Malaysia has announced several measures under its Budget 2026 to support high value sectors including investing MYR 550 million ($130 million) in the semiconductor ecosystem.
Its Prime Minister Anwar Ibrahim said in his speech on last Friday that Khazanah and Retirement Fund (KWAP) are investing MYR 550 million in the semiconductor ecosystem to increase collaboration between local firms and multinational companies.
Under the National Semiconductor Strategy (NSS), Bank Pembangunan Malaysia Berhad (BPMB) will provide MYR 500 million in soft loans to support high-value-added activities such as research and development (R&D), especially by local companies that support the electrical and electronics (E&E) ecosystem.
“Semiconductor start-ups often face barriers to entry due to the substantial prototype costs. To address this, Malaysia will launch SemiconStart, an incubator program by Malaysian Technology Development Corporation (MTDC) in collaboration with global incubators,
“This initiative will help early-stage startups gain mentorship, access to global financing, prototype creations at discounted rates and a wider customer network,” said the Prime Minister.
Meanwhile, a total of MYR 200 million ($47.35 million) under the Strategic CoInvestment Fund (CoSIF) will provide matching grants to small and medium-sized enterprises (SMEs) and mid-tier companies that strengthen the supply chains of key sectors, through Equity Crowdfunding (ECF) and Peer-to-Peer (P2P) financing platforms.
An allocation of MYR 180 million ($42.61 million) under the NIMP Industry Development Fund (NIDF) to finance industry development programs in high-impact sectors such as pharmaceutical, semiconductor, artificial intelligence (AI), digital and sustainability.
An allocation of MYR 25 million ($5.92 million) will be channeled to STAR to drive comprehensive digitalization initiatives across public services as well as accelerate infrastructure and innovation development.
Anwar also highlighted that government-linked investment companies (GLICs) will continue to catalyze domestic investment.
Under GEAR-uP, GLICs will increase their domestic investment to MYR 30 billion ($7.1 billion), up from MYR 25 billion ($5.92 billion) this year.
“To drive the expansion of strategic sectors, GLIC investments will support local companies or markets in their growth stage,” said Anwar.
For example, KWAP will provide MRY 1.2 billion ($280 million) under Dana Pemacu to undertake co-investments with private fund managers (co-GP) to finance emerging companies or markets in sectors such as energy transition, food security and the digital economy.
Under Khazanah’s Mid-Tier Company Program, MYR 250 million ($59.19 million) is provided to strengthen the capacity of mid-tier companies.
Anwar also said the government will continue to strengthen the startup ecosystem in the country.
It is noted that startups have contributed MYR 1 billion ($240 million) to gross domestic product (GDP) and generated 82 thousand job opportunities.
It is noted that in line with the aspirations of the Malaysia Venture Capital Roadmap, KWAPs’ Dana Perintis and Khazanah’s Jelawang Capital have increased their investments to MYR 750 million ($178 million) from MYR 550 million ($130 million).
With an allocation of MYR 55 million ($13 million), Cradle Fund will implement the Equity Investment Program, as well as the Bengkel Inovasi GLC (BIG), which is extended to the private sector.
The government also proposes to improve the existing Venture Capital Tax Incentive through special tax rates and dividend tax rates for ten years.
Anwar also highlighted that since introduction, MyCIF has attracted over MYR 6 billion ($1.42 billion) in ECF and P2P capital into micro, small, and medium-sized Enterprises (MSMEs), nurturing local companies to expand their footprint globally.
Meanwhile, MYR 30 million ($7.1 million) will be provided, among others, for expansion purposes, including support to the food, agritech, agetech and high impact care-economy sector.
For agri-entrepreneurs, he said Agrobank will provide MYR 1.1 billion ($260 million) in financing for entrepreneurs to grow their businesses and support automation and mechanization in agricultural projects.
KPKM NextGen Agropreneur Program will also provide startup grants and agricultural project development grants with a fund of MYR 20 million ($4.73 million), he added.
To encourage automation for higher crop productivity, the government also proposes the Agricultural Sector Automation Incentive for crops, livestock, apiculture, aquaculture and deep-sea fishing to include selected livestock through closed-house farming.
As to support the sustainability of Bumiputera entrepreneurs, Anwar said the MARA Penskalaan Usahawan Bumiputera program provides MYR 100 million ($23.67 million) to support the growth of startup companies in high-value strategic sectors.
He also said VentureTECH has invested in 31 Bumiputera technology companies and nine companies have penetrated over 30 countries in the global market.
“In this regard, MRY 105 million ringgit ($24.86 million) will be for VentureTECH to increase Bumiputera equity ownership in high technology sectors,” he added.