Budget 2025 Highlights: Minimum wage up to RM1,700

Prime Minister Datuk Seri Anwar Ibrahim unveiled Malaysia’s Budget 2025 today at 4 PM, outlining the government’s plans for economic growth and social support in the coming year. 

It is the third budget presented under the Madani government led by Anwar and the final one under the 12th Malaysia Plan (2021-2025), before transitioning to the 13th Malaysia Plan.

Among the key highlights is the proposed increase in the minimum salary to RM1,700, along with various initiatives to strengthen the economy, support businesses, and improve public services. This article will provide an overview of the major announcements and their potential impact on the nation. 

• RM421 billion allocated: Prime Minister Datuk Seri Anwar Ibrahim announced a total budget of RM421 billion, focusing on economic growth and ensuring social equity.

• RON95 subsidy continues: The fuel subsidy for RON95 petrol will remain in place, benefiting 85% of the population.

• Sales tax on premium imports: Luxury food items, including imported goods like salmon and avocados, will see a rise in price due to a new sales tax on premium items.

• Tax on dividends: A 2% tax will be applied to dividends exceeding RM100,000, impacting individual shareholders from 2025 onwards.

• GDP growth forecast: Malaysia’s GDP is expected to grow between 4.5% and 5.5% next year.

• Big tech investments: Malaysia has secured investments totalling US$16.9 billion (RM72.75 billion) from tech giants such as AWS, Microsoft, Google, and Oracle, with commitments until 2038.

• Digital economy boost: RM50 million will be allocated for the SME Digital Matching Grant and Vendor Digital Grant under Bank Simpanan Nasional (BSN), designed to help local entrepreneurs remain competitive.

• Cuti-Cuti Malaysia: A RM550 million fund will support tourism promotion efforts, especially for Visit Malaysia Year 2026.

• Support for micro-entrepreneurs: The i-Tekad program, in collaboration with 13 banks and 70 partners, will assist over 8,000 low-income micro-entrepreneurs. RM20 million in matching grants has been set aside, with RM5 million allocated for insurance or takaful contributions, to be matched by insurers or takaful operators.

• Pioneer Fund for start-ups: The Retirement Fund (Incorporated) will allocate RM1 billion through the Pioneer Fund to support local start-ups, with RM200 million dedicated to nurturing new businesses.

• Increased support for SMEs: RM50 million will be available through the Digital Matching Grant and Vendor Digital Grant under BSN to help small and medium enterprises stay competitive.

• Minimum wage increase: The minimum wage will rise from RM1,500 to RM1,700 per month, effective February 1, 2025. Employers with fewer than five employees will be granted a six-month extension before the new wage is enforced.

• Salary transparency initiative: The Human Resources Ministry will introduce salary guidelines for various job sectors, offering a transparent reference point for employees.

• MyDigital ID App: The government will launch MyDigital ID, a unified platform that integrates various public services such as JPJ, Padu, and LHDN.

• Encouraging women back into the workforce: Employers who rehire women will receive a 50% tax exemption for 12 months, incentivizing companies to bring women back to work.

• Empowering women entrepreneurs: A total of RM470 million in funding will be made available through SME Bank, BSN, Bank Rakyat, and MARA, aimed at supporting women in securing business capital for their ventures.

• Promoting flexible work arrangements: Employers adopting hybrid or flexible work setups can benefit from a 50% tax deduction on the associated costs, encouraging a more adaptable workforce.

• My50 Monthly Pass: The My50 Monthly Pass will be extended, providing affordable transportation for 180,000 bus and rail users in the Klang Valley.

• Sumbangan Tunai Rahmah (STR): The STR fund will see a RM3 billion increase, bringing the total to RM13 billion, benefiting around nine million recipients.Monthly essentials assistance (Sara): Starting in April 2025, 4.1 million household STR recipients will receive Sumbangan Asas Rahmah (Sara), a monthly RM100 credit on their MyKAD. This can be used to purchase essentials like food, medicines, school supplies, and personal hygiene products at over 600 supermarkets and retail stores nationwide. Single individuals will receiving RM600 in STR payments.

• TVET

  • Incentives for hiring OKU and ex-convicts: Employers who hire individuals with disabilities (OKU) or ex-convicts will receive a monthly incentive of RM600 for three months, managed by SOCSO.

  • Financing for vocational training: PTPK will offer financing of up to RM500 million, benefiting over 20,000 trainees. RM100 million of this will focus on sectors prioritized by the National Industrial Master Plan (NIMP), such as maintenance, repair, and overhaul (MRO), electric vehicles (EV), aerospace, and artificial intelligence (AI).

  • Tax deductions for equipment donations: Companies donating new equipment and machinery to registered public skills training institutions, polytechnics, or vocational colleges will enjoy tax deductions from the 2025 tax year until 2027.

  • Increased use of HRDCorp funds: Employers will now be able to allocate up to 50% of their HRDCorp funds, up from the current 30%, to cover the costs of upgrading skill training facilities, including purchasing new equipment.