During the Malaysia budget 2024 presentation, Prime Minister Anwar Ibrahim outlined several measures designed to guide Malaysia through a challenging period marked by chaos, complexity, and contradiction, which he referred to as a “post-normal era.” This situation arises as the world is still grappling with the ongoing impact of COVID-19, while Malaysia faces challenges like the rising cost of living and the declining power of the Ringgit.
In addition to the initiatives aimed at assisting the average Malaysian, the Prime Minister introduced a range of plans and support programs in the latest national budget to aid micro, small, and medium enterprises (MSMEs). Below is a list of the proposed facilities and support that MSMEs and businesses can look forward to in 2024 under the second Belanjawan Madani.
Mandatory adoption of e-invoicing
The compulsory implementation of e-invoicing will apply to taxpayers generating over RM100 million in revenue. Starting from 1 August 2024, these businesses will be obligated to use e-invoicing. This move aims to enhance their record-keeping procedures and reduce the costs associated with tax compliance. Originally, this mandatory e-invoicing adoption was scheduled to commence in June 2024 during Phase 1, with a pilot phase running from January 2024 until that date.
As a result of this timeline adjustment, the deadlines for taxpayers falling into other income categories will also be changed. The e-invoicing system will be phased in for them, with a goal of full implementation by 1 July 2025.
SST Increased to 8%
Sales and services tax (SST) – currently set at 6% – will increase to 8% in 2024. This increase in SST will exclude essential services such as Food & Beverage and Telecommunications. Take a breath, going out to eat will still cost the same… or not, inflation might hurt those odds.
The government also promises to expand the scope of taxable services to eventually include logistics, brokerage, underwriting and karaoke services (time to get a home karaoke kit).
Business loan facilities for MSMEs
The government is planning to earmark a total of RM44 billion to provide loans and financial guarantees to support MSMEs. Additionally, RM2.4 billion will be set aside to offer small loan facilities to microentrepreneurs and small traders through agencies like BNM, Bank Simpanan Nasional (BSN), and Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN). This allocation will be as follows:
- RM1.4 billion for BSN micro-loans, which can be used for business capital, equipment purchases, premises, and marketing initiatives by hawkers and small entrepreneurs.
- RM330 million through TEKUN, aiming to provide financing facilities to small traders, including batik and craft operators, orang asli entrepreneurs, and Bumiputera entrepreneurs from Sabah and Sarawak. A specific RM30 million is reserved for businesses run by the Indian community.
- An earmarked RM720 million was designed specifically to support women and youth entrepreneurs.
SME funding under Bank Negara Malaysia (BNM)
An independent sum of RM8 billion in loan funds will be made available through BNM to assist SME companies. Within this allocation, RM600 million will be set aside for micro-enterprises, low-income entrepreneurs, small contractors, sustainable businesses, and businesses operating in sectors related to food security.
Small business capital with Amanah Ikhtiar Malaysia (AIM)
AIM, a microcredit organisation has supported approximately one million small businesses, with a particular focus on aiding single mothers and individuals with low incomes. The government intends to provide AIM with RM100 million in funding to enable the organization to sustain and further its initiatives.
Tailored financial schemes for halal Small and Medium Enterprises (SMEs)
As part of the Halal Industry Masterplan 2030, nine financial institutions will be introducing customised programs for halal SMEs within a unified framework. This initiative will provide these businesses with access to specialized funds and capacity-building programs. Additionally, the application process for obtaining a halal certificate will be streamlined, reducing the processing time from 51 days to 30 days.
Guarantees for Bumiputera MSME entrepreneurs
Budget 2024 will allocate a sum of RM1.6 billion in loan facilities and guarantees tailored exclusively for Bumiputera MSME entrepreneurs. This initiative, which includes the offer of venture capital financing for Bumiputera startups, is being implemented to enhance the capabilities and competitiveness of these businesses.
Special facilities for disabled microentrepreneurs
A dedicated financial aid program with a budget of RM50 million will be offered by BSN, specifically designed for microentrepreneurs with disabilities. This initiative is part of the government’s broader efforts to safeguard the welfare and promote self-sufficiency among persons with disabilities (OKU).
Supplementary funding for the iTEKAD social finance program
iTEKAD, a comprehensive program administered by Bank Negara Malaysia (BNM), aims to assist low-income microentrepreneurs in enhancing their financial management skills and business knowledge. It provides access to social finance tools, combining resources from donations, social impact investments, zakat, and cash waqf, along with microfinance. The program is further supported by structured financial and business training.
In Budget 2024, the government will allocate additional funding of up to RM25 million in matching grants with financial institutions, expanding its support to benefit more entrepreneurs.
SJPP Government Guaranteed Schemes
Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) plays a vital role in supporting SMEs and businesses by offering government-backed guarantee schemes, enabling them to secure financial assistance from financial institutions. Typically, these SMEs may face difficulties accessing funding due to a lack of collateral. Currently, SJPP has aided over 100,000 SMEs, with a total approved value exceeding RM75 billion.
In Budget 2024, SJPP will expand its support by guaranteeing up to 80% of loans for entrepreneurs, with a special emphasis on those engaged in the green economy, technology, and halal sectors. An allocation of RM20 billion has been earmarked for this initiative.
Enhancements for Digital Economy Centers (PEDi)
The government will earmark RM25 million for each state constituency’s Digital Economy Center to enhance its capabilities in assisting small entrepreneurs engaged in online product sales. These centres were initially introduced in 2021 to boost e-commerce activities, particularly in rural areas.
Enhanced Capital Allowance for ICT Equipment and Computer Software
The capital allowance for expenses related to the acquisition of information and communication technology (ICT) equipment and computer software will be raised from 20% to 40%. Additionally, the period within which companies can claim this capital allowance will be reduced from four years to three years.
HRD Corp Skill Improvement programmes
Human Resource Development Corporation (HRD Corp) will receive RM1.6 billion to train approximately 1.7 million employees. HRD Corp will also reallocate special funds using 15% of the total levy collected to implement the MADANI Training Programme for MSME entrepreneurs and vulnerable groups (including ex-prisoners, the disabled, as well as the elderly and retirees).
Extension of Tunas Usahawan Belia Bumiputera Programme (TUBE)
Introduced by SME Corp Malaysia in 2014, the TUBE initiative has played a significant role in nurturing over 7,000 young Bumiputera entrepreneurs and generating close to 14,000 job opportunities. This program includes features such as training workshops and a mentoring system to guide young individuals in their journey toward becoming successful entrepreneurs.
In Budget 2024, the government plans to allocate RM20 million to sustain and further develop this program.
Extending the Deadline for Tax Exemption Applications for Social Enterprises
To nurture, support, and promote social enterprises in Malaysia, which are businesses with distinct social goals, such as aiding refugees or environmental preservation, the government has suggested extending the application period for tax exemption on their income for an additional two years, until 2025. Currently, the exemption is applicable for applications submitted to the Ministry of Finance between January 1, 2022, and December 31, 2023.
The array of items listed above is intended to stimulate and empower SME owners and micro-entrepreneurs from diverse backgrounds, long recognized as the cornerstone of the nation’s economy, in 2024.
