MADANI Budget 2025: Key Highlighted

The MADANI Budget 2025, presented by Malaysia’s Finance Minister, lays out the government's strategy to stimulate sustainable growth and address social challenges.

With a total allocation of RM421 billion, the budget aims to uplift welfare, boost family support, enhance green technology, introduce housing reforms, and support businesses. Here’s an in-depth look at the budget’s main features, including newly added housing sector initiatives.

1. Economic Growth & Strategic Investments

• The New Industrial Master Plan (NIMP), National Energy Transition Roadmap (NETR), and National Semiconductor Strategy (NSS) are the core strategies driving Malaysia's growth and technological advancement.
• Malaysia achieved a record RM329.5 billion in investments in 2024, with RM160 billion approved in the first half of 2024 alone, reflecting robust investor confidence.
  
• The budget’s revenue target for 2025 is set at RM340 billion, a rise from RM322 billion in 2024, driven by enhanced tax measures, public-private partnerships, and improved SST collection.

2. Fiscal Responsibility & Debt Management

• Introduction of the Public Finance Act aims to ensure better transparency in debt and deficit management.
• The act sets clear benchmarks to maintain the fiscal deficit below 3% of GDP and national debt below 60% of GDP by the mid-term.
  
• To support fiscal sustainability, there will be a gradual reduction in new debt issuance, with public spending focused on high-impact infrastructure projects.
  

3. Tax-Related Reforms: Balancing Revenue and Relief

a) Sales and Service Tax (SST)

• The SST will remain excluded from essential food items like rice, flour, and cooking oil, ensuring affordability for low- and middle-income households. This measure protects the most vulnerable groups while keeping basic goods accessible.
  
• Conversely, SST will continue to apply to premium imported goods, such as salmon, avocados, and high-value consumer electronics, to boost government revenue. This strategy not only drives tax revenue but also promotes local consumption.
  

b) Dividend Tax

• A new 2% tax on dividend income exceeding RM100,000 will be introduced, starting in 2025. This aims to promote fair wealth distribution among higher-income earners and increase revenue.
  
• However, certain dividends, including those from the Employees Provident Fund (EPF), unit trusts under Permodalan Nasional Berhad (PNB), and foreign investments, will be exempt from this tax.
  

c) Carbon Tax Initiatives

• The budget includes a carbon tax targeting the iron, steel, and energy sectors to encourage industries to adopt low-carbon technologies.
  
• Revenue from this tax will support the Carbon Capture, Utilization, and Storage (CCUS) projects, enabling Malaysia to progress toward its goal of achieving net-zero greenhouse gas emissions by 2050.
  
• Companies investing in carbon reduction technologies will receive tax incentives to offset their transition costs.
  

d) Excise Duty on Sugary Beverages

• The excise duty on sugary drinks will increase by 40 sen per litre, effective from January 2025. This tax aims to curb the consumption of high-sugar beverages, a major contributor to obesity and diabetes.
  
• Revenue from this excise duty will be channeled to healthcare programs, including diabetes management, procurement of medications like SGLT-2 inhibitors, and dialysis treatment for kidney disease patients.
  

4. Enhanced Subsidy Targeting & Cost of Living Measures

• The government plans to save RM4 billion annually by refining electricity subsidy targeting, ensuring 85% of households that consume less than 600kWh continue receiving subsidies.
  
• The RON95 fuel subsidy will be restructured by mid-2025, affecting the top 15% income group while retaining benefits for the majority of the population.
  
• Educational subsidies for the top 15% income earners will be gradually reduced, and the savings will be redirected toward upgrading infrastructure in public schools and universities.
  

5. Public-Private Partnerships & Anti-Corruption Measures

• The Public-Private Cooperation Master Plan aims to boost private sector investments by RM78 billion and generate 900,000 jobs by 2030.
  
• The National Anti-Corruption Strategy will enhance transparency, including amendments to the Audit Act of 1957 and empowering the Auditor-General to oversee the management of public funds and government-linked corporations.
  

6. Healthcare& Social Security

• Healthcare Sector
  • RM45.3 billion, the second-highest allocation in the budget, aimed at upgrading hospital infrastructure, introducing new clinics, and expanding healthcare services.
    
  • Additional excise duties on sugary drinks will fund expanded diabetes treatment facilities and peritoneal dialysis for kidney patients.
    
  • “Sugary drink taxes will directly fund diabetes treatment expansions,” says Dr. Lee, a public health expert.
• Social Security: Programs like Skim Keselamatan Sosial Pekerjaan Sendiri will cover up to 70% of workers’ contributions, improving protection for self-employed individuals.
  

7. Minimum Wage & Progressive Wage Policy

• The minimum wage will rise from RM1,500 to RM1,700 by February 2025, with enforcement for small employers delayed until August 2025.
  
