KUALA LUMPUR, October 19 – Prime Minister and Finance Minister Anwar Ibrahim has presented the 2025 federal government budget, allocating a historic RM421 billion, marking the first time the budget has surpassed RM400 billion. This represents a significant RM27.2 billion increase from the RM393.8 billion budgeted for 2024. Of the total allocation, RM335 billion, or 79.6%, is earmarked for operational expenditures, while RM86 billion is designated for development projects.
The budget outlines comprehensive plans for various sectors, including a focus on economic growth and investments. Government-linked investment companies (GLICs) are expected to invest RM120 billion domestically over the next five years, with RM25 billion allocated for the upcoming year. The introduction of a New Investment Incentive Framework is planned for the third quarter of 2025, alongside RM1 billion in investment funds aimed at training local talent. Furthermore, RM300 million will be directed towards Khazanah’s National Fund-of-Funds to bolster investments in startups.
In the realm of development and utilities, significant allocations have been made, including an increase of the National Energy Transition Facility to RM300 million for 2025 and the extension of the Net Energy Metering program for photovoltaic solar panel installation until June 30, 2025. The government has committed RM1 billion for a green technology financing scheme and announced that UEM Lestra and Tenaga Nasional Berhad (TNB) will invest RM16 billion to enhance transmission and distribution networks, alongside decarbonizing industrial areas.
Taxation policies also feature prominently in the budget, with a sales tax to be imposed on premium imported food items and a widened service tax including commercial services. Notably, a 2% tax on dividend income exceeding RM100,000 will come into effect in the 2025 assessment year, while a carbon tax on steel, iron, and energy industries is set for 2026 to promote low-carbon technology adoption. Additional tax relief measures include raising individual income tax relief for education and medical insurance premiums to RM4,000, as well as extending tax exemptions on foreign-sourced income until December 31, 2036.
In the education sector, the government allocated RM64.1 billion to the Ministry of Education, including RM2 billion for school upgrades and the construction of 44 new schools nationwide. There are also provisions for early schooling aid, supplementary food programs, and increased funding for higher education initiatives. Health care sees an allocation of RM45.3 billion for the Ministry of Health, with a commitment to raise excise duty on sugary drinks to combat health issues related to excessive sugar consumption.
The security sector received a boost with RM19.5 billion allocated to the Home Ministry and RM21.2 billion to the Defence Ministry. Efforts to strengthen national security will also see enhancements to border security and increased funding for the Malaysian Anti-Corruption Commission (MACC). Environmental concerns are addressed through an increased Ecological Fiscal Transfer fund, set at RM250 million, aimed at supporting state efforts in forest and wildlife protection.
Social welfare initiatives have been bolstered, with RM13 billion allocated for the Rahmah cash aid program, benefiting a larger segment of the population. Cash aid for households will increase, while specific support measures for low-income families and seniors are set to rise. In housing, nearly RM900 million is allocated for People’s Residency Programs, along with guarantees for first-time homebuyers, reflecting the government’s commitment to housing accessibility.
To support job creation and community development, the minimum wage will rise from RM1,500 to RM1,700 per month starting February 1, 2025, with provisions for small employers. The budget also emphasizes rural development, allocating RM100 million for mobile clinics and RM2.9 billion for upgrading basic infrastructure in rural areas.
Overall, the 2025 federal budget reflects the Malaysian government’s comprehensive strategy to stimulate economic growth, enhance public welfare, and promote sustainable development across various sectors.
