Budget 2025 Malaysia: A Turning Point for Malaysia’s Economic and Real Estate Landscape

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Discover how Budget 2025 aims to boost Malaysia’s economy and real estate sector, addressing inflation while fostering growth and development across key industries.

The 2025 Malaysian Budget, themed “Ekonomi MADANI Negara Makmur, Rakyat Sejahtera,” was presented by Prime Minister Datuk Seri Anwar Ibrahim on October 18th, 2024, at 4 p.m., generating varied public reactions. As both Prime Minister and Finance Minister, Anwar emphasized his dedication to addressing inflation and raising wages.

The budget allocates a record-breaking RM 421 billion, with RM 82.1 billion for education, RM 45.3 billion for healthcare, and RM 21.2 billion for defence, making it Malaysia’s largest budget ever.

The budget’s focus revolves around three main areas aligned with its theme: Raising the Ceiling, Raising the Floor, and Promoting Good Governance in the Public Sector.

What lies ahead for the people of Malaysia?

Budget 2025 Malaysia:

  • Real Estate Focuses
  • Bantuan Rakyat
  • Other Highlights

Real Estate Focuses

1. Affordable Housing

The outlook for real estate is promising! A total of RM900 million has been allocated for 48 People’s Housing Program projects and 14 Friendly People’s Housing projects.

This includes two new developments in Port Dickson and Seberang Perai Tengah. By the end of 2025, 30 of these projects are expected to be completed, benefiting approximately 17,500 new residents.

2. PPR

As part of Budget 2025, the government emphasized its focus on assisting low-income individuals through the People’s Housing Programme (PPR).

To support this initiative, the government intends to allocate RM200 million for upgrading old elevators in PPR housing and RM100 million to develop 48 Madani Parks.

3. Home Loan Agreement

For loan agreements, the government is offering personal income tax relief of up to RM7,000 on mortgage interest payments.

Additionally, those who finalize a home loan agreement between January 1, 2025, and December 31, 2027, may qualify for this tax relief.

There’s also tax relief of up to RM7,000 for purchasing residential properties valued at RM500,000 or less.

In terms of housing development, the government has allocated RM200 million for affordable housing projects on waqf land by UDA.

Moreover, partnerships between PNB and PHB will focus on initiatives for affordable housing, student accommodations, and commercial developments.

4. Sejati MADANI

In Budget 2025, the government plans to allocate RM1 billion next year for the Sejati MADANI Community Prosperity Project.

5. All States Development

State Development For Sabah and Sarawak, the MADANI government is focused on narrowing the development gap and improving living standards, particularly in key areas such as roads, electricity, and access to clean water.

The total public investment for development in 2025 is projected to reach RM120 billion.

6. Forest City

The government plans to establish a new financial entity to support the construction and redevelopment of Forest City in Johor Bahru.

This initiative seeks to boost the local economy and generate numerous job opportunities, particularly within the duty-free zone.

Meanwhile, the National Energy Transition Roadmap (NETR) will enter its implementation stage, including projects like the Kenyir Hybrid Hydro Floating Solar Farm and a green hydrogen hub in Terengganu.

Bantuan Rakyat

1. Ikhtiar Sejati Madani Initiative

In Budget 2025, the government has introduced a major Bantuan Rakyat initiative, allocating RM1 billion to the Ikhtiar Sejati Madani program. This includes:

  • RM600 million to boost rural economies in villages, towns, remote areas, and Orang Asli communities.
  • RM200 million to expand the Kampung Angkat Madani initiatives to 200 villages.
  • RM100 million for public universities to participate in the Kampung Angkat Madani program, with TVET institutions providing services like home repairs and electrical installations.
  • RM100 million to support PPR communities across the nation through various socioeconomic programs.

2. STR

The budget for the Compassionate Assistance Program (STR) in 2025 will increase to RM13 billion, benefiting approximately 9 million individuals, which represents 60% of the adult population.

3. B40

In keeping with the annual tradition, the monthly welfare assistance for the most disadvantaged elderly citizens has been raised from RM500 to RM600 in 2024.

Child Assistance Rates for Low-Income Families:

  • For children aged 6 and under: RM250
  • For children aged 7 to 18: RM200
    *The maximum amount per family is RM1,000.

4. Youth

To assist young people in purchasing their first home, the government has launched the RM5 billion Step Up Financing Scheme (1-Skim Step Up Financing) to support those facing difficulties.

Additionally, unmarried individuals qualify for a monthly compassionate allowance of RM600.

5. Basic Salary

Starting February 1, 2025, the minimum wage will increase to RM1,700 from RM1,500.

