Government Grants for SMEs under Budget 2023

Government Grants for SMEs under Budget 2023

Malaysia’s Finance Minister, Tengku Datuk Seri Zafrul Tengku Abdul Aziz, has released Budget 2023, the country’s second-largest ever, to guide the country through rising interest rates, high inflation, and a poor global growth outlook.

One sector of the economy that is expected to be struggling next year is the Small and Medium Enterprises (SMEs). Budget 2023 is also likely to offer some reprieve for these SMEs. Here are the notable takeaways that you should know.

  1. Income tax reduction for MSME operators

Tax is one of the annual expenses for businesses that must be paid. As a relief plan, Budget 2023 proposes that the tax rate on chargeable income for the first RM100,000 will be reduced by 2%, from 17% to 15%. This will save up to RM2,000 for each MSME taxpayer, which reaches approximately 150,000 businesses.

  1. One-off grant to all registered MSMEs

Budget 2023 also proposes to give a one-time incentive of RM1,000 to all registered taxi drivers and MSMEs to assist micro-small traders. This grant is projected to help 1 million enterprises with a total fund of RM1 billion.

  1. Support to automate and digitize SMEs

The COVID-19 pandemic is devastating, especially for the SME sectors. Budget 2023 overall liquidity will be injected and focus on the automation and digitalization of SMEs as support for the post-pandemic recovery phase.

It would have been more effective to provide a double deduction for R&D, digitization, automation, ESG compliance investments, and financing facilities. Because of the current political and economic instability, most SMEs are hesitant to invest significantly in plant and process modifications. As a result, targeted finance facilities like those offered would have a different impact than a more comprehensive package of budgetary assistance.

  1. Further support for Bumiputera entrepreneurs

An RM135 million fund will be made available to Bumiputera enterprises through TERAJU. Perbadanan Usahawan Nasional Berhad (PUNB) would also offer RM200 million to facilitate finance and entrepreneurial development programs for Bumiputera in the retail and distribution trade sectors.

  1. Special funding for female entrepreneurs

To empower women, especially in the MSME sectors, Budget 2023 also includes special funding for female entrepreneurs. The government will give their support through programs such as Terkunita TEKUN, Semarak-Nita BSN, Biz Lady Bank Rakyat, and Dananita MARA.

  1. Expanded guarantee limit for SMEs.

Financing is quite a problem for SMEs. Budget 2023 proposes a guaranteed limit of up to RM9 billion to support SMEs gaining funds through the Business Financing Guarantee Company. Strategic industries such as agrifoods, sustainable technologies, tourism, and oil and gas will be the focus of this program.

  1. More Semarak Niaga funds to support entrepreneurs

SemarakNiaga 2023 now has a total value of RM45 billion, up from the RM40 billion announced for 2022. Financing guarantees, alternative financing, and direct loans are all included in this value. Microcredit loans and funding facilities worth RM1.7 billion will be accessible to small entrepreneurs next year, including:

  • BSN microcredit loans worth RM950 million.
  • The Indian Community Entrepreneur Development Scheme (or SPUMI) Micro-funding Scheme, with a fund of RM25 million.
  • Credit facilities for small-scale entrepreneurs under TEKUN, specifically for the informal sector, youth, women, and Bumiputera, with an allocation of RM300 million.
  • The iTEKAD social finance initiative contributed RM10 million, which financial institutions matched through zakat and cash waqf payments.


Many experts predict that next year will be tough for SMEs and startups; that’s why many business owners and CEOs are busy preparing for it. However, with careful preparation and support from the government, the possibility of an economic downturn is manageable. With Budget 2023, SMEs can focus more on growing their business rather than worrying about uncertainty.