Madani Economy: Empowering the People

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EY Malaysia Tax

3 Aug 2023
Subject Tax alert
Categories Tax
Jurisdictions Malaysia

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Madani Economy: Empowering the People

On 27 July 2023, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim launched the “Madani Economy: Empowering the People” economic framework. The two main focuses of the framework are to restructure the economy to make Malaysia a leader among Asian economies and to ensure that the enlarged wealth is benefitted equitably by the Rakyat. The Madani Economy framework will serve as a foundation for other policies, such as the National Energy Transition Roadmap, the New Industrial Masterplan 2030 and the Mid-Term Review of the 12th Malaysia Plan.

The Madani Economy framework sets short-term targets and medium-term targets that will be achieved in the next ten years:

  • Short-term targets

a)    To accelerate the implementation of projects relating to schools and dilapidated clinics

b)    To eradicate hardcore poverty this year

  • Medium-term targets

a)    To rank Malaysia among the top 30 largest economies in the world

b)    To rank Malaysia among the top 12 countries in the world in the Global Competitiveness Index

c)     To increase the percentage of labour income to 45% of total income

d)    To increase the female labour force participation rate to 60%

e)    To rank Malaysia among the top 25 countries in the world in the Human Development Index

f)     To improve Malaysia’s position in the Corruption Perceptions Index to being among the top 25 countries in the world

g)    To achieve fiscal sustainability with a fiscal deficit of 3%, or lower

Below are some of the tax measures or initiatives which were announced or reiterated to help the country achieve the targets: 

Focus 1: Malaysia as a leader among Asian economies
  • To introduce outcome-based tax incentives that focus on high-impact activities
  • To review the investment incentives to be more focused on generating high-income jobs
  • To reduce the stamp duty on contract notes for the trading of listed shares or stocks (effective for contract notes executed from 13 July 2023 to 12 July 2028, see Tax Alert No. 12/2023)
  • To promote specific incentives to encourage new green growth activities such as Sarawak’s bus project that utilises hydrogen energy and Carbon Capture, Utilisation and Storage (CCUS)
Focus 2: Elevating the quality of the Rakyat’s life
  • To strengthen the development of Iskandar Malaysia in Johor by providing special tax incentives, a concessionary 15% tax rate for knowledge workers and fast-track immigration facilities
  • To offer more incentives and tax services for the social enterprise sector

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