For employers with fewer than five employees, the implementation of the RM1,700 minimum wage will begin on August 1, 2025, providing a six-month grace period.

6. EV Subsidy

The government is providing rebates of up to RM2,400 for the purchase of new locally assembled electric vehicles (EVs), backed by a RM10 million allocation.

7. Public Transport

Prasarana and KTMB have purchased 250 electric buses and 12 passenger train carriages to enhance public transportation.

Additionally, the My50 Monthly Pass will remain in effect, benefiting 180,000 bus and train users in the Klang Valley.

Others

1. Education

Students pursuing STEM subjects at public universities will receive encouraging news as the National Higher Education Fund Corporation (PTPTN) allocates RM500 million for special education funding.

Additionally, the government intends to raise tuition fees for students from the top 15% income bracket attending government boarding schools and public universities.

To promote savings for higher education, the government will extend personal income tax relief on net deposits in the SSPN for another three years.

In a bid to generate high-paying jobs in the AI sector, the government is providing special tax incentives to private higher education institutions that introduce new courses in fields such as digital technology, AI, robotics, IoT, data science, FinTech, and sustainable technology.

Additionally, RM100 million has been allocated to public universities to implement the MADANI Adopted Village program.

2. MyDigital ID

MyDigital ID is a centralized government application that integrates multiple agencies, including Padu, JPJ, and LHDN.

This platform aims to offer Malaysian citizens a comprehensive tool to simplify their access to government services.

Additionally, from April 2025, financial assistance will be automatically credited to MyKad cards, allowing beneficiaries to buy everyday essentials at more than 600 supermarkets and grocery stores across the country.

This initiative is part of the government’s strategy to embrace the digital age.

3. Healthcare

In terms of healthcare, the Budget 2025 introduced an increase in the personal income tax deduction for tuition fees and medical insurance premiums to RM4,000. Additionally:

  • The Ministry of Health has been allocated RM45.3 billion to ensure the provision of quality and accessible healthcare facilities.
  • RM1.35 billion has been set aside for maintaining healthcare infrastructure, which includes essential updates like aging hospital restrooms.
  • RM300 million is earmarked for improving underperforming clinics.
  • Parents can deduct medical examination fees, including vaccinations, from their taxes, which also extends to expenses related to grandparents.

4. Taxes

Sales Tax: Starting May 1, this tax will only apply to imported goods, with basic food items for Malaysians being exempt. However, in the future, less common food items like salmon and avocados will be taxed.

Services Tax: This will now encompass a wider range of commercial services, including businesses that provide fee-based financial services.

Dividend Tax: Beginning in 2025, a 2% tax will be levied on dividend income exceeding RM100,000 received by individual shareholders.

Carbon Tax: The government intends to introduce a carbon tax in 2026, targeting the steel and energy sectors to promote low-carbon technologies and support green research and development efforts.

Sugar Tax: A tax on sugar-sweetened beverages will come into effect on January 1, 2025, imposing a levy of 40 cents per liter on sweetened drinks.

However, dividend income from investments such as the EPF, unit trusts under PNB, and foreign dividend income will be exempt from taxation.

5. Entrepreneur

Business owners can access RM200 million from the Retirement Fund Incorporated (KWAP) to invest in local startups.

Moreover, Malaysian companies are encouraged to obtain ICT and computer software to support the shift to e-invoices.

The government has provided a two-year period for business owners to acquire the essential tools needed for the full implementation of e-invoices.

The government has introduced the Public-Private Partnership Initiative (PIKAS) to strengthen cooperation between the public and private sectors, with a goal of attracting RM780 billion in private investments and generating 900,000 jobs by 2030.

Additionally, the government is boosting the capabilities of SMEs and has allocated RM50 million in digital grants to help local entrepreneurs stay competitive.

For women entrepreneurs, the SME Bank, in partnership with the People’s Bank and the People’s Trust Bureau, has earmarked RM470 million in loans to support their businesses.

In summary, while Budget 2025 Malaysia aims to address inflation and enhance wages, the introduction of five new taxes and several new ‘bantuan rakyat’ initiatives raises the question: Can Malaysia effectively combat inflation?

Alternatively, could these measures unintentionally add to the challenges faced by Malaysians grappling with an already high cost of living?

On a positive note, with the launch of MyDigitalD and four development projects, it’s clear that the 2025 Budget has the potential to be a significant turning point for the nation’s economic growth, particularly in the real estate sector.

We are excited to observe how Budget 2025 may positively impact the economy, real estate sector, and other key industries, fostering progress and growth for Malaysia.

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