The Malaysia Budget 2025, themed "Membugar Ekonomi, Menjana Perubahan, Mensejahtera Rakyat" (Reinvigorating the Economy, Driving Reforms, and Prospering the Rakyat), serves as a pivotal driver for the growth of the Global Business Services (GBS) sector in Malaysia.
With strategic initiatives, the country is positioned to enhance regional collaboration by strengthening digital infrastructure, nurturing artificial intelligence (AI) innovation, and supporting local businesses in their digital transformation. The budget reinforces Malaysia’s commitment to sustainable growth through technology, making it attractive to both local and international companies looking to capitalise on GBS potential.
Four Key Budgetary Highlights That Impact the GBS Sector
Digital Infrastructure and Transformation
Malaysia is advancing its position as a regional technology hub through a robust investment in digital infrastructure and transformative policies.
A dedicated RM320 million to improving internet access, enhancing productivity in educational institutions, and uplifting the quality of life. The introduction of a second 5G network will further strengthen Malaysia’s ICT competitiveness.
Malaysia's ambitious digital transformation agenda has to-date attracted USD 16.9 billion (RM72.67 billion) in investments from global tech giants, establishing the country as a key cloud infrastructure hub. For the GBS sector, these developments offer unparalleled opportunities to leverage, AI and othercloud-based solutions to further drive innovation and operational excellence
Tax Incentives and Business-Friendly Policies
The introduction of the Investment Incentive Framework (IIF2025) in Budget 2025 is set to revolutionse Malaysia's investment landscape by attracting high-value investments in modern services such as Artificial Intelligence (AI), robotics, the Internet of Things (IoT), data science, and FinTech.
Key incentives that may benefit the GBS industry include:
Tax Incentives for High-Tech Companies: Deductions for training and job creation, supporting workforce development.
R&D and Innovation Incentives: Double tax deductions for AI-related projects.
Access to Skilled Foreign Talent: Simplified hiring processes for specialists in AI and advanced technologies.
Educational Collaborations: Partnerships with institutions to create a talent pipeline for the GBS sector.
Reinvestment Allowance Extension: For companies investing in automation and modernisation.
Investment Tax Allowances (ITAs) and Exemptions: Encouraging new operations in finance, HR outsourcing, and IT consulting. These incentives allow companies to offset a significant portion of their investment costs, such as capital expenditures on equipment, technology, and infrastructure, against their taxable income
Accelerate Small and Medium Enterprises (SMEs) Digital Growth
The Malaysia Budget 2025 emphasises digital transformation for SMEs, offering various forms of financial support that will accelerate their adoption of technology and increase competitiveness.
These measures could empower SMEs to explore the journey of setting up an internal team or Centers of Excellence (CoEs) for AI, Analytics and Automation.
BNM Loan Funds
RM3.8 billion from Bank Negara Malaysia to support SMEs in adopting digitalisation, automation, and sustainable business practices. Via this support, SMEs are encouraged to embrace digitalisation in ways that streamline their operations, including through automation and advanced data analytics.
Digitalisation Grants
RM50 million in Digital Matching Grants through BSN is allocated to assist SMEs accelerate digital transformation. These grants offer SMEs the opportunity to invest in digital tools. By integrating technologies that enhance data-driven decision-making and process automation, SMEs are well-positioned to thrive in a digital economy.
These budget measures not only empower SMEs directly but also create new avenues for GBS providers to extend their offerings. GBS firms can offer solutions in finance, accounting, and analytics, enabling SMEs to leverage expertise that drives growth and operational excellence. In doing so, Malaysia strengthens its standing in the global digital economy, fostering a collaborative ecosystem that benefits businesses of all sizes.
Green Economy Initiatives
The budget emphasises a shift towards a green economy, supporting sustainable agricultural practices and energy transition through projects like solar farms and green hydrogen hubs.
Given the extensive data requirements for Environmental, Social and Governance (ESG) disclosures—including emissions, energy use, and diversity metrics. GBS companies are well-positioned to support reporting and compliance efforts.
By leveraging their capabilities in data analytics, ESG compliance, and supply chain optimisation, GBS firms can play a pivotal role in helping businesses align with national green initiatives, meet sustainability goals, and enhance their competitive edge.
Conclusion
Malaysia's Budget 2025 provides a dynamic framework for growth and innovation within the GBS sector. Strategic investments in digital infrastructure and cloud services, alongside targeted tax incentives, enable GBS providers to broaden service offerings, enhance operational efficiency, and attract high-value investments. These initiatives firmly position Malaysia as a regional technology hub, fostering a supportive environment for both foreign and local firms advancing in digital transformation.
Additionally, the emphasis on SME empowerment through financing, digital grants, and specialised loan funds opens new opportunities for GBS firms to offer tailored, scalable solutions that drive competitiveness and sustainability across diverse sectors. The budget’s integration of green economy initiatives also aligns with global ESG trends, positioning GBS providers to lead in sustainability reporting and compliance analytics that support clients’ environmental and social goals.
In summary, Malaysia Budget 2025 not only strengthens Malaysia’s foundation for GBS expansion but also elevates its status as a competitive, resilient player in the global digital economy. The GBS sector is poised to capitalise on these opportunities, driving innovation and contributing to long-term economic prosperity.
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