Budget 2025 highlight

With the theme “Ekonomi MADANI Negara Makmur, Rakyat Sejahtera,” the Budget 2025 Malaysia presented by Prime Minister Datuk Seri Anwar Ibrahim on October 18th, 2024 at 4pm, has elicited a diverse range of reactions from the Malaysian public.

Anwar, who is also a Finance Minister, laid the spotlight on his commitment to tackle inflation and improve wages.

The budget specifies a total allocation of RM 421 billion, comprising RM 150 billion for education, RM 690 billion for health, and the remaining RM 123 billion designated for defence.

This marks the largest budget in Malaysia’s history.

The tabling was focused on three key areas, which reflect the respective theme: Raise the Ceiling, Raise the Floor and Good Governance and Public Sector.

So, what does the future hold for the people of Malaysia?

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Real Estate Focuses

Affordable Housing

A total of RM900 million is allocated for 48 People’s Housing Program projects and 14 Friendly People’s Housing projects.

This includes two new housing projects in Port Dickson and Seberang Perai Tengah. By the end of 2025, 30 of these projects are expected to be finished, helping around 17,500 new residents.

PPR

A part of the Budget 2025, the government highlighted will be focused on supporting low-income individuals under the People’s Housing Programme (PPR).

In line with this commitment, the government plans to invest RM200 million to improve old elevators in PPR housing and RM100 million to create 48 Madani Parks.

Home Loan Agreement

For loan agreement, the government provides personal income tax relief of up to RM7,000 for mortgage interest payments.

Apart from that, people who finalise a home loan agreement from January 1, 2025, to December 31, 2027, could qualify for this tax relief.

There is also a tax relief of up to RM7,000 available for purchasing residential properties valued at up to RM500,000.

Housing Development

Good news! The government has revealed a budget of RM200 million for the development of affordable housing for the people on waqf land by UDA.

Additionally, through collaboration between PNB and PHB, there will be initiatives for affordable housing, student accommodations, and commercial development.

Sejati MADANI

For Budget 2025, the government also plans to set aside RM1 billion next year to support the Sejati MADANI Community Prosperity Project.

All States Development

For Sabah and Sarawak, the MADANI government aims to reduce the development gap of development and comfortable living between states, particularly in important areas like roads, electricity, and clean water.

For this, the total public investment for development in 2025 is expected to be at RM120 billion.

Forest City

A new financial entity will be established by the government to fund the construction and redevelopment of Forest City.

This initiative aims to enhance the local economy and create a substantial number of job opportunities, especially in the duty-free zone.

At the same time, the National Energy Transition Roadmap (NETR) project will move into the implementation phase, including the Kenyir Hybrid Hydro Floating Solar Farm and a green hydrogen hub in Terengganu.

Bantuan Rakyat

Ikhtiar Sejati Madani Initiative

For Budget 2025, the government has set up a significant initiative for Bantuan Rakyat.

A total of RM1 billion has been designated for the Ikhtiar Sejati Madani initiative, which includes:

• RM600 million aimed at enhancing the rural economy in villages, towns, remote regions, and Orang Asli communities.
• RM200 million to broaden the Kampung Angkat Madani initiatives in 200 villages.
• RM100 million allocated for public universities to participate in the Kampung Angkat Madani programme, with TVET institutions offering services like home repairs and electrical installations to local residents.
• RM100 million dedicated to empowering PPR communities nationwide through a range of socioeconomic initiatives.

STR

The budget for the Compassionate Assistance Program (STR) in 2025 will rise to RM13 billion, helping around 9 million people (60% of the adult population).

B40 

To continue the yearly tradition, the monthly welfare aid for the poorest elderly citizens has been increased to RM600 from RM500 in 2024.

Child Assistance Rate for Low-Income Families:

• Ages 6 and below – RM250
• Ages 7 to 18 – RM200
• *maximum rate of RM1,000 per family.

Youth

For young individuals looking to buy their first home, the RM5 billion Step Up Financing Scheme (1-Skim Step Up Financing) has been introduced by the government as a means to aid in helping those who are struggling.

For unmarried individuals, they are eligible for a monthly compassionate allowance of RM600.

Basic Salary Rate 

The minimum wage will be raised to RM1,700 from RM1,500, starting on February 1, 2025.

For employers with fewer than 5 employees, the enforcement of the RM1,700 minimum wage will take effect on August 1, 2025, allowing a 6-month grace period.

