Budget 2025: Semiconductor Association Urges Govt To Support Local Firms Digitalisation

By Siti Noor Afera Abu

KUALA LUMPUR, Oct 3 (Bernama) -- The government needs to aid the growth of local companies by supporting technology acquisition and providing funding, which will help transform Malaysia into a global leader in the semiconductor and electrical and electronics (E&E) sector.

In its Budget 2025 wishlist, Malaysia Semiconductor Industry Association (MSIA) president Datuk Seri Wong Siew Hai highlighted the need for the government to reduce entry barriers and mitigate risks for Malaysian companies.

"With government backing, these companies could potentially double their revenue by 2030. More Malaysian firms could also advance up the value chain if risks and barriers were minimised," he told Bernama.

Budget 2025, to be tabled in the Dewan Rakyat on Oct 18, 2024, marks the third by the unity government.

Wong further recommended that the government provide capital expenditure (capex) grants or funding of at least 20 per cent to encourage local manufacturing companies to enhance their products and adopt new technologies.

Such support is vital for local firms to remain competitive against other outsourced semiconductor assembly and test companies, particularly those in China, which benefit from similar capex rebates.

He also urged the government to offer tax incentives for companies investing in advanced technologies. These could include 100 per cent income tax exemptions under pioneer status, 100 per cent investment tax allowances, or 100 per cent reinvestment allowances.

"Incentives like these would enable companies to reinvest their tax savings into further business expansion and innovation," he said.

Meanwhile, the National ICT Association of Malaysia (PIKOM) proposed various measures to accelerate the digitalisation of small and medium-sized enterprises (SMEs).

Suggestions include raising annual allocation for small and micro enterprises' digitalisation grants from RM5,000 to RM10,000 while for medium-sized SMEs, PIKOM recommended establishing a performance-tied digital marketing fund, capped at RM50,000 per company.

For mid-sized companies, it also proposed a double tax deduction for digitalisation expenses and transferring the management of the smart automation grant to Malaysia Digital Economy Corporation or MyDIGITAL Corporation, the association stated.

Finally, PIKOM advocates promoting soft loan facilities to assist businesses with working capital and digitalisation expansion.

-- BERNAMA