In Budget 2025, the government continues to emphasise the technological aspects of agriculture, especially in an effort to improve aspects of the country’s food security that are not strong currently.
In his budget speech this time, Prime Minister Datuk Seri Anwar Ibrahim gave many “on-the-ground” examples, which are the success stories of government programmes that have succeeded in changing the fate of the people. This is because his wish is for Malaysians to enjoy the prosperity of their own country as per the vision of the Madani Economy plan.
Among the examples he gave are in Kapit, Sarawak; Pasar Siti Khadijah, Kelantan; Rumah Panjang Nanga Sebatu, Kampung Tebuk Hj Dollah, Selinsing, Perak; Kampung Kuala Bibang, Semporna, Usahawan BateriKu and many more.
As in the previous budget, the Education Ministry followed by the Health Ministry received the highest government allocation, RM64.1bil and RM45.3bil respectively.
Overall, there is no major difference in Budget 2025 compared to last year apart from the largest increase in government finances in the country’s history with RM421bil.
This is because there is an overall increase in greater allocation for continuation of all government programmes such as aid and welfare of the people connected from the previous years such as Sumbangan Asas Rahmah (SARA), Rahmah Cash Contribution (STR), Social Welfare Department, Payung Rahmah; as well as various programmes to help the Madani micro, small, and medium enterprises (MSMEs), startups and so on.
Indeed there are notable improvements in this budget but not surprising as it has been projected that the government will introduce targeted subsidies for RON95 this year, but the implementation mechanism has not yet been explained by the government, whether it involves Central Database Hub (Padu), National Poverty Data Bank System (eKasih) or other means. In addition to the 2025 pre-budget, the government had already announced further incentives to develop the economy such as the Johor Exclusive Economic Zone as a tax-free area and financial centre for high net worth fund management, as well as the implementation of e-invoicing in updating national taxation transactions.
Dr Aimi Zulhazmi Abdul Rashid is an associate Professor of Finance and Islamic Finance at the Universiti Kuala Lumpur Business School.There were some surprises from the tax aspect, namely the introduction of a new 2% tax on company dividends, but there was no Inheritance Tax and High-Value Goods Tax as expected. The implementation of the carbon tax has been expected on the iron and steel industry which will only happen in 2026.The government continues to provide cash assistance to the people such as SARA and STR, by increasing the allocation compared to last year as it is well aware of the increase in population and the challenge of the cost of living that continues to rise even though the country’s economy is improving. The government also wants the savings from the implementation of targeted subsidies such as from electricity bills and diesel fuel to be channelled in a targeted manner to the B40 segment which is in great need.
For example, savings from diesel of RM4bil are now channelled through STR and SARA to RM13bil, an increase of RM3bil from Budget 2024.
This RM13bil injection will also be used for the targeted segment of the people to buy basic necessities, food, clothing and so on directly.
This expenditure helps to develop the country’s domestic economy, ensuring cash flows within the country from consumers to retailers, transport, wholesalers and manufacturers, that is, the entire value chain of supply of goods or services.
The government has also clearly made a lot of provision for Malaysian citizens and businesses for the adaptation of the digital economy at all levels, especially those involving smart technologies such as Artificial Intelligence (AI).
Digital transformation involves MyDigital ID covering PADU, JPJ and LHDN as well as improving the country’s cyber security. Public universities are given special allocations to develop AI according to their respective specialisations. A special tax deduction incentive is given to all private universities and skill institutes that provide courses in digital technology, AI, robotics, the Internet of Things, data science, fintech and sustainable technology.
The allocation for the year Visit Malaysia 2025 is also hefty, which is RM550mil in an effort to reach the target of 31.4 million tourists to achieve revenue of RM125.5bil. An additional RM610mil is to improve the country’s main historical tourist attractions.The government also continues the energy transition programme towards achieving the net-zero greenhouse gas target with various innovative projects.
Similarly, the encouragement to citizens and businesses to save electricity by increasing energy efficiency and continuous support for EVs is also extended to electric motors as well. The government continues to emphasise the technological aspects of agriculture, especially in an effort to improve aspects of the country’s food security that are not strong currently.
The large-scale involvement of government agencies with private bodies must achieve the goal with large government allocations through land and finance.
Cultivation of food crops such as rice, onions and many more is the core of the country’s food security programme.
Dr Aimi Zulhazmi Abdul Rashid is an associate professor of Finance and Islamic Finance at the Universiti Kuala Lumpur Business School.
