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Buckle up, entrepreneurs and business owners! 

The Malaysia Budget 2025 has arrived and it features a range of opportunities and initiatives. Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim, has unveiled a record-breaking RM421 billion allocation, with RM335 billion for operating expenses, RM86 billion for development and RM2 billion in contingency savings. 

We’ve highlighted key aspects of the budget for your consideration. If you’re ready to take your business to the next level, here’s what you need to know.

Dividend Tax

One of the notable changes in the 2025 Budget is the introduction of a 2% tax on dividend income exceeding RM100,000, effective from the year of assessment 2025. However, there is a proposal to exempt certain types of dividend income from this tax, including those from government funds such as the Employees Provident Fund (EPF), mutual funds under Permodalan Nasional Bhd, and dividends from foreign countries. 

How does it benefit you?

This measure is aimed at ensuring a fairer tax structure while providing some relief for income tied to essential investment funds.

Agency Mergers for Efficiency

One aspect of the 2025 Budget is the effort to streamline government processes through the consolidation of several agencies. This restructuring aims to improve efficiency and make it easier for businesses to interact with government entities. Key mergers include:

• MAVCOM with CAAM: This merger consolidates regulatory oversight in the aviation sector, making it easier for businesses to navigate related regulations.
• InvestKL with MIDA: By merging these investment bodies, the government aims to simplify the process for foreign and local investors to explore opportunities in Malaysia.
• Razak School of Government with INTAN: This integration focuses on enhancing public sector training, which could indirectly benefit businesses through improved governance.
• HDC with MATRADE: This merger seeks to streamline export processes, making it simpler for companies to promote their products globally.

Why does this matter to startups? 

For new businesses, especially those navigating government regulations for the first time, these mergers can significantly reduce administrative burdens. This means quicker responses and more straightforward procedures, allowing startups to focus more on their core business operations rather than bureaucracy.

RM200 Million for CoSIF and NIDF

The 2025 Budget sets aside RM200 million for the Strategic Joint Investment Fund (CoSIF) and the NIMP Industrial Development Fund (NIDF), targeting the growth and development of small and medium-sized enterprises (SMEs).

• CoSIF aims to foster collaboration between public and private sectors, facilitating joint ventures that can drive innovation and industrial growth.
• NIDF focuses on providing support for companies looking to expand their industrial capabilities, encouraging investment in manufacturing and other key sectors.

These funds can be especially beneficial for startups looking to partner with established industry players or those venturing into manufacturing. With the backing of these funds, businesses can access the resources needed to innovate and expand, providing a vital boost to Malaysia’s industrial landscape.

KWAP’s Dana Perintis Fund

The KWAP Dana Perintis Fund, with a total allocation of RM1 billion, is designed to support the growth of local startups. For 2025, RM200 million is specifically set aside to provide targeted assistance to emerging businesses.

This initiative helps startups looking to scale, as it provides not just financial support but also strategic guidance. It also empowers local entrepreneurs, enabling them to establish a solid foundation and expand their reach in the competitive market.

Who should take note? 

Startups with a clear vision for growth and a solid business plan can greatly benefit from this fund. It offers a chance for new ventures to secure crucial capital without relying solely on private investment.

Cradle Fund Allocation

The Cradle Fund remains a crucial component of Malaysia’s startup ecosystem. In 2025, RM65 million is allocated to support startups with high potential for regional and global expansion. This includes RM15 million specifically earmarked for grants that encourage GLCs (Government-Linked Companies) to collaborate with startups through corporate venture capital.

This initiative is intended to foster partnerships that can help startups reach new markets, scale their operations, and enhance their technological capabilities. The Cradle Fund has a proven track record of nurturing early-stage companies, making it a valuable resource for those aiming for accelerated growth.

Digital Grants for MSMEs

Recognizing the need for digital transformation, the 2025 Budget provides RM50 million in digital matching grants through BSN, aimed at supporting micro, small, and medium enterprises (MSMEs) in their digital journey. This funding is critical in helping businesses adopt new technologies, from e-commerce platforms to cloud computing.

Additionally, RM100 million is allocated to the Malaysian Communications and Multimedia Commission (MCMC) over five years to strengthen the National Information Dissemination Centre (Nadi). This platform is expected to become a valuable resource for online entrepreneurship, offering training and support for businesses transitioning to digital operations.

The takeaway for startups

Embracing digital tools is essential for staying competitive in today’s market. This funding can help businesses transition smoothly into the digital economy, enhancing their ability to reach customers online and streamline operations.

Tax Incentives

Tax incentives continue to play a pivotal role in supporting businesses under the 2025 Budget. Key measures include:

• Accelerated Capital Allowance: Businesses can fully claim the cost of purchasing computer equipment, software, and consulting fees within two years. This incentive aims to ease the financial burden of technological upgrades.
• Stamp Duty Exemptions: Full exemptions are available for loan or financing agreements made through the Initial Exchange Offering (IEO) platform for MSMEs, applicable for two years. This measure is designed to lower the entry barriers for new businesses seeking capital.
• Tax Deductions for Sponsorships: Companies sponsoring innovative AI-driven solutions, such as reverse vending machines, can continue to benefit from extended tax deductions.

Why it matters?

These incentives make it easier for startups to invest in technology and innovation. It would lead to improving their operational efficiency and market competitiveness. Lowering the cost of investment enables businesses to redirect funds towards growth and development.

Empowering Women and Youth Entrepreneurs

The 2025 Budget allocates RM650 million to support women and youth entrepreneurs with RM470 million specifically targeted towards female entrepreneurs.

This focus on women and youth entrepreneurship reflects Malaysia’s broader commitment to inclusivity in economic development. With targeted funding, these groups can gain access to essential training, mentorship, and capital, helping them build sustainable businesses.

i-TEKAD Program Funding

The i-TEKAD program will receive RM20 million in matching grants for 2025 with RM5 million specifically allocated for insurance contributions. This program has been instrumental in supporting over 8,000 low-income micro-entrepreneurs, offering them a lifeline through financial aid and insurance coverage.

This initiative is designed to provide stability to small traders and hawkers so they can have the necessary safety net to continue their operations during challenging times.

Second Chance Policy: Helping Bankrupt Companies Restart

The Second Chance Policy, which has already provided relief to over 170,000 individuals, is being expanded to include companies that have gone bankrupt. This policy aims to help these businesses re-enter the market, offering them the opportunity to regain their footing and contribute to the economy.

This policy benefits entrepreneurs who have faced setbacks but possess the determination and vision to rebuild their businesses. By providing a pathway back into the market, the policy ensures that valuable entrepreneurial talent is not lost.

Export Support for Malaysian Businesses: RM40 Million in Refund Grants

For businesses aiming to expand internationally, the 2025 Budget allocates RM40 million under MATRADE for refund grants. These grants are designed to help Malaysian exporters promote their products in new markets, such as Africa, Latin America and the Middle East.

• Purpose: This initiative aims to increase the presence of Malaysian products in diverse global markets, providing businesses with the financial support needed to overcome export challenges.
• Who benefits: Companies that are ready to expand their footprint beyond Malaysia’s borders can leverage these grants to cover a portion of their marketing and operational costs in new regions.

An Opportunity Worth Seizing

The 2025 Budget presents a range of opportunities and by leveraging these initiatives, businesses can position themselves for growth and resilience in today’s fast-changing market. If you have any questions or need guidance on making the most of these opportunities, our team of experts at Altomate is here to help. We also provide a range of corporate digital solutions that includes bookkeeping, incorporation, company digital secretary services and tax assistance to help you kickstart your business or ensure compliance. Contact us on WhatsApp for more information.