The government’s latest budget marks a significant shift in Malaysia’s economic game plan, shifting away from the mega-project approach of the past, towards a more holistic practice, placing a greater emphasis on the rakyat’s well-being.

The Madani Government, headed by Prime Minister Datuk Seri Ibrahim, has tailored RM421 billion Budget 2025 to fulfil its commitment to protecting the vulnerable, improving public services and tackling inefficiencies such as corruption and resource leakages.

For too long, the nation’s focus has been on large-scale ‘mega’ projects, some of which contributed to the country’s debt while providing limited benefits to the wider population.

The Anwar administration’s new direction, guided by the Ekonomi Madani framework, prioritises uplifting the dignity of the rakyat, improving basic infrastructure, enhancing value of existing services and creating a resilient and inclusive society. Collectively, these efforts will build up the country’s strengths in a more equitable and sustainable manner.

The Madani Government is steering towards this direction via three interdependent verticals outlined in Budget 2025, namely: raising the ceiling, raising the floor and strengthening governance.

Raising the ceiling focuses on boosting productivity and national income. Meanwhile, the focus on uplifting standards of living and strengthening social security is represented under the raising the floor vertical. As for strengthening governance, the vertical focuses on restoring fiscal discipline, streamlining public service delivery and ensuring efficient and transparent use of public resources.

Reeling in high-value investments, stimulating the economy
The government has made known its plans to prioritise investments from high-value sectors such as electrical and electronics (E&E), green industries and semiconductors.

Budget 2025 lays the groundwork for Malaysia to position itself as an attractive investment destination for these high-value industries through tax incentives via a new investment incentive framework expected to be implemented in the third quarter of 2025 (3Q2025).

This includes expanding export tax incentives for integrated circuit (IC) design and offering special tax deductions for private institutions developing courses in artificial intelligence (AI), robotics and FinTech.

Strategic public-private partnership (PPP) infrastructure projects such as the Johor-Singapore RTS (Rapid Transit System), the expansion of Kulim Hi-Tech Park and other state-specific developments like the Taman Perindustrian Hijau Bersepadu in Perak will improve connectivity and also enhance Malaysia’s attractiveness as an investment hub.

Aside from serving as economic stimuli, investments in these high-value sectors are an integral cog in raising the country’s productivity as the government pushes for further automation and advanced manufacturing via tax incentives.

This will be further supplemented by Malaysia’s advanced digital infrastructure with the implementation of 5G technology by Digital Nasional Bhd and growing secure renewable energy (RE) supply.

Investments in green industries such as RE, while a high-value industry itself, will serve as an avenue to fund further expansion of the country’s RE supply as demand for sustainable sources of energy continues to surge as the globe turns to green energy to comply with environmental, social, and governance (ESG) standards.

The push in the green energy industry also synergises well with the country’s aspiration of net zero emissions by 2050 as outlined in the National Energy Transition Roadmap (NETR).