KUALA LUMPUR, Oct 4 (Bernama) – The Malaysia Semiconductor Industry Association (MSIA) has proposed raising the qualifying expenditure limit under the Automation Capital Allowance to RM100 million and providing a 200 per cent tax deduction for qualifying research and development (R&D) expenditure under Budget 2027.
The association said increasing the automation allowance limit to RM100 million from RM10 million would better reflect the scale of automation and advanced manufacturing investments undertaken by the semiconductor and electrical and electronics (E&E) industry.
MSIA president Datuk Seri Wong Siew Hai said competition for investment, technology and talent is intensifying, requiring policies to evolve alongside industry needs.
“While attracting new strategic investments remains important, we must also create the right environment for companies already in Malaysia to continuously reinvest, expand their operations, undertake more R&D and move into higher-value activities.
“Budget 2027 is an opportunity to strengthen these fundamentals,” he said in a statement today.
The proposals form part of MSIA’s Budget 2027 recommendations, developed through consultations with its members and submitted to the government ahead of the budget’s tabling on Oct 9.
On continuous reinvestment and scaling, MSIA has proposed an investment incentive framework that recognises the different needs of new strategic investments, existing investors undertaking reinvestment and expansion, and Malaysian-owned companies seeking to scale globally.
Its recommendations include strengthening reinvestment incentives through Accelerated Capital Allowance and Reinvestment Allowance, alongside enhanced support for automation and advanced manufacturing.
On R&D and higher-value activities, MSIA proposed broader coverage of eligible R&D activities and expenditure under the 200 per cent tax deduction, with stronger support across the full R&D lifecycle to encourage more engineering, design, testing, validation and technology development in Malaysia.
It also proposed targeted semiconductor and E&E R&D grants, shared research infrastructure and stronger industry-university collaboration to strengthen domestic capabilities.
Reinvestment and R&D are among the six pillars highlighted in MSIA’s Budget 2027 wishlist, alongside easing the cost and friction of doing business; building, retaining and accessing critical talent; modernising the stamp duty framework; and strengthening the local semiconductor ecosystem.
According to MSIA, Malaysia’s semiconductor subsector recorded RM16.9 billion in approved investments in 2025, reflecting the country’s continued importance in global semiconductor production networks.
– BERNAMA