The 2023 Malaysia Budget explained

On 24th February 2023, Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, presented Budget 2023 in Parliament. This is the first budget presented under the Unity Government led by Anwar. Budget 2023 was originally presented by former Prime Minister Datuk Seri Ismail Sabri Yaakob in October 2022. However, it couldn’t be passed as Parliament was dissolved shortly after. The theme for this year is ‘Developing Malaysia Madani’. For the uninitiated, ‘MADANI’ is the Malay acronym for SCRIPT, which stands for sustainability, care and compassion, respect, innovation, prosperity, and trust. It encompasses Anwar’s vision for Malaysia, focusing on shared trust between the government and the citizens based on transparency and cooperation. It highlights care and compassion in all segments of society to promote equality and equal opportunity, and encourages mutual respect as a social and cultural norm to enhance inclusiveness. Overall, Malaysia’s 2023 Budget involves an allocation of RM388.1 billion, with RM289.1 billion for operating expenditure and RM99 billion for development expenditure (including RM2 billion in contingency savings). Among an extensive list of new initiatives and updates, what are the key changes that employers, as well as HR and payroll professionals, need to be aware of? We’ve done the work for you — so just sit back, relax, and read through this overview of key updates. Before we jump in, here are some headline numbers to know:

• Malaysia’s national debt will reach RM1.2 trillion, or more than 60% of GDP for 2023.
• Economic growth is projected to be around 4.5% this year.
• Inflation rate for 2023 is expected to stay the same as 2022, at 3.3%.
• Budget 2023 allocations have been revised upwards to RM386.1 billion from RM372.3 billion in October 2022.

In this factsheet, we cover:

• Taxable income for SMEs and micro businesses for the first RM150,000 reduced from 17% to 15%
• RM100 million allocated under the SME Grant Scheme
• RM1 billion under Bank Negara Malaysia (BNM) to incentivise SMEs to automate processes and digitalise operations
• BNM will provide financing of RM2 billion to support green technology start-ups
• RM1.7 billion in loan facilities for micro businesses under Bank Simpanan Nasional (BSN), BNM and National Entrepreneurial Group Economic Fund (TEKUN)
• RM1.5 billion investment in local start-ups that are innovative and have high-growth potential
• The Social Security Organisation (SOCSO) gets RM45 million to incentivise private sector employers to hire technical and vocational education and training (TVET) graduates
• SOCSO will amend its act to enable grants matching 80% of the insured salary value to encourage women to return to work
• Technical and vocational education and training (TVET) will be improved by having major industry players provide jobs for TVET graduates at decent wages

Download the factsheet today.