PETALING JAYA: Budget 2026 places strong emphasis on artificial intelligence, semiconductors, and green technology. These focus areas will shape Malaysia’s future competitiveness and mark a clear shift from labour-intensive to productivity-led growth.
“With coordinated implementation, transparent governance, and strong collaboration between the public and private sectors, Budget 2026 has the potential to accelerate Malaysia’s transformation into a high-value, innovation-driven economy,” said SME Association of Malaysia president Dr Chin Chee Seong.
He pointed out that the additional 50% tax deduction for Artificial Intelligence (AI) and cybersecurity training, together with Accelerated Capital Allowances for ICT equipment and software, is expected to drive digital adoption and enhance workforce readiness among SMEs.
“Incentives such as the ten-year venture capital initiative and the Asean Business Entity framework will attract private capital and support Malaysian enterprises expanding regionally.”
Meanwhile, he added that the introduction of a carbon tax in targeted industries and the extension of the SRI Sukuk and Green Bond Grant Schemes underline the government’s commitment to green growth.
Chin said consistent leadership, clear execution, and strong collaboration are essential to position Malaysia as a regional hub for sustainable investment and a resilient, innovation-driven economy.
On strengthening Malaysia’s SME ecosystem, Chin said it can be achieved through expanding high-tech industrial clusters in semiconductors and renewable energy.
“Through initiatives like the National Semiconductor Strategy and the National Energy Transition Roadmap, local supply chains can deepen, creating subcontracting opportunities in precision engineering, automation, green manufacturing, and component production.
“With strong collaboration between government, industry, and SMEs, Malaysia can accelerate its transition into a competitive and resilient innovation-based economy that benefits businesses and the nation as a whole,” he said.
If effectively implemented, these initiatives will generate job creation, skills upgrading, technology transfer, and new business linkages, aligning with the 13th Malaysia Plan’s vision of a high-income, innovation-driven economy.
In terms of digital competitiveness, Chin said the establishment of the National AI Office (NAIO) and the rollout of national digital infrastructure under Budget 2026 position Malaysia as a competitive player in the regional digital economy.
He added that full e-Invoicing adoption, nationwide 5G and fibre coverage via JENDELA 2, and expansion of the National Digital Network will enhance connectivity and reduce the digital divide.
“For SMEs, this means greater access to AI-based training, automation solutions, and data-analytics capabilities that will raise productivity and competitiveness,” he said.
NAIO will coordinate efforts under the National AI Action Plan 2026–2030, fostering collaboration between government, academia, and industry.
Chin called for regular review by a high-level taskforce comprising ICT professionals and industry representatives as essential to ensure effective implementation and alignment with market needs.
Meanwhile, the New Industrial Master Plan (NIMP) 2030 aims to promote balanced and inclusive industrial growth across all Malaysian states. Through cluster-integration programmes and regional development funds, states can access technology upgrades, capacity expansion, and sustainable growth initiatives.
“The SME Association of Malaysia fully supports the government’s goal to build balanced and sustainable industrial growth through high-impact clusters. What matters most is effective execution, open collaboration, and a shared commitment to ensure that all regions in Malaysia benefit and that our country continues to grow as a strong, competitive, and innovation-driven economy,” said Chin.
Emphasising that coordination between federal and state governments is crucial to avoid duplication and ensure fair support for less-developed regions, including the East Coast, Sabah, and Sarawak, Chin reiterated the need for independent reviews by experts and industry practitioners to ensure funds are deployed effectively and efficiently.
He noted that Budget 2026 promotes public–private partnerships and targeted fiscal incentives to attract sustainable investment and enhance economic resilience.
Measures such as the Strategic Co-Investment Fund, Green Investment Tax Allowance, and extended venture capital incentives support local SMEs in upgrading capabilities and integrating into regional and global supply chains.
Chin opined that Malaysia is moving towards a shared-growth model that encourages innovation, job creation, and responsible business practices via fostering collaboration between government and private sectors.
However, he emphasised that consistent leadership, clear execution, and strong collaboration are essential to position Malaysia as a regional hub for sustainable investment and a resilient, innovation-driven economy.
“A plan is only as real as its results. Leadership is proven by action, not by announcements. Ideas are easy. Implementation is everything,” said Chin.
