KUALA LUMPUR: Budget 2025, set to be tabled on Oct 18, marks the final budget under the 12th Malaysia Plan (2021-2025) and is expected to lay the groundwork for the upcoming 13th Malaysia Plan (2026-2030).
The Malaysian Institute of Economic Research (MIER) said the budget aims to balance economic growth with targeted measures to support households, businesses, and key economic sectors, while maintaining fiscal discipline.
The budget is also expected to address pressing challenges such as cost-of-living pressures, wage stagnation, and the green transition, MIER noted in a report today.
In its pre-Budget 2025 takeaway, MIER highlighted that the government is likely to relax its blanket RON95 fuel subsidy to mitigate inflationary pressures and tackle rising living costs, aiming to keep inflation within the two to three per cent range.
Currently, the top 20 per cent of households account for about 53 per cent of RON95 subsidies, rendering the system unsustainable and inequitable.
On tax reforms, MIER indicated that the government is expected to introduce a global minimum tax rate of 15 per cent, aligning with international standards. Discussions are ongoing on the potential reintroduction of the goods and services tax.
"Focus will also be on tax reforms to support small and medium enterprises. The budget could extend reinvestment allowances and raise the Syarikat Jaminan Pembiayaan Perniagaan (SJPP), a government-backed loan guarantee limit, from RM20 million to RM30 million," it said.
MIER also pointed out that the New Industrial Master Plan 2030 would be crucial for promoting high-value manufacturing, automation and green technologies.
"The budget is expected to target sectors such as semiconductors, automotive, and renewable energy, aiming to create high-value jobs and drive sustainable growth," it noted.
To boost self-sufficiency, MIER said the budget will likely focus on the agro-food industry, with investments in sustainable agriculture, supply chain enhancements, and climate change mitigation strategies.
Furthermore, the budget is expected to prioritise automation, artificial intelligence (AI), and digitalisation, with government support directed toward high-value industries such as startups, tech innovation, solar panel development, and electric vehicle infrastructure-positioning Malaysia as a regional leader under the MADANI economy framework, it added. - Bernama
