Budget 2024, unveiled by Prime Minister Datuk Seri Anwar Ibrahim, represents the nation’s most comprehensive financial plan, with a total allocation of RM393.8 billion.
Under the theme “Ekonomi MADANI: Memperkasa Rakyat,” this budget places paramount importance on serving the ‘rakyat’ (citizens) through policies aligned with the country’s broader economic strategies, such as the National Energy Transition Roadmap, New Industrial Master Plan 2030, and the Mid-Term Review of the Twelfth Malaysia Plan.
This budget brings significant opportunities and challenges, particularly for Malaysia’s Fintech industry. Let’s delve into the key highlights.
Capital Gains Tax
The introduction of the Capital Gains Tax, specifically on profits from selling shares of locally unlisted companies, is set to have a substantial impact on investment trends. While the initial 10 percent rate effective from March 1, 2024, may seem high at first glance, the finer details require closer examination.
The proposed exceptions related to approved Initial Public Offerings (IPOs) and investments in venture capital could offer substantial financial relief and reshape investment practices in the fintech sector.
Tax Incentives and Financial Support
The Malaysian government is making significant efforts to bolster various sectors through budgetary initiatives. To enhance areas like food security, healthcare, education, and agriculture-related enterprises, it has allocated RM100 million to MyCIF over a three-year period through the development of waqf assets.
Additionally, tax advantages are being extended to individuals investing in startups via the Equity Crowdfunding platform, with special incentives for angel investors funding technology startups. These measures underscore the government’s commitment to nurturing new businesses and technological advancements within the nation.
Startups, particularly in fintech, represent the forefront of various industries. To support these ventures, the National Digital Economy and Industrial Revolution Council is injecting RM28 million into the MYStartup platform. This central hub consolidates resources and funding, facilitating growth in startup ventures. Government-linked companies (GLCs) are also committing up to RM1.5 billion to encourage startups, SMEs, and the Bumiputera community to explore high-growth opportunities, particularly in the digital economy.
Enhancing Cybersecurity Infrastructure
With a focus on safeguarding digital assets and citizens’ data privacy, the Malaysian government has allocated RM60 million in its 2024 budget to strengthen national cybersecurity efforts through CyberSecurity Malaysia (CSM). This funding aims to advance a 5G Cyber Security Testing Framework and bolster local expertise in 5G technology to enhance technical capabilities and cybersecurity initiatives.
This allocation underscores the government’s commitment to fortify Malaysia’s digital defenses and secure the nation’s digital economy.
The National Scam Response Centre (NSRC) plays a crucial role in the battle against financial scams, and the government has doubled its funding to support its work. The development of the National Fraud Centre (NFC) led by Bank Negara Malaysia and financial sector partners promises to improve scam detection and fund recovery with an advanced automated system.
Legal changes to crack down on scam networks underscore Malaysia’s commitment to protecting its citizens and returning funds to victims efficiently.
Strengthening Islamic Finance
Malaysia’s 2024 budget includes substantial measures to boost Islamic financial activities in the Labuan International Business and Financial Centre (IBFC). Entities involved in Islamic financial transactions will enjoy full income tax exemptions from 2024 to 2028. This aligns with the government’s aim to make Malaysia a hub for Shariah-compliant financial activities. The Labuan IBFC operates under the Labuan Islamic Financial Services and Securities Act, with guidance on Green, Social, and Sustainability Sukuk issuance and compliance standards for Labuan Islamic digital offerings.
The IDAC’s blockchain capabilities have introduced securities token offerings for global investors, and the new Labuan Exchange simplifies digital sukuk trading using blockchain technology. Although the tax treatment for Shariah-compliant fund management services is adjusted, the exemption period is extended to compensate for this change.
Additionally, tax exemption policies for Sustainable and Responsible Investment (SRI) Funds and SRI Sukuk Grants are expanded, reflecting Malaysia’s commitment to promoting responsible investing in today’s interconnected financial world.