The entire Malaysian population has been waiting with bated breath for the announcement of Budget 2020.
At 4PM on 11 October 2019, it finally aired online.
Based on our Finance Minister, Lim Guan Eng’s, tabling of Budget 2020, here’s what we found would be relevant to entrepreneurs and SMEs in the country.
In total, RM297 billion will be allocated for Budget 2020, less than the RM314.5 billion that was allocated for Budget 2019.
RM241 billion of the total will be given to operational expenditure, and RM56 billion will be dedicated to developmental expenditure.
In Support Of Entrepreneurship
SME Bank will dedicate RM200 million to women entrepreneurs and RM300 million to support SMEs with the potential to become regional champions.
To support bumiputera entrepreneurship development, RM445 million will be allocated to improve access to financing, business premises preparation, and entrepreneurial training.
This can be broken down into:
- RM150 million for all entrepreneurship development and skills development programmes by Perbadanan Usahawan Nasional Berhad (PUNB),
- RM7 million to build a bumiputera SME capacity by SME Corp, which includes programmes to enhance marketing, packaging, and financial literacy,
- RM170 million for financing access through Tekun Nasional, SME Bank and Real Estate Investment Berhad (PHB,
- And RM50 million for entrepreneurship programs under the Economic Affairs Ministry.
For Indian and Chinese entrepreneurs, the government has allocated RM20 million under the Indian Entrepreneur Development Scheme, and RM100 million to the Chinese Community Small Industries Fund respectively.
There will also be 50% matching grants amounting to RM5,000 for SMEs to boost operations.
The Entrepreneur Development Ministry has been allocated RM10 million to focus on consultation services and to raise awareness of the halal industry.
To encourage SMEs to engage in promotional activities, the Market Development Grant (MDG) ceiling by MATRADE was raised to RM300,000.
The ceiling of participation in export fairs will also increase to RM25,000.
For The Digital Future
A 50% matching grant of up to RM5,000 will be given to SMEs to upgrade their digital operations.
14 One-Stop Digital Improvement Centres will also be established in each state to facilitate access to financing and business capacity development.
When it comes to 5G development, the government will introduce a 5G Ecosystem Development Grant worth RM50 million.
RM25 million matching grant funds will go to promoting more digital application pilot projects that utilise fiber optic and 5G infrastructure.
Malaysia Digital Economy Corporation (MDEC) will be allocated RM10 million to train micro-digital entrepreneurs and technology experts, to benefit e-Marketplaces and social media platforms.
The government will also introduce the concept of “Digital Social Responsibility” (DSR), which is a commitment for business sectors to upskill future workers with digital skills. Private companies who engage in DSR will be given tax deductions.
In July, the Entrepreneur Development Ministry’s SME Corporation Malaysia (SME Corp) stated that it expects all SMEs to embrace digitalisation in 5 years.
Bring In More Foreign Investment
The government also plans on making Malaysia the first destination of choice for Foreign Direct Investment (FDI). To accomplish this, a special channel will be established to draw in investors from China under InvestKL.
Special investment incentives packages worth up to RM1 billion a year for 5 years will also be provided to attract Fortune 500 companies and global unicorns in the high tech, manufacturing, creative, and economic sectors.
The government will be offering the same package to local companies who are able to penetrate the world market.