Kuala Lumpur:The Malaysia Semiconductor Industry Association (MSIA) has proposed significant changes under Budget 2027, including raising the Automation Capital Allowance limit to RM100 million and introducing a 200 percent tax deduction for qualifying research and development (R&D) expenditures.
According to BERNAMA News Agency, MSIA suggests that increasing the automation allowance from RM10 million to RM100 million will better mirror the scale of investments in automation and advanced manufacturing within the semiconductor and electrical and electronics (E&E) industry. The association emphasizes the need for evolving policies due to intensified competition for investment, technology, and talent.
MSIA president Datuk Seri Wong Siew Hai highlighted the importance of not only attracting new investments but also fostering an environment that encourages existing companies in Malaysia to reinvest, expand, and engage in higher-value activities such as R&D. He sees Budget 2027 as a vital opportunity to enhance these fundamental areas.
The proposals are part of MSIA's recommendations for Budget 2027, which have been developed through member consultations and submitted to the government. These recommendations focus on an investment incentive framework that caters to new strategic investments, reinvestment, and expansion by existing investors, as well as scaling by Malaysian-owned companies.
MSIA also advocates for broader R&D tax deductions to cover more activities and expenses, along with targeted grants and improved industry-university collaboration to bolster domestic capabilities in semiconductor R&D. The association's wishlist for Budget 2027 includes other priorities such as reducing business costs, attracting critical talent, modernizing the stamp duty framework, and strengthening the local semiconductor ecosystem.
Malaysia's semiconductor subsector remains a key player in global networks, with RM16.9 billion in approved investments recorded in 2025, underscoring the country's significant role in the industry.