Malaysia’s government announced its largest state budget in history on October 29, 2021, totaling 333.2 billion ringgit (US$80.2 billion) as the government aims to spur post-pandemic growth in 2022.
The budget provides several incentives, grants, and financing schemes for businesses. Several are also an extension of the benefits issued under the 2021 state budget. These include more than 19 billion ringgit (US$4.5 billion) in funding for micro, small, and medium-sized enterprises (MSMEs) and wage subsidy programs to help employers hire Malaysians. Moreover, the government has also dedicated 10 billion ringgit (US$2.4 billion) for loans dedicated to Bumiputera businesses (businesses owned by the country’s majority ethnic Malays).
Malaysia’s economy contracted 5.6 percent in 2020 — Malaysia’s weakest since a 7.4 percent contraction during the 1998 Asian financial crisis. Economic recovery was not helped by infighting within the government that saw prime minister Mahathir Mohammad resign and power transferred to Muhyiddin Yassin and his BERSATU coalition. Muhyiddin himself lasted only 18 months and resigned in August 2021 after his government was found to be incompetent in handling the pandemic.
In a sign of wanting to achieve at least medium-term stability, Ismail signed an unprecedented peace pact with the main opposition, the Pakatan Harapan alliance, headed by Anwar Ibrahim. Criticism from Pakatan Harapan was largely muted during the presentation of the budget to parliament.
To see our article on the tax measures covered under Budget 2022, click here.
Employers who hire Malaysians who have not been actively employed are eligible to receive the following incentives in the form of:
This is subject to employers earning 1,500 ringgit (US$360) per month.
The government guarantee scheme to help SMEs under the Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) has been given an additional 10 billion ringgit (US$2.4 billion) in funding. This includes 2 billion ringgit (US$480 million) for businesses owned by ‘Bumiputera’s’ (ethnic Malays).
The SJPP is a government entity responsible for administering and managing government guarantee schemes. Further, the scheme is available to SMEs in all sectors with at least 51 percent of their shares controlled by a Malaysian.
This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected]