Agricultural support: A total of RM2.62bil has been allocated for padi farming subsidies under Budget 2026.
GEORGE TOWN: The 100% income tax exemption for companies undertaking new food production projects is expected to boost reinvestment in areas such as automation, food innovation and sustainability.
Managing director Dominic Tan, whose company produces plant-based ready-to-eat meals and packaged sauces for export to Singapore and Japan, said the initiative would encourage more businesses to explore new opportunities, thus benefitting local communities.
“With operating costs on the rise, every bit of savings that can be redirected into expanding production capacity or to research and development makes a difference,” he said.
Prime Minister Datuk Seri Anwar Ibrahim announced a 100% income tax exemption for 10 years for new food-production companies, while expansion projects will get the exemption for five years. The application period is up to Dec 31, 2030.
Tan said this will encourage more local entrepreneurs to venture into new segments such as functional foods, high-protein alternatives and smart farming integration to boost food resilience.
“We can now explore value- added opportunities such as expanding into a food service system where we supply semi-processed ingredients directly to restaurants, hotels and institutional kitchens.
“This not only widens our business model but also creates new jobs throughout the supply chain,” he added.
Tan believes the impact of the tax incentives will be felt beyond individual companies.
“When the food production ecosystem grows, from farmers to processors to distributors, it strengthens the economy.
“We can reduce the need for imports and increase exports while ensuring locals have access to affordable and high-quality food products,” Tan said.
Anwar, who is also Finance Minister, said automation tax incentives would be extended in the agriculture sector, covering cultivation, livestock farming, beekeeping, aquaculture and deep-sea fisheries. It will also include selected livestock farming using closed-house systems.
Agrobank will allocate RM1.1bil to help entrepreneurs expand their businesses and to support automation.
Goh Choon Aik, the assemblyman for Bukit Tambun, which has many farms, said the initiative will encourage automation and increase productivity.
He urged farmers, such as those in the poultry industry, to adopt automated and closed-system farming to increase productivity.
Anwar also announced that the Agropreneur NextGen programme will provide RM20mil in grants for start-up and expansion of agricultural projects.
Under Budget 2026, RM300mil has been allocated to strengthen support for corn cultivation, aquaculture and paddy farming in Sabah and Sarawak.
A total of RM2.62bil will go towards padi farming subsidies and incentives, providing an estimated RM4,300 in assistance per hectare per season.
Fishermen will continue to receive a diesel subsidy of RM1.65 per litre, while RM160mil has been set aside for additional support, including monthly allowances of up to RM300.
The government is also allocating about RM120mil to assist those earning a living in the plantation sector. The funds will help cover replanting costs for aging oil palm trees, encourage rubber smallholders to increase production, revive idle plantations and provide 1.1 million high-quality cocoa seedlings along with industry-led training programmes.
To ensure the long-term sustainability of the rubber industry, the Malaysian Rubber Board will establish a RM600mil research centre.
