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FMM PRESS RELEASE: Budget but More Is Needed to Support Business Recovery

Kuala Lumpur, October 7, 2022 - The Federation of Malaysian Manufacturers (FMM) commends the Government for a people’s budget focusing on the wellbeing of the rakyat in line with the Keluarga Malaysia approach. The budget is poised to help our country rebuild national resilience to drive socio-economic recovery and sustainable growth as well as to tide over the current challenges brought about by the global inflationary pressures.

We note that the budget is expansionary in nature with focus on assisting the middle and lower-income groups as well as the micro, small and medium enterprises (MSME) during the current challenging economic climate. The development budget of RM95 billion, an increase from the previous RM75.6 billion, will certainly help to further stimulate domestic consumption which will have a spillover effect on the entire economy.

Specifically for the manufacturing sector, the budget has provided initiatives and incentives for further investments in specific manufacturing sub-sectors namely the electrical and electronics; medical devices; pharmaceutical; shipbuilding and ship repair; chemical and petrochemical; automotive in particular electric vehicles (EV); and aerospace industries. The budget has continued to enhance job opportunities as well as reskilling and upskilling initiatives including Technical and Vocational Education and Training (TVET); driving the green and sustainable agenda; and further accelerating digital adoption and automation especially amongst SMEs.

Human Capital Initiatives

FMM welcomes the initiatives introduced to address the current labour shortages faced by the industries by implementing a five year income tax exemption to support women returning to work after a career break as well as hiring incentives for unemployed youths, TVET graduates and the vulnerable groups. We thank the government for continuing the mobility assistance under SOCSO which will mobilise the workforce from the rural areas as well as from Sabah and Sarawak to Peninsular Malaysia and vice versa.

We commend the Government for the RM6.7 billion allocation for TVET to support the TVET empowerment agenda. We hope that this would also include the initiatives by the Government-Industry TVET Coordination Body (GITC) which has been established to drive the industry-led TVET agenda. The allocation of RM750 million to HRD Corp is lauded as it would further drive re-skilling of the workforce as well as the TVET skills training fund of RM180 million for Malaysian Skills Certification Programme and RM20 million for National Dual Training System to support the transformation towards high technology and high value added activities.

FMM thanks the Government for making a firm decision to implement the foreign worker multi-tier levy mechanism in 2023 and for channelling the additional levy contribution towards automation activities to reduce the dependence on foreign workers. However, we had hoped that the Government would have channelled the entire levy contribution towards a National Automation Fund and National TVET Apprenticeship Fund as proposed under FMM’s Budget 2023 wishlist as a two pronged approach towards reducing dependence on foreign workers.

Green Growth and Sustainable Development

FMM appreciates several initiatives outlined to facilitate business community especially the SMEs in accelerating the transition towards sustainable practices and contributing to planetary health and achieving the national net zero emission target by 2050, namely:
  • RM1.5 billion allocation for sustainable development financing through Bank Pembangunan Malaysia Berhad’s interest subsidy of 1.5% per annum;
  • RM3 billion Green Technology Financing Scheme until 2025 which offers 80% guarantee for waste sector and 50% for EV sector
  • RM150 million funding from Khazanah Nasional Berhad in support of green projects development
  • RM160 million for Tenaga Nasional Berhad investment on solar rooftops and EV charging stations
  • The RM50 billion investment allocation from GLCs and GLICs in 2023 which include launching of sustainability framework and target for ESG compliance and carbon neutral operation which would have spillover impact on its supply chain
  • Extension of Green Investment Tax Allowance (GITA) dan Green Income Tax Exemption (GITE) until December 31, 2025
Industry 4.0 & Digital Economy and Internet Connectivity

FMM lauds the government’s initiative to allow up to 100% tax exemption for businesses that implements Industry 4.0 as this incentive will enhance the adoption of Industry 4.0 amongst SMEs in Malaysia. The allocation of RM10 billion through Bank Negara Malaysia for digitalisation and automation by SMEs is also timely.

FMM welcomes the continued focus on upgrading of the country’s internet connectivity. However, the industry is dissatisfied with the progress of the JENDELA project as the coverage of 47 industrial areas remains the same as in Budget 2022. FMM is of the view that more industrial areas need to be equipped with High Speed Broadband and 5G.

Support for SMEs

The RM1 billion allocation for the Low Carbon Transition Facility to assist SMEs to adopt low carbon practices and the RM10 million matching grant to assist SMEs to conduct carbon assessment is a good start for SMEs to kick-start their ESG journey. This is a very good move by the government and it will be helpful for SMEs if the interest rate is less than 3%. Moving forward, more funding would be required in the ensuing years to help SMEs sustain and continue with their ESG journey.


FMM is disappointed that Budget 2023 has not provided any assistance to support trade for industries to expand their market access as many have faced severe impact to their existing markets due to the Covid-19 pandemic and supply chain disruptions. There were also no specific allocations to support SMEs that have invested or going to invest in ESG initiatives in their operations. In addition, we find that the allocation of RM100 million for the Domestic Investment Strategic Fund (DISF) is insufficient to support business recovery.

Tan Sri Dato’ Soh Thian Lai
President, Federation of Malaysian Manufacturers

FMM Advocates Transparency, Integrity and No Corruption

About FMM
The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 11,500 member companies (3,500 direct and 8,000 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefitting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.

Media Enquiries
Han Mong Ying, Senior Manager, Corporate Affairs Tel: 03-6286 7200 Email:

Date: 7 October 2022

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