Budget 2026 must drive leap to innovation, say groups

PETALING JAYA: The Malaysia Semiconductor Industry Asso­ciation (MSIA) is urging a bold Budget 2026 with cost relief, ta­lent incentives and trade support to strengthen Malaysia’s semiconductor industry.

MSIA president Datuk Seri Wong Siew Hai said Budget 2026 presents a golden opportunity for Malaysia to move from “Made in Malaysia” to “Made by Malaysia” products.

“MSIA is seeking cost relief on stamp duty, particularly exemptions for employment and intercompany contracts, deferment and clearer guidelines.

“We are also requesting Sales and Service Tax (SST) relief for broader business-to-business (B2B) exemptions, along with capital-­intensive industries and investment-linked exemptions supported by incentives for energy efficiency and automation investments.” MSIA is also seeking support for trade and geopolitical readiness and hopes the government will introduce policies to diversify export markets, grants for supply chain resilience, and the introduction of a Qualified Refundable Tax Credit (QRTC).

“This is to offset the impact of the Global Minimum Tax and sustain Malaysia’s investment competitiveness,” Wong said.

The association has also urged the government to consider building and retaining a workforce in the industry by providing special funding to enhance the quality of education in science, technology, engineering and mathematics (STEM) and artificial intelligence in schools and universities.

“MSIA also recommends allocating resources to select public universities, such as UniMAP, USM and UTM, as semiconductor centres of excellence, to ensure resources are not spread too thin and are better used to support the semiconductor industry,” it said.

MSIA also said it was requesting targeted tax relief for engineers, especially those in design and development (D&D), smart manufacturing and advanced equipment, to encourage and retain talents in Malaysia.

“Malaysia needs to emulate other countries by using foreign STEM graduates and global expertise to fill immediate gaps and support Malaysia’s pursuit of advanced D&D for greater innovation success,” said MSIA.

The request also emphasised the need for a broader focus that extends beyond traditional research and development (R&D) to encompass research, development, commercialisation and innovation (RDCI).

“By considering these aspects in Budget 2026, we can accelerate the implementation of the National Semiconductor Strategy and secure Malaysia’s place as a global semiconductor powerhouse,” said Wong.