced in Budget 2025 Malaysia.

For more information on how YYC taxPOD can assist your business, visit our official website or book a demo session.

Final Thoughts

Budget 2025 Malaysia represents a critical juncture in Malaysia’s economic journey. With its focus on sustainable growth, social protection, and inclusivity, the budget is poised to create a stronger, more resilient Malaysia. As the government continues to engage with the public and gather input from key stakeholders, there is optimism that Budget 2025 Malaysia will not only address current challenges but also pave the way for a prosperous and equitable future for all Malaysians.

Sources

1. Malaysia Gazette – Engagement Session in Kedah Malaysia Gazette
2. Laman Khas Belanjawan 2025 Laman Khas Belanjawan 2025
3. Kosmo Digital – Economic Reforms in Budget 2025 Malaysia Kosmo Digital
4. Malaysia MADANI – Budget 2025 Focus Malaysia MADANI
5. WK Expert Solutions – Budget 2024 Malaysia Highlights WK Expert Solutions
6. CNA – Budget 2024 Malaysia Luxury Goods Tax CNA
7. Business News Malaysia – Social Welfare in Budget 2024 Business News Malaysia