2025 Fiscal budget: key points on livelihood and investment you should know
On October 18, 2024, the government announced Malaysia's 2025 fiscal budget. With numerous policies and figures mentioned, here's a quick overview of what's relevant to you.
Economic goals and budget highlights:
GDP growth: The 2024 GDP growth forecast has been raised from 4%-5% to 4.8%-5.3%, with an optimistic outlook for next year's growth projected at 4.5%-5.5%.
Budget allocation: Next year's budget will increase by 3.3% to a record 421 billion ringgit. Despite this rise in spending, the deficit rate is expected to decrease to 3.8%, reflecting strong revenue growth.
Public welfare: benefit packages for 85% of the population
You're probably curious about which policies will positively impact your life. Overall, the main focus of this fiscal budget is:
Support for low to middle-income groups (the bottom 85%).
Strengthen the social responsibility of the wealthy (the top 15%).
Supporting 85% of the Population
Minimum wage increased from RM1,500 to RM1,700.
Allocation for STR and SARA raised from RM10 billion to RM13 billion, benefiting 9 million people (60% of adults).
Education and medical insurance tax deductions increased from RM3,000 to RM4,000.
First-time homebuyers tax relief: RM7,000 for homes under RM500K and RM5,000 for homes between RM500K and RM750K.
EPF contributions can be transferred to family members.
RM3 billion investment for 3 million training opportunities.
Strengthen the social responsibility of the top 15%
2% tax on dividends over RM 100,000.
Sales tax on premium goods (e.g., salmon, avocados).
Removal of RM 8 billion RON95 petrol subsidies.
Investment: beneficial industries
As noted in Watch the 2025 fiscal budget that might impact your wallet, stocks in government-supported industries may benefit. Let's identify the companies likely to gain and those facing challenges.
Beneficial Industries
Tourism: Funding for the 2026 Malaysia Tourism Year increased from RM 350M to RM 550M.
Logistics: 1. Smart logistics companies receive a 60% investment tax exemption for 5 years; 2. RM 107M allocated for building and upgrading logistics corridors.
Real Estate: First-time homebuyers enjoy tax relief.
Clean Energy: National Energy Transition Fund increased from RM 100M to RM 300M, a 200% increase.
Exports: 1. RM 750M in export business loans; 2. RM 40M in subsidies.
Semiconductors: RM 1B investment to support the local semiconductor industry.
Affected Industries
Beverages: 80% increase in sugary drink excise tax.
Steel: Carbon tax to be implemented starting in 2026.
Premium Goods: Sales tax on non-essential items.
High Dividend Stocks: 2% tax on dividends over RM 100K.
How to React
The Budget may have a limited short-term impact on the stock market, so investors need not be overly concerned. The key is to analyze the potential long-term changes the policy may bring to these industries and to closely monitor industry data for validation.
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. Read more