KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) has praised the 2025 Budget for its focus on higher value-added activities, Environmental, Social, and Governance (ESG) initiatives, and net-zero targets, all of which are vital for fostering economic growth.
Its president Tan Sri Soh Thian Lai said the introduction of the multi-tier levy mechanism (MTLM) was designed to drive automation and reduce reliance on low-skilled foreign workers.
"This initiative is crucial for advancing technology adoption and digitalisation, which will increase demand for skilled workers while decreasing reliance on low-skilled labour," he said.
He said there was a need for the tiered levy system to be implemented transparently, with clear criteria, a pre-announced deadline, and a gradual increase in rates to minimise business costs.
Incentives for businesses that reduce foreign worker usage should also be included, he added.
With RM64.1 billion allocated to the Education Ministry and RM18 billion to the Higher Education Ministry, the budget aims to build a skilled workforce, particularly in STEM and AI fields.
"The RM7.5 billion earmarked for Technical and Vocational Education and Training (TVET), including industry collaborations, will further support this objective," he said.
Soh expressed optimism regarding the government's plan to raise the minimum wage to RM1,700 starting February next year, acknowledging the need to balance worker wages with inflationary pressures while ensuring sustainable industry growth.
"FMM looks forward to the thoughtful implementation of these measures to support both employee welfare and business competitiveness," he said.
However, he voiced concerns over the increase in excise duty on sugar-sweetened beverages, labelling it a "hard policy" that could burden consumers.
He urged a more holistic approach to combating non-communicable diseases (NCDs) through education and community health programmes.
Additionally, the proposed increase in sales tax on premium imported products like salmon and avocados raised concerns about potential administrative challenges and increased consumer costs.
"Any increase in sales tax on premium products should be approached cautiously to avoid unnecessary burdens on consumers, especially as many of these items have become common in households," he said.
Soh also expressed disappointment that the government did not adopt FMM's proposal for double tax reductions for companies embracing Industry 4.0 technologies, such as AI, Big Data Analytics, and automation systems, which could enhance manufacturing processes and support local SMEs in their smart manufacturing journeys.