• The Progressive Wage Policy, supported by a RM200 million allocation, aims to increase workers' incomes and overall labor market productivity.
  

8. Sustainable Energy & Green Initiatives

• Investments exceeding RM16 billion from entities like UEM Lestra and TNB will support renewable energy projects, including expanding the electricity grid to accommodate more renewable sources.
  
• Initiatives like the Corporate Renewable Energy Scheme (CRESS) aim to create an open grid for corporate power sourcing from renewable generators.
  
• Tax incentives will support electric vehicle (EV) adoption, with plans to promote locally assembled EVs priced below RM100,000 and introduce rebates of up to RM2,400 for electric motorcycles.
  

9. Food Security & Agriculture

• RM300 million will be allocated for state-level agricultural collaborations, focusing on boosting production of local produce like rice and onions.
  
• Agricultural subsidies and incentives for farmers and fishermen will rise to RM2.78 billion, supporting sustainable farming practices and increasing food production.
  

10. Digital Economy & Innovation

• Major tech companies like AWS, Microsoft, and Google have committed USD16.9 billion in investments, positioning Malaysia as a digital infrastructure hub.
  
• The budget also supports comprehensive e-invoicing to enhance business transparency, effective from 2025, with accelerated capital allowances for purchasing ICT equipment.

11. Housing Sector: Ensuring Affordable & Quality Homes

a) Increased Funding for Housing Development

• The government has allocated RM900 million for Residensi Rakyat and Rumah Mesra Rakyat programs, targeting 48 Residensi Rakyat projects and 14 Rumah Mesra Rakyat projects across the country.
  
• Two new Residensi Rakyat projects will be launched in Port Dickson and Seberang Perai Tengah, with 30 projects expected to be completed by the end of 2025, benefiting around 17,500 new residents.
  
• Additional funding will be directed toward improving basic infrastructure, such as roads, water supply, and sanitation in residential areas, especially in rural regions.
  

b) Home Financing and Ownership Support

• To boost homeownership, the government will continue the RM10 billion guarantee program under the Syarikat Jaminan Kredit Perumahan Berhad (SJKP). This initiative aims to support 20,000 homebuyers, particularly first-time homebuyers who face difficulties securing loans.
  

• The maximum assistance for new home construction will increase to RM90,000 per home, up from the previous threshold. This initiative is aimed at helping low-income families build new homes in rural and underdeveloped areas.
  
• The ceiling amount for home repair assistance will also be raised to RM20,000, ensuring better upkeep of existing homes and improved living conditions for residents.
  

c) Upgrading Strata Housing for Low- and Middle-Income Groups

• Nearly RM200 million has been earmarked for the maintenance of low- and medium-cost strata housing, focusing on the replacement of aging lifts, roof repairs, and other essential upgrades to enhance residents’ quality of life.
  
• The maintenance program covers common facilities, utilities, and amenities in public housing schemes, promoting safer and cleaner environments.

d) Urban Renewal and Taman Awam MADANI

• The government has committed nearly RM100 million to upgrade 48 Taman Awam MADANI parks across urban and small-town areas. These parks will feature enhanced recreational facilities, landscaped areas, and safety features to encourage community engagement and active lifestyles.
  
• Urban renewal projects will also focus on the renovation of public spaces and infrastructure around housing areas, making cities more livable and pedestrian-friendly.
  

e) Enhancing Housing in Specific Communities

• Chinese New Villages will receive RM84 million for infrastructure upgrades, including better road access, drainage systems, and utilities.
  
• Upgrades in Indian and Orang Asli settlements will focus on improving basic amenities, such as water supply, electricity, and road connectivity, to create sustainable living conditions.
  
• The Kampung Angkat MADANI initiative will receive RM200 million to revitalize 200 selected villages nationwide, with improved infrastructure, economic opportunities, and enhanced local administration.

12. Education & Skill Development

a) Increased Funding for Education

• The Ministry of Education will receive RM64.1 billion, marking the highest allocation in Malaysia’s history, up from RM58.7 billion in 2024. The funds will be used to improve school infrastructure, support learning materials, and ensure accessibility to quality education across all states.
• An additional RM18 billion will be directed to the Ministry of Higher Education, compared to RM16.3 billion in 2024, to support higher education institutions and enhance the overall academic landscape.

b) Infrastructure Upgrades in Schools

• RM2 billion will be invested in upgrading school buildings and facilities, focusing on classrooms, science labs, libraries, and special education facilities for differently-abled students (OKU).
• RM1 billion has been allocated for the maintenance of existing schools, especially in rural and remote areas such as Sabah and Sarawak, to ensure safer learning environments.
• Construction of 44 new schools is planned for 2025 in strategic areas like Batu Pahat (Johor), Hulu Langat (Selangor), Putatan (Sabah), Sungai Petani (Kedah), and Sibu (Sarawak).

