Table of contents
- Introduction
- Business digitalisation
- Business financing
- Stamp duty exemption
- Empowering the workforce
Introduction
On Friday, 18 October 2024, the Prime Minister and Finance Minister, YAB Dato’ Seri Anwar bin Ibrahim, unveiled the 2025 Budget with a total allocation of RM421 billion — the largest in the country’s history. With the theme “Reinvigorating the Economy, Driving Reforms and Prospering the Rakyat”, the third MADANI budget aims to grow the economy while caring for the rakyat’s wellbeing.
Being the cornerstone of the Malaysian economy, micro, small and medium enterprises or MSMEs are one of the focus areas driving the country’s economic resilience and sustainable growth. MSMEs make up nearly 90% of the Malaysian economy, contributing 40% to Malaysia’s Gross Domestic Product while employing nearly half of the workforce. The measures proposed in Budget 2025 will further develop MSME industries, strengthening their financial health and competitiveness.
The following are the key announcements that MSMEs in Malaysia should be aware of. At the time of writing, the Finance Bill that will enact the changes into law has not yet been released.
Business digitalisation
MSMEs are encouraged to move away from the traditional brick and mortar model and embrace digitalisation in their businesses. While the pandemic accelerated the process, digital adoption remains a challenge for MSMEs. In Budget 2025, the government has announced grants to help boost the use of technology in MSMEs, ie:
- RM50 million for Digital Matching Grants for SMEs and Digital Grants for vendors under Bank Simpanan National (BSN)
- RM100 million allocated by the Malaysian Communications and Multimedia Commission for a period of 5 years to empower National Information Dissemination Centres.
In line with the full implementation of e-Invoicing by 1 July 2025, the government has also announced that information and communication technology equipment, computer software packages and consultancy fees will be given accelerated capital allowances, to be fully claimed within 2 years.
Business financing
To facilitate MSMEs in obtaining capital for their entrepreneurial needs, the government has allocated RM40 billion in loan facilities and business financing, comprising:
- up to RM3.2 billion in micro-sized loans, available through TEKUN National, BSN and others
- RM6.4 billion in financing funds provided by Bank Pembangunan Malaysia Berhad to support the financing of infrastructure development, digitalisation, tourism, logistics, transportation, renewable energy and energy transition
- up to RM20 billion in guaranteed financing through Syarikat Jaminan Pembiayaan Perniagaan Berhad
- RM3.8 billion in SME loans provided by Bank Negara Malaysia to support the enterprises’ transition to digitalisation and automation, in addition to continuing to assist the agri-food sector and sustainable practices
- up to RM100 million in financing funds provided by the Malaysian Co-operative Societies Commission
- RM780 million in business financing allocated to women and youth and the Indian community.
Stamp duty exemption
The government has also proposed measures to help reduce the financial burden on MSMEs when obtaining financial assistance by providing:
- full stamp duty exemption for loan or financing agreements executed by MSMEs with investors through the Initial Exchange Offering platform from 1 January 2025 to 31 December 2026
- stamp duty exemption for loan or financing agreements under the Micro Financing Scheme that will be expanded to include agreements for amounts up to RM100,000 executed from 1 January 2025.
Empowering the workforce
In addition to helping businesses, the government prioritises the income of the rakyat by ensuring they earn meaningful salaries. Although the measures proposed would increase the operational cost of MSMEs, the initiatives will give employers opportunities to benefit from increased consumer purchasing power over the long term. Among the proposed measures are:
- The minimum wage will be increased to RM1,700 per month effective 1 February 2025. However, employers that employ less than 5 workers will have a grace period of 6 months.
- The Progressive Wage Policy will be fully enforced in 2025.
- Mandatory Employees Provident Fund contributions for all non-citizen employees will be implemented in stages.
The government’s initiatives through Budget 2025 will help MSMEs to remain agile and competitive in challenging economic situations. They promote the spirit of entrepreneurship and accelerate the nation’s post-pandemic economic recovery.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