EV Subsidy 

The government is offering up to RM2,400 in rebates for the purchase of new locally assembled electric vehicles (EV), which is supported by a RM10 million allocation.

Public Transport

Prasarana and KTMB have acquired 250 electric buses and 12 passenger train carriages to improve public transport.

And the My50 Monthly Pass will continue, benefiting 180,000 users of buses and trains in the Klang Valley.

Other Highlights

Education

A welcoming news for students studying STEM subjects at public universities; the National Higher Education Fund Corporation (PTPTN), the government has set aside RM500 million for special education funding.

Regarding educational subsidies, the government plans to impose higher tuition fees on students from the top 15% income bracket who attend government boarding schools and public universities.

To encourage higher education savings, the government will extend the personal income tax relief on SSPN net deposits for an additional three years.

Meanwhile, to create high-paying jobs in the AI sector, special tax incentives are offered to private higher education institutions that develop new courses in areas such as digital technology, AI, robotics, IoT, data science, FinTech, and sustainable technology.

Lastly, RM100 million has been set aside for public universities to carry out the MADANI Adopted Village program.

MyDigital ID

MyDigital ID is a centralised government application that brings together various agencies such as Padu, JPJ, and LHDN.

This application will provide a complete platform for the citizens of Malaysia, helping them use the app to streamline access to government services.

On the other hand, starting April 2025, financial aid will be automatically deposited into MyKad cards, enabling beneficiaries to purchase daily necessities at over 600 supermarkets and grocery stores nationwide.

This initiative is part of the government’s effort to transition into the digital era.

Health

As for health, the Budget 2025 announced the personal income tax deduction for tuition fees and medical insurance premiums has been raised to RM4,000. Other than that,

• RM45.3 billion allocated to the Ministry of Health to provide quality and accessible healthcare facilities.
• RM1.35 billion designated for the maintenance of healthcare infrastructure, including essential facilities like outdated hospital restrooms.
• RM300 million allocated for upgrading underperforming clinics.
• Parents can fully deduct medical examination fees, including vaccinations, from their taxes. This also covers expenses related to grandparents.

New Taxes

• Sales Tax: Effective May 1, this will apply only to imported goods, excluding basic food items for Malaysians. However, in the future, uncommon foods such as salmon and avocado will be subject to taxation.
• Like Services: Now includes a broader range of commercial services, covering businesses that offer fee-based financial services.
• Dividend Tax: A 2% tax will be imposed on dividend income over RM100 received by individual shareholders, starting from 2025.
• Carbon Tax: The government plans to implement a carbon tax in 2026. This tax will target the steel and energy industries to encourage the use of low-carbon technologies and support green research and development initiatives.
• Sugary Tax: The government has announced a sugar-sweetened beverage tax that will take effect on January 1, 2025. This tax will impose a levy of 40 cents for every liter of sweetened drink.
• However, dividend income from investments such as EPF, unit trusts under PNB, and foreign dividend income is exempt from tax.

Entrepreneur

Business owners can access RM200 million from Retirement Fund Incorporated (KWAP) to invest in local startups.

Additionally, Malaysian companies are encouraged to acquire ICT and computer software to facilitate the transition to e-invoices.

The government has allowed a two-year timeframe for business owners to equip themselves with the necessary tools for the complete rollout of e-invoices.

The government also mentioned that the Public-Private Partnership Initiative (PIKAS) is designed to enhance collaboration between the public and private sectors, aiming to attract RM780 billion in private investments and create 900,000 jobs by 2030.

Furthermore, the government is enhancing the functions of SMEs and has allocated RM50 million in digital grants for local entrepreneurs to remain competitive in the market.

For women entrepreneurs, the SME Bank, in collaboration with the People’s Bank and the People’s Trust Bureau, has set aside RM470 million in loans to support their ventures.

In conclusion, even though the goal for Budget 2025 Malaysia is to tackle inflation and improve wages, with the addition of five new taxes and and numbers of new ‘bantuan rakyat‘ initiative, can Malaysia finally tackle inflation?

Or will it inadvertently create an additional challenge for Malaysians facing an already high cost of living?

On the brighter side, with the introduction of MyDigitalD and four development projects, I think we can all agree that the 2025 Budget will mark a pivotal moment for the nation’s economic development, especially in the real estate industry.

We are eager to see how the Budget 2025 could positively affect the economic, real estate sector and other important industries, leading to progress and growth of the Malaysia state.