Belanjawan 2025: What is in Malaysia's Budget 2025?

PROPERTY GUIDE

Written by Fazrina Fezili

Belanjawan 2025, also known as Budget 2025, is Malaysia’s financial roadmap for the year ahead, aimed at balancing economic growth and improving the quality of life for its citizens. This comprehensive document outlines how government revenues drawn from taxes, petroleum royalties, and excise duties, will be allocated to essential sectors like healthcare, education, housing, employment, and infrastructure development. Presented annually, it reflects the government's priorities in supporting the well-being of the people while promoting sustainable economic development.

What is Belanjawan 2025?

Belanjawan 2025, or the Budget 2025, is a detailed fiscal plan that specifies government expenditures for all ministries and programs for the upcoming year. It includes costs related to government staffing and various development initiatives. More importantly, it reflects the government’s efforts to achieve economic stability while focusing on the welfare of its citizens. The 2025 budget is guided by the MADANI Economic Framework, a strategy aimed at boosting high-value economic activities, supporting technological advancement, and maintaining steady growth.

Theme: "MADANI Economy, Prosperous Nation, Happy People"

The theme for Budget 2025, “Ekonomi MADANI, Negara Makmur, Rakyat Sejahtera,” emphasizes the need to harmonize economic growth with improving the livelihoods of Malaysians. The MADANI Economic Framework, launched in 2023, underpins this theme, focusing on long-term reforms, sustainable growth, and ensuring the nation's wealth benefits all, especially vulnerable and middle-income groups.

Presentation of Belanjawan 2025

According to Prime Minister Datuk Seri Anwar Ibrahim, Belanjawan 2025 will be presented on October 18, 2024, during the parliamentary session starting October 14. This budget is seen as critical in guiding Malaysia through current global economic uncertainties, while also tackling local challenges such as inflation, unemployment, and infrastructure development.

Key Features of Belanjawan 2025

Budget 2025

1. Economic Growth and Fiscal Consolidation

Malaysia recorded 4.2% economic growth in the first quarter of 2024, and the government aims to push this further to 5.8% in Q2, primarily driven by the services sector and domestic consumption.
Fiscal consolidation efforts aim to reduce the budget deficit to 4.3% by the end of 2024. This reflects the government's focus on stabilizing public finances while ensuring that social programs remain funded

2. Restructuring the Economy

The budget will emphasize shifting Malaysia's economic focus to high-value sectors, such as technology, innovation, automation, and artificial intelligence. This is crucial for enhancing global competitiveness and developing sustainable industries that provide long-term employment.

3. Tax and Subsidy Reforms

The government is considering the reintroduction of the Goods and Services Tax (GST) at a rate lower than 4% to increase fiscal revenue while minimizing the burden on the population. This tax will help reduce the national deficit by an estimated 3-5%
Another major focus will be phasing out the RON95 petrol subsidy, which has long been a drain on public finances. The government plans to do this gradually to avoid shocking low-income groups with sudden price increases.

4. Youth and Housing Support

MADANI Deposit for Youth Home Ownership: A subsidy of up to RM30,000 will be provided for young homebuyers, especially gig workers and recent graduates, to help them overcome difficulties in securing housing loans.
RM1 billion allocation will go toward housing and urban development, improving public housing infrastructure and making urban areas more livable and sustainable.

5. Public Infrastructure and Environmental Sustainability

An ambitious plan to create 100 MADANI Recreational Parks across the nation to improve quality of life and promote environmental sustainability
Urban water management projects will be upgraded to reduce flood risks and ensure long-term urban sustainability

6. Minimum Wage and Social Welfare

The current minimum wage of RM1,500 is expected to be reviewed, with gradual increases proposed to reduce the financial strain on businesses while improving worker welfare. Adjustments may vary depending on the region and business size.
The welfare assistance provided by the government, currently at RM500 for vulnerable groups such as the elderly and disabled, could be increased to RM1,000 depending on fiscal capacity.

Key Framework of the MADANI Economy

The MADANI Economic Framework is central to Malaysia’s broader financial and developmental strategy. This framework aims to transform the economy into one that thrives on high-value activities, innovation, and technology. It encompasses several core goals:

Private investment growth: Private investment surged 9.2% in Q1 2024, contributing to the nation's robust economic performance.
Labor market growth: Employment opportunities rose by 2.1% in the same period, reflecting the government's commitment to job creation and improving living standards.
Foreign Direct Investment (FDI): Foreign investments reached RM47 billion, with domestic investment standing at RM36.7 billion in early 2024. These figures demonstrate Malaysia’s attractiveness as a global investment hub.

Major Initiatives in Housing and Local Government (KPKT)

Minister Nga Kor Ming has outlined several key initiatives in the housing sector for Budget 2025:

MADANI Deposit for Youth Home Ownership: A subsidy of up to RM30,000 for home purchases priced below RM500,000 to help young people, including gig workers and new graduates, overcome challenges in securing bank loans.
Development of 100 MADANI Recreational Parks: Expanding public recreational areas across Malaysia to promote healthy living.
Urban Reservoir Transformation: Upgrading urban water management systems to reduce flood risks and improve sustainability.
Digitalization of Property Transactions: New electronic systems for property sales and purchase agreements will be introduced to make real estate transactions more transparent and efficient
RM1 Billion Allocation for Housing and Urban Development: Proposing nearly RM1 billion for initiatives aimed at enhancing public housing, urban infrastructure, and sustainable development.

Belanjawan 2025 will not only aim to ensure Malaysia’s economic growth but also focus on improving the well-being of its people through strategic investments in housing, infrastructure, and welfare. Guided by the MADANI Economic Framework, this budget is expected to drive sustainable and inclusive growth while positioning Malaysia as a globally competitive economy.

The full details of Budget 2025 will be unveiled on October 18, 2024, providing further clarity on the government’s priorities and long-term strategies for economic resilience and social welfare.

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