By Andrew Lim, ACCA Portfolio Head of Maritime Southeast Asia
As we approach the announcement of Budget 2025, there is widespread anticipation. It’s a moment to reflect on the progress of Budget 2024, recalibrate goals, and outline the next steps to propel Malaysia forward, particularly in sustainability, economic resilience, and social well-being.
Budget 2024: Successes and Shortcomings
1. SME Support
Budget 2024 provided a major boost to SMEs, which contribute nearly 38% of Malaysia’s GDP, through the RM10 billion SME Digitalisation and Automation Matching Grant. While these initiatives helped businesses adopt advanced technologies, further streamlining the tax system could reduce administrative burdens and encourage compliance.
2. Sustainability Initiatives
Budget 2024 made progress in promoting sustainability with incentives for green investments and renewable energy projects. The Low Carbon Cities Framework encouraged more municipalities to adopt eco-friendly practices. Future budgets could expand support through clearer incentives for businesses investing in green technologies and introducing a carbon pricing mechanism.
3. Youth Empowerment
With RM500 million allocated for upskilling and reskilling programs, Budget 2024 sought to improve job opportunities for young Malaysians. Further collaboration between the private sector and educational institutions could ensure training programs better align with market demands.
However, challenges like affordable housing and expanding the tax base in the growing digital economy remain unresolved.
Key Focus Areas for Budget 2025
1. Simplifying and Expanding the Tax System
A simplified tax system is vital for business growth, especially for SMEs. Expanding the tax base to include the digital economy is necessary to capture revenues from sectors like multinational tech companies.
2. Advancing the Green Economy
To meet climate goals, introducing carbon pricing and expanding tax breaks for renewable energy will drive the transition to a low-carbon economy.
3. Bridging the Skills Gap
Stronger public-private partnerships are needed to align education with industry needs, especially in digital and sustainability skills, positioning Malaysia as a leader in the green and digital economy.
4. Addressing Housing Affordability
More aggressive measures, like expanding rent-to-own schemes and public-private partnerships for affordable housing, are essential to address the housing crisis, particularly for young professionals.
5. Fostering Digital Transformation
Investments in digital infrastructure, especially in rural areas, will bridge the digital divide and support innovation, job creation, and Malaysia’s push towards becoming a high-income nation.
Professional Insights and Fiscal Prudence
As Budget 2025 approaches, industry insights, like those from ACCA, offer guidance on simplifying tax systems, incentivising green finance, and preparing the workforce for future challenges. While bold initiatives are necessary, maintaining fiscal prudence is crucial to ensure long-term financial stability.
With the right policies in place, focusing on taxation reform, sustainability, youth development, housing, and digital transformation, Malaysia can chart a course towards a more resilient and inclusive economy.
