Budget 2024 included a broad range of initiatives and measures aligned with the nation ’ s vision set by the HIMP 2030
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Budget 2024
@ Halal | NOVEMBER-DECEMBER . 2023
Globalising Malaysia ’ s halal industry aspirations
Budget 2024 included a broad range of initiatives and measures aligned with the nation ’ s vision set by the HIMP 2030
BY SOH LIAN SENG ,
Head of Tax , KPMG in Malaysia
THE halal industry continues to take centre stage in Malay sia ’ s mission to become the dominant driving force at the domestic , regional and global levels . The Halal Industry Master Plan 2030 ( HIMP 2030 ), launched in March 2023 , serves as the national blueprint for transitioning Malaysia into a worldwide leader in the halal industry , under its theme of a ‘ Prominent Visible and Globalised Halal Malaysia ’.
The core sectors have traditionally encompassed ( 1 ) halal food and beverages , ( 2 ) halal pharmaceuticals , and ( 3 ) halal cosmetics and personal care products .
However , HIMP 2030 recognises the importance of tapping into emerging sectors , including medical devices , medical tourism and modest fashion – which are underpinned by critical enablers such as enhanced accessibility to Islamic financing , development of competent halal professionals and experts , as well as sustaining robust and dynamic standards , accreditation and certification services .
The recently unveiled Budget 2024 included a broad range of initiatives and measures aligned with the nation ’ s vision set by the HIMP 2030 .
POSITIONING MALAYSIA AS THE GLOBAL ISLAMIC ECONOMY LEADER
Budget 2024 prominently emphasised a focus on Islamic finance , reflecting the government ’ s commitment to fostering innovative approaches in Islamic financing to drive the growth of Malaysia ’ s halal industry .
Key initiatives include the implementation of a Value-based Intermediation ( VBI ) approach and pilot programmes by Bank Negara Malaysia ( BNM ) and Islamic financial institutions to advance impact-based investments . Additionally , an allocation of RM20 million has been designated in the Budget 2024 to spur research and innovation within the Islamic economy .
• Budget 2024 also introduced tax incentives geared towards Islamic finance in the form of an income tax exemption for income derived from Islamic Securities Selling and Buying ( ISSB ), effective from the Year of Assessment ( YA ) 2024 .
• Labuan entities engaged in trading activities related to Islamic finance will receive a total income tax exemption for activities such as Islamic digital banking , Islamic digital bourses , ummah-related companies , and Islamic digital token issuers . These exemptions will be effective for five years , from YA 2024 to YA 2028 .
• Recognising the necessity for our halal industry to remain competitive and agile in the global landscape , Budget 2024 also proposed reducing the duration of the halal certification process from 51 days to 30 days – a welcome sight for businesses seeking to tap into the potential of the halal industry .
• To regain Malaysia ’ s status as a preferred tourist destination , RM15 million was allocated to the Islamic Tourism Centre ( ITC ) to
Other funding allocations from Budget 2024 relating to MSMEs included an allocation of RM5 million to iTEKAD Mawaddah ( iTEKAD ), a social finance initiative designed to provide matching grants to underserved communities , micropreneurs explicitly under the Asnaf fisabilillah category .” develop a Muslim-friendly tourism industry in Malaysia .
MICRO , SMALL AND MEDIUM ENTERPRISE ( MSME ) EMPOWERMENT
Budget 2024 continues its support for MSMEs , in line with the MADANI Economy framework , with specific initiatives tailored for those in the halal industry . Nine ( 9 ) financial institutions are slated to offer special programmes for halal SMEs through an integrated platform , providing access to special funds and capacitybuilding initiatives .
The most substantial allocation for MSMEs in Budget 2024 pertains to the Syarikat Jaminan Pembiayaan Perniagaan ( SJPP ) guarantee scheme . A guarantee of RM1 billion was granted for each focus sector under the plan .
In total , an allocation of RM20 billion was granted to the SJPP guarantee scheme to facilitate lending to Malaysian MSMEs across these focus sectors : Halal , High Technology , Green Economy and Healthcare .
Other funding allocations from Budget 2024 relating to MSMEs included an allocation of RM5 million to iTEKAD Mawaddah ( iTEKAD ), a social finance initiative designed to provide matching grants to underserved communities , micropreneurs explicitly under the Asnaf fisabilillah category .
The Market Development Grant continues with an allocation of RM30 million to facilitate exporting high-value local products in the halal , agriculture and handicraft sectors .
In a bid to stimulate capital funding in startups , Budget 2024 provided an additional allocation of RM100 million to be channelled to the Malaysia Co-Investment Fund ( MyCIF ) over three years , aimed at fostering collaborations related to food security , the environment , community and the State Islamic Religious Council to drive opportunities to develop waqf assets catered towards health , education and agro-based enterprises .
Waqf asset is an endowment made by Muslims through land or buildings for religious , educational or charitable causes .
EXPANDED ALLOCATIONS , CONTRIBUTIONS AND INITIATIVES FOR THE DEVELOPMENT OF ISLAMIC KNOWLEDGE AND EDUCATION
Budget 2024 highlighted a focus on enhancing the infrastructure of Islamic institutions and promoting Islamic knowledge and education among Muslim youths in Malaysia .
The government has allocated RM1.9 billion in Budget 2024 , an increase from RM1.5 billion in the previous Budget , for managing and developing Islamic affairs . Similarly , a unique contribution of RM700 will be channelled directly to over 70,000 takmir teachers , Kelas Al-Quran & Fardu Ain ( KAFA ) teachers , imams , bilal , siak , noja and marbut , with a total allocation of over RM50 million .
This marks an increase from the RM600 related to the same unique contribution previously allocated in the Budget 2023 , with a total allocation of RM40 million .
An additional allocation of RM150 million was granted to Jabatan Kemajuan Islam Malaysia ( JAKIM ), for the maintenance and enhancement of infrastructure related to Islamic education institutions . For new Islamic infrastructure , a separate allocation of RM220 million was provided for constructing two Islamic education institutions in Kuala Lumpur and Negeri Sembilan .
Budget 2024 also introduced soft loans of RM500 million to catalyse the redevelopment of waqf lands nationwide .
To further promote Islamic education among Islamic youths , an additional RM20 million is also provided for implementing the KEMAS Pre-Tahfiz Programme , targeted to produce 100,000 young hufaz by 2026 . Moreover , the grant of RM20,000 to all Sekolah Agama Rakyat under JAKIM was reinstated .
In summary , Budget 2024 has presented commendable proposals to pave the way for Malaysia to strengthen its footprint in the global halal industry – mainly through exploring innovative approaches towards Islamic finance and a strong focus on elevating Islamic education in Malaysia to meet international standards .
It is important to note that the Budget 2024 initiatives are observed to be primarily targeted at strengthening critical enablers of the halal industry rather than directly addressing the core sectors or emerging sectors outlined in the HIMP 2030 .
This indicates that the government is focused on establishing a sustainable foundation for the industry before introducing more targeted initiatives . These robust approaches should enable the halal sector to contribute up to 8.1 per cent of Malaysia ’ s Gross Domestic Product ( GDP ) by 2025 .
But , the act of globalising Malaysia ’ s halal industry will require all parties in the ecosystem to work together to dismantle the roadblocks that will hold back the industry ’ s growth potential . Let Malaysia ’ s proactive efforts become an example for the global halal industry to emulate . –
The views expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG in Malaysia .