2020 Budget Malaysia for SME

Malaysia’s finance minister, Lim Guan Eng, introduced the 2020 budget to the Malaysian government on Friday, October 11, 2019. The theme of this budget was “Driving Growth and Equitable Outcomes Towards Shared Prosperity.” On April 6, 2020, Prime Minister Muhyiddin Yassin introduced a supplementary package that primarily targeted small and medium-sized enterprises (SMEs).

Key Economic Projections in the 2020 Budget Malaysia for SME

  • There is an expectation that Malaysia’s GDP will rise by 4.7% in 2019 and 4.8% in 2020. Budget papers state that “growth is underpinned by persistent domestic demand, particularly household consumption following a stable labor market and low inflation.”
  • Malaysia’s gross RM exports will rise by 0.1% in 2019 and 1.0% in 2020.
  • Gross imports might decline by 2.5 percent in 2019 and rise by 2.7 percent in 2020. The budget papers note that these figures are “in line with the downturn in global economic and commercial results.”
  • Inflation is forecast to be 0.9% in 2019 and 2.0% in 2020.
  • There is an expectation that Malaysia’s unemployment rate will remain constant at 3.3% in 2020.


Main Targets

2020 budget

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The main driving force behind budget 2020 Malaysia for SME are:

  • Driving development in the new economy and digital age.
  • Investment in Malaysians.
  • Setting up and creating a united, wide-ranging, and justifiable society.
  • Renewal of public and institution and finances.


Other main targets of 2020 Malaysian budget includes:


  • Government guarantees for Bumiputera SMEs, trade-oriented SMEs, and SMEs investing in innovation and digitalization will rise from 70% to 80%, and reduction of guarantee fee by 0.75 percent. 
  • Two new SME Bank funds where the government will have an annual interest benefit of 2% to raise borrowing costs.
  • RM50 million to enable small and medium-sized companies to participate in further export growth activities
  • Funds for Entrepreneurs

The government allocates the following funds to small business owners in Malaysia:

  • RM445 million to help Bumiputera entrepreneurs in terms of access to capital, company premises, and entrepreneur training.
  • RM100 million to the Chinese community for small business loans under the program Pembiayaan Usahawan Perusahaan Kecil Komuniti Cina.
  • RM20 million to Indian entrepreneurs.
  • Housing Plans

Lowering the high price threshold for property in metropolitan areas for foreign ownership from RM1 million to RM600, 000. Launching the rent to own financing scheme for first-time homebuyers up to RM500, 000.

Extension of the Youth Housing Scheme operated by Bank Simpanan Nasional from January 1, 2020, to December 31, 2021. Adjustment of the tax year for the real property gains tax charged on the disposal of properties after five years for assets acquired before January 1, 2013, to January 1, 2013, from January 1, 2000.


2020 budget

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Building up a particular channel under Invest KL to draw investment from China. A new opportunity program to promote investment to be available by January 1, 2021. RM1 billion worth of customizable rewards annually for specific fortune 500 companies and global digital unicorns spending at least RM5 billion each and generating 150,000 high-quality jobs over the next five years.

RM1 billion in personalized benefits annually over five years for Malaysian companies exporting products and services globally. Income tax waiver of up to 10 years for electrical and electronics (E&E) companies investing in selected knowledge-based services. An exclusive investment tax allowance for E&E companies that have depleted their reinvestment allowance to further reinvest in selected knowledge-based services.

Communications and Multimedia

Malaysian Communications and Multimedia Commission (MCMC) will remain in charge of funding, at least half of the investment needed under the National Fiberisation and Connectivity Program, with mutual investment by private telecommunications players through a corresponding grants mechanism. 

MCMC’s allowance of RM250 million to leverage various technologies, including satellite broadband connectivity. RM210 million to accelerate the implementation of new digital infrastructure for public buildings, especially schools, and high-impact areas such as industrial zones. It is setting a 5G eco-friendly technology grant worth RM50 million. RM25 million contestable matching grant to fund more trial projects for digital applications that power fiber optics and 5G infrastructure. RM20 million for Malaysian Digital Economy Corporation (MDEC) to create local digital content champions. 


SMEs and entrepreneurs are those groups that will benefit Malaysia 2020 Budget. In the framework of ambitious growth, the SME Bank will launch two new funds. RM 20 million will go to women entrepreneurs and another RM 300 million to help Bumiputra small and medium-sized enterprises that will become regional champions.

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