c) Expanding Digital Connectivity in Schools

• To improve digital literacy, RM100 million will be invested in enhancing broadband connectivity, particularly in schools located in remote and underserved areas.
• The Point of Presence (POP) Project, with an allocation of RM800 million, will continue to be implemented, providing faster and more reliable internet access for educational institutions, benefiting both students and educators.

d) Comprehensive Education Assistance Programs

• 17 types of education assistance will be provided, with a total allocation of RM5.3 billion, covering student meals, transportation, uniforms, and learning materials.
• The Hostel Meal Assistance Program will receive RM2 billion, benefiting students in boarding schools, while the Additional Food Program (RMT) will be funded with RM870 million to serve over 860,000 students.
• The Back-to-School Assistance program will receive RM800 million to support 5.2 million students from Year 1 to Form 5, with no parental income cap, ensuring broader coverage.
• The Poor Students' Trust Fund (KWAPM) allocation will be increased to RM180 million to provide additional support to underprivileged students.

e) Higher Education and STEM Advancement

• RM4 billion has been allocated for scholarships, student loans, and educational allowances, ensuring equal opportunities for all young Malaysians to pursue tertiary education.
• The National Higher Education Fund Corporation (PTPTN) will set aside RM500 million for students pursuing Science, Technology, Engineering, and Mathematics (STEM) courses at public universities.
• The National Savings Scheme (SSPN) tax exemption will be extended for another three years, encouraging parents to save for their children’s higher education.

f) TVET (Technical and Vocational Education and Training)

• The budget allocates RM7.5 billion to strengthen the National TVET Strategy, focusing on industry partnerships, training for marginalized youth, and support for rural, indigenous, and vulnerable communities.
• RM900 million has been set aside to increase the Per Capita Grant (PCG) for TVET programs by 15%, enhancing training quality and outcomes.
• The Program Anak Angkat ILKA, with RM50 million in matching grants, will foster stronger collaborations between industries and TVET institutions, ensuring practical, industry-relevant skills for students.

g) University Development and Research Excellence

• RM635 million will be allocated to improve infrastructure, replace outdated equipment, and expand internet access in public universities.
• Major public universities will have dedicated funding to focus on research areas aligned with national priorities, such as AI in medicine at Universiti Malaya, quantum computing at Universiti Putra Malaysia, and semiconductor research at Universiti Sains Malaysia.
• RM600 million will be provided for R&D through the Ministry of Higher Education (KPT) and the Ministry of Science, Technology, and Innovation (MOSTI), supporting innovation, commercialization, and research capabilities in emerging fields.

h) AI & Digital Skill Development

• RM50 million is allocated for expanding AI-related education in all research universities, preparing students for future roles in AI, robotics, IoT, and sustainable technologies.
• A special focus is on the Malaysia Techlympics, with RM10 million allocated to encourage local talent to excel in robotics and AI competitions, fostering innovation and digital competency among youth.

i) Skill Development and Workforce Readiness

• HRDCorp will receive RM3 billion to provide 3 million training opportunities focusing on upskilling, reskilling, and soft skills development. The fund will target marginalized groups, supporting them with training in digital skills, renewable energy, and high-growth sectors like semiconductors.
• The K-Youth Program will be funded with RM200 million, aiming to equip 11,000 local talents with skills in high-demand sectors, including electronics, IT, and manufacturing.

j) Inclusive Programs for Vulnerable Groups

• RM55 million will be provided to train 10,000 huffaz students (students of Quranic memorization) in vocational skills through GiatMARA and community colleges, preparing them for diverse career paths.
• A short-term training initiative by GiatMARA will support over 3,000 gig workers, offering them specialized training in various trades.

13. Johor-Singapore Economic Zone (JS-SEZ)

The Zon Ekonomi Khas Johor-Singapura (JS-SEZ) aims to strengthen bilateral economic cooperation, enhancing connectivity and trade between Malaysia and Singapore.

• Free Trade Area at Forest City:Forest City is designated as a duty-free island to boost tourism and financial services, while special tax incentives are introduced for the Zon Kewangan Khas Forest City to support financial sector growth.
• Invest Malaysia Facilitation Centre - Johor (IMFC-J):IMFC-J is established to facilitate investments in the JS-SEZ, aimed at reducing bureaucratic delays and accelerating project approvals.
• Employment & Investment:The JS-SEZ will offer incentives to attract quality investments and create high-value jobs, with announcements expected by the end of 2024.

The MADANI Budget 2025 reflects the Malaysian government’s commitment to sustainable growth, social welfare, and economic resilience. By focusing on inclusivity, green technology, housing, and welfare, the budget sets a promising path for the nation's progress. It aims to ensure that all Malaysians, especially vulnerable groups, benefit from economic growth while fostering a greener and more sustainable environment.