2025 Budget: PLKN Is Back Yo, Minimum Wage To Be RM1,700

Budget 2025 is kinda interesting (we think lah).

Prime Minister Datuk Seri Anwar Ibrahim has announced that a total of RM421 billion is set aside for Budget 2025, which aims to ensure social justice and drive economic growth.

Of the total, RM335 billion goes to Operating Expenditures such as emoluments, subsidies and social assistance, and debt service payment expenses. Meanwhile, RM86 billion is set aside for Development Expenditures.

Here are some of the highlights from what was announced:

Taxation Updates: Sales & Service Tax (SST)

To boost revenue and widen the tax base, SST will be made more progressive, but without burdening everyday Malaysians.

• Sales Tax Exemptions: Essential items like basic food products won’t be taxed.
• Premium Items Taxed: Imported luxury items like salmon and avocados will be taxed.
• Service Tax Expansion: Commercial services, such as fee-based financial services, will be included.

The SST updates will kick in from May 1, 2025. The extra revenue will boost cash assistance programs and enhance education and healthcare services.

Subsidy Reforms: Petrol, Education & Healthcare

RON95 Petrol Subsidy: From mid-2025, petrol subsidies will be targeted, and the savings will be redirected to support public welfare. This means that Malaysia’s top 15% high-income earners or wealthy individuals (the T15 group) and foreigners won’t get the RON95 petrol subsidies anymore.

Education Subsidy Reductions: Education subsidies will be gradually reduced for the T15 group. The savings will be used to improve infrastructure in Boarding Schools (SBP) and Public Universities (IPTA), benefiting all students.

Targeted Healthcare Subsidy: High-income earners will have to pay more when using public healthcare services. The savings from this will fund medical devices for low-income patients and upgrade equipment in public hospitals and clinics.

The government will soon table the Consumer Credit Bill

A Consumer Credit Monitoring Board will be established to regulate non-bank credit providers and credit service providers such as factoring companies, leasing non-bank and those offering the “Buy Now Pay Later” scheme.

Johor-Singapore Special Economic Zone

The Johor-Singapore Special Economic Zone Memorandum of Understanding (MoU) was signed in January 2024.

The government has approved Forest City as a Duty-Free Island to support tourism and local economic activities.

A tax incentive package is also introduced for the Forest City Special Financial Zone (FCSFZ) to boost financial service activities such as global business services and Fintech. A special incentive will be rolled out at the year’s end to attract quality investments and high-value jobs.

A Single-Family Office Scheme (FO Scheme) has been rolled out in FCSFZ to encourage the management of family funds.

To make it easier, the Securities Commission will act as the authorisation party to approve Resident Passes and Employment Passes for each of the Founding Family Investors and related Family Office investment professionals.

The Invest Malaysia Facilitation Center – Johor (IMFC-J) will be established to facilitate investment in JSSEZ. This centre aims to reduce bureaucracy at various levels to expedite approval.

PLKN 3.0 is a go

PLKN 3.0 will start with a new concept as a pilot project. RM50 million has been allocated to the Ministry of Defense cadets.

The Royal Malaysia Police (PDRM) and other uniformed agencies are also involved in making PLKN 3.0 a success by using existing infrastructure in collaboration with the National Academy.

Meanwhile, Program Rakan Muda will be allocated RM25 million to help build the potential and identity of youths.

New minimum wage announced

There will be a new minimum wage of RM1,700 starting February 2025, up from RM1,500.

However, employers with fewer than 5 staff will be given 6 months’ reprieve and only have to start in August 2025.

More affordable Perodua EVs on the road

Perodua plans to produce EVs that cost less than RM100,000 to fulfil demand.

War on Sugar is also a go

As part of its War on Sugar, the government will increase the excise duty rate for sugary drinks in phases from 1 January 2025 by 40 cents per litre.

Malaysia is among the most obese countries in South East Asia.

Free rides for students

University, polytechnic, community college, and matriculation students get to enjoy free fares on the BAS.MY service.

Tax relief on first-home mortgages

To make first-time homeownership easier, the government plans to offer tax relief on mortgage interest payments. Homes up to RM500,000 will qualify for up to RM7,000 in tax relief, while homes between RM500,000 and RM750,000 can get up to RM5,000 in tax relief.

Special needs allowance and tax exemptions for treatments

A special needs allowance of RM150 per month will be provided to 110,000 OKU students including those with autism, with a total cost of RM200 million.

Private schools will also be provided RM10 million for autistic students who are registered with the Education Ministry.

Tax exemption for treatments for autistic children will also be increased to RM6,000, up from RM4,000.

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