Malaysia committed to attracting high value investments
13 Dec 2024
Malaysia remains committed to increasing productivity, increasing national income and making Malaysia a more attractive destination for high-value investments.
The Budget 2025, presented on October 18 by Datuk Seri Anwar Ibrahim, focuses on advancing Ekonomi Madani through reforms, reducing bureaucracy, and addressing rising living cost.
It primarily supports key initiatives including the New Industrial Master Plan (NIMP), National Energy Transition Roadmap (NETR), and Bumiputera Economic Transformation Plan.
Fiscal policies will align with the Public Financial Management and Fiscal Responsibility Act, alongside targeted subsidy reforms. Governance improvement will be guided by the National Anti-Corruption Strategy and streamlined processes.
The Budget 2025 supply bill is built on the Ekonomi MADANI framework, focusing on reinvigorating the economy; driving reforms; and prospering the rakyat.
The government aims to drive sustainable growth and innovation with strategic investments and targeted policies.
This includes promoting green technology, energy efficiency, and supporting SMEs and mid sized companies.
The team with Public Investment Bank Bhd (PublicInvest Research) said in spite of a gradual reduction in fiscal deficit, the government continues to maintain an expansionary budget with the highest ever announced for 2025 at RM421 billion.
This covers RM335 billion operating expenses and RM86 billion development spending.
In addition, public-private joint ventures worth RM9 billion as well as domestic direct investment by GLIC companies worth RM25bn would bring the total development expenditure to RM120 billion in 2025.
The government will continue its fiscal reform agenda to broaden its revenue base as the share of tax collection in GDP remains the lowest in the region at 12.6 per cent versus the average of 14.6 per cent in 2023.
Hence, Budget 2025 would entail progressive expansion of tax revenue and targeting of subsidies only to the majority of people in need.
The government will stimulate growth through PPPs by prioritising strategic infrastructure projects such as the Johor-Singapore RTS Link, the expansion of Kulim Hi-Tech Park and other state specific developments such as the Integrated Green Industrial Park in Perak.
These projects will improve connectivity and increase Malaysia’s attractiveness as an investment hub.
Exports and trade facilitation
To increase the country’s income, Malaysia’s export facilitation will focus on enhancing the competitiveness of its industries.
Strategic export hubs will expand to include semiconductors, pharmaceuticals and green technology, leveraging Malaysia’s strengths in these sectors. Efforts will be directed towards streamlining the approval process and reducing bureaucratic inefficiencies.
PublicInvest Research noted that a total of RM40 billion has been allocated to the economic sector in 2025, aimed at enhancing national competitiveness by improving infrastructure and supporting investment.
“Key subsectors receiving the largest allocations include transport, environment, and trade and industry,” it said in its analysis.
“The transport subsector, receiving RM17.6 billion, focuses on enhancing connectivity in rural areas and alleviating congestion in more developed regions.
“Notable projects include the construction of a bridge and road from Ng Belawai to Song-Kapit in Sarawak, and an additional lane for the PLUS Highway (Phase 3: Simpang Renggam-Machap) in Johor.
“Ongoing projects include the Pan Borneo Highway Sabah and the Sabah-Sarawak Ring Roads.”
To drive future industrial growth and support Malaysia’s sustainable energy transition, RM3.1 billion will be allocated to the trade and industry subsector, with RM200 million for the NIMP 2030 and RM306 million for the National Energy Transition Roadmap (NETR).
Digital infrastructure
Malaysia will continue to advance its digital infrastructure through the implementation of 5G technology by Digital Nasional Berhad (DNB).
This second 5G network is expected to drive competitiveness in the ICT sector, create new opportunities for high-income jobs, attract advanced technology investments and drive the adoption of 5G in line with Malaysia’s aspirations as the ASEAN Chair 2025.
Analyst Jeffrey Tan from RHB Investment Bank Bhd (RHB Research) noted that improvement in Malaysia’s broadband connectivity remains a key thrust with continued allocations for rural areas, schools, and public universities under the Point of Presence (PoP) projects.
“These projects aim to close the digital gap in rural areas by using schools as a hub for the provision of fibre broadband infrastructure – hence, enabling schools, government premises, and surrounding housing areas to have access to fibre broadband services,” he said.
Funded by the Communications Ministry, Phase 1 of these PoP projects – which involved an allocation of RM673 million for 677 locations nationwide – have been largely completed.
Meanwhile, Phase 2 at RM3.9 billion – which commenced in Dec 2022 and involves 3,693 sites – is ongoing with target completion of end 2025.
“The PoP projects will see a further allocation of RM800 million under Budget 2025, with a RM100 million allocation under a new fibre broadband infrastructure connectivity programme for schools in villages and rural areas.”
Meanwhile, several initiatives in green technology and renewable energy continue to be introduced to increase the country’s productivity. Malacca Securities Sdn Bhd (Malacca Securities) noted that the facilitation fund for the NETR will be raised from RM100 million to RM300 million.
A total of RM100 million was allocated for solar and hydrogen energy projects in Terengganu. Budget 2025 also introduced carbon tax, affecting iron and steel and energy in Malaysia by the year 2026 aims to encourage the use of low carbon technology.
“We are positive for the solar and electronic vehicles segment as green energy policies are extended,” Malacca Securities said.
Improving energy security
To support productivity, the government will focus on energy security, ensuring reliable and affordable energy supply, and investments in sustainable energy projects.
PublicInvest Research analyst Khairul Fahmi saw that generally, Budget 2025 is fine tuning the implementation of the NETR to achieve Net Zero aspiration in 2050.
About more than RM300 million under the budget is allocated for the National Energy Transition Facility fund as compared with RM100 million in 2024.
The budget highlighted two projects that have entered implementation phase, which are the Kenyir Hybrid Hydro Floating Solar farm to power up 1000MW to the grid (half of the capacity to be used for the first green hydrogen hub project in Terengganu) and the 2,000MW Large Solar Scale, which is is currently in bidding stage until December 2024.
Meanwhile, five initiatives have been introduced to enhance renewable energy (RE) accessibility.
They include the extension of Net-Energy-Metering (NEM) scheme until 30 June 2025 (from the current 31 December 2024) to encourage household rooftop solar; and the the continuation of Green Technology Financing Scheme (GTFS) amounted to RM1.0bn for the period until 31 December 2026.
Also, UEM Lestra and TNB to invest RM16bn to increase transmission and distribution network capacity and decarbonisation within industrial areas.
An initiative will enable corporations to access renewable energy from selected independent power producers (IPP) via Third Party Access (TPA) i.e Corporate Renewable Energy Scheme (CRESS) Programme.
Budget 2025 also introduced a special programme to focus on dual function RE design concepts such as agrivoltaic to reduce negative impact of RE power plants on food production.
Ssource: Borneo Post
