Golden Year for Start-ups and SMEs: Exploring the Impact of the 2025 Budget
The Malaysian Budget 2025 is primed to unlock fresh opportunities for Small and Medium Enterprises (SMEs), underscoring the government’s commitment to this critical economic sector. In past budgets, SMEs have benefited from funding support, digitalization programs, and financial incentives designed to drive growth and innovation. Unveiled on October 18, 2024, by Prime Minister Datuk Seri Anwar Ibrahim, Budget 2025 signals a major shift in Malaysia’s economic direction. With a record-setting RM421 billion allocated—the largest budget in the country’s history—this plan combines a strong vision for sustainable growth with careful financial planning, setting a new standard for Malaysia’s economic goals.
SMEs and startups are set to gain expanded access to growth capital through initiatives like loan guarantees, direct financing, and targeted funds for digitalization and halal sector development. Here’s a look at the key highlights making 2025 a golden year for startups and SMEs.
Business financing guarantees
Bank Pembangunan Malaysia Berhad is allocating RM6.4 billion to support local infrastructure development in sectors such as digitalization, tourism, logistics, transportation, renewable energy, and energy transition.
Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) will continue to back SME financing up to RM20 billion, with an additional RM5 billion guarantee for Bumiputera SMEs. This initiative helps SMEs, including those facing collateral challenges, secure financing to expand operations and boost competitiveness.
Additionally, Bank Negara Malaysia (BNM) will allocate RM3.8 billion to aid SMEs in digitalization, automation, and sustainable practices, focusing on the agrifood sector.
Golden Year for Startups
For those looking to start a business in Malaysia, KWAP, the statutory body managing public employee pensions, will allocate RM1 billion over four years to enhance the local startup ecosystem through Dana Perintis, a fund for early-stage startups.
The government has also earmarked RM65 million for Cradle Fund, which supports startups with potential for regional and global growth.
To stimulate investments in startups, Khazanah, Malaysia’s sovereign wealth fund, will establish a National Fund-of-Funds (NFOF) next month, with a total allocation of RM1 billion over four years.
Additionally, Budget 2025 includes RM15 million in matching grants to strengthen connections between government-linked companies (GLCs) and local startups via an Innovation Accelerator program managed by Cradle.
Tax deduction
Multinational enterprises (MNEs) incurring expenses up to RM2 million can receive a double tax deduction for three consecutive years. MNEs investing in local vendors will enjoy income tax deductions on their joint venture investments, while local vendors will benefit from an outcome-based tax incentive package.
Additionally, a matching investment fund of RM100 million will be available through an equity crowdfunding platform to support local vendor development, especially in the electrical and electronics engineering, specialty chemicals, and medical device sectors.
Exemptions on Stamp Duty
To broaden access to alternative loans and financing, the government is proposing a stamp duty exemption on loan or financing agreements executed by MSMEs with investors through the Initial Exchange Offering (IEO) platform. This exemption will be valid from January 1, 2025, to December 31, 2026. Additionally, the loan or financing limit under the Micro Financing Scheme for stamp duty exemption purposes will increase to RM100,000 from its initial RM50,000, effective 2025.
These measures will significantly benefit startups and SMEs in Malaysia by reducing the overall cost of financing, making it easier for them to secure the capital they need for growth and innovation. The increased loan limit under the Micro Financing Scheme will also provide more flexibility and support for emerging businesses, allowing them to invest in critical areas like technology, talent, and infrastructure.
Advantages for Halal Businesses
If you operate a halal-compliant business, you can take advantage of specialized financing options from Bank Pembangunan Malaysia Berhad (BPMP) and SME Bank, with nearly RM600 million available.
With an allocation of RM20 million, the Malaysia External Trade Development Corporation (MATRADE) has been entrusted with enhancing capacity development for halal enterprises and boosting the competitiveness of halal businesses.
Additionally, the government, through SJPP, is offering guarantees of up to 80% on halal SME loans, amounting to a total of RM1 billion.
Empowering SMEs in the Export Market
Malaysia’s export trade is thriving, with total trade from January to September 2024 increasing by 10.2%, creating exciting opportunities for local businesses to enter global markets. In response, Khazanah is launching a RM1 billion Mid-Tier Company Programme aimed at enhancing local company capabilities.
Additionally, for exporters looking to expand internationally, EXIM Bank has allocated RM750 million under the Exporter Sustainability Incentive Scheme to help broaden their reach. To further support Malaysian exporters venturing into new markets in Africa, Latin America, and the Middle East, MATRADE will provide RM40 million in reimbursement grants.
The Bottom Line
In wrapping up, it’s clear that Malaysia’s Budget 2025 is a game-changer for small and medium enterprises (SMEs), startups, and halal businesses. The government’s proactive stance is evident in the substantial funding and innovative tax incentives designed to foster growth and resilience in the local economy. From the RM1 billion Mid-Tier Company Programme to the RM750 million Exporter Sustainability Incentive Scheme, these initiatives empower businesses to break into new markets and enhance their competitiveness. As we move towards a more digital and inclusive economy, the future looks bright for Malaysian entrepreneurs ready to seize these opportunities and drive sustainable growth.
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