Tax Exemptions To Position Food Production As High-impact Sector - NAFAS

 KUALA LUMPUR, Oct 10 (Bernama) -- Granting tax exemptions to companies undertaking new food production projects is a strategic approach to position the industry as a high-impact investment sector while strengthening food security.

General Manager of the National Farmers Organisation (NAFAS), Muhammad Faris Arriffin, said the move demonstrates the government's commitment to transforming the food sector beyond a mere social or welfare endeavour, to a field worthy of investment on par with the electrical and electronics (E&E) and green energy sectors.

“With a full tax exemption, the return on investment (ROI) for food projects will increase. This will establish Malaysia as a premier destination for agri-food investment, attracting domestic and foreign capital," he said.

“Many entities that were previously cautious about entering the food sector can now consider large-scale investments in contract farming, food processing, agricultural automation, aquaculture, or intensive livestock farming,” he told Bernama.

Muhammad Faris added that the five-year incentive for expansion projects would enable existing players to upgrade their operations through automation, seed research and development, as well as strengthen the downstream value chain.

Muhammad Faris said the measure aligns with the government's policy to boost domestic production, reduce import dependency, and transform the agricultural sector into a more sustainable, "profit-driven with fiscal incentives" model.

Meanwhile, Universiti Putra Malaysia’s Department of Resource Management and Consumer Studies, Faculty of Human Ecology senior lecturer Dr Shamsul Azahari Zainal Badari, said in addition to creating more job opportunities in supporting sectors like logistics, engineering, and marketing, the government's initiative will also stimulate the economy.

"Overall, this proposed tax exemption is a strategic move. With responsible implementation and careful monitoring, it has the potential to significantly strengthen the nation's food resilience and security," he said.

Shamsul Azahari, who is also the Secretary of the Malaysian Consumer and Family Economics Association (MACFEA), noted that the tax incentive is expected to attract more investment into the food sector by lowering company costs, particularly during the capital-intensive initial stages of a project.

"The extended eligibility period for the incentive until Dec 31, 2030, gives investors ample time to plan and develop their projects. This demonstrates the government's serious commitment to developing the food sector sustainably," he added.

During the tabling of Budget 2026, Prime Minister Datuk Seri Anwar Ibrahim announced a proposed 10-year full income tax exemption for companies undertaking new food production projects. 

Existing companies carrying out expansion projects will also enjoy a 100 percent income tax exemption for five years, with the application period extended until Dec 31, 2030.

The Muda Agricultural Development Authority (MADA) said the RM2.62 billion allocation for various subsidies and assistance for padi farmers will help them cope with operating costs and boost rice production yields.

In a statement, MADA said the Jeniang Water Transfer Project, involving a cost of RM1.28 billion and set to begin next year, will enhance the irrigation system’s capacity to support increased padi output in the Muda area, the country’s main rice bowl located along the Kedah-Perlis border.

“As a forward-looking measure, MADA will continue to focus on adopting smart agricultural technologies, improving water management efficiency and developing farmers’ human capital through continuous training and guidance,” it said.

-- BERNAMA