KUALA LUMPUR (Oct 27): Alliance Bank Malaysia Bhd anticipates “solid growth” in Malaysia’s economy for 2025, as it sees Budget 2025 stimulating additional investments.

“This is a progressive budget that has a prudent balance between the economy, sustainability, the adoption of digital investments, and well-being of the rakyat,” said Alliance Bank group chief executive officer Kellee Kam Chee Khiong in a statement on Sunday.

“It evidences the government’s persistent efforts on strengthening the nation’s economic fundamentals,” he added.

Kam noted that the national budget reflects the government’s intention to drive investments with initiatives such as the New Investment Incentive Framework, which will introduce a strategic investment fund of RM1 billion to enhance local capacity and encourage high-value activities.

In addition, government-linked investment companies have pledged to invest RM120 billion in domestic direct investments over the next five years.

Khazanah Nasional Bhd will also establish a National Fund-of-Funds with RM1 billion to support venture capital fund managers to invest in start-up companies.

Recognising the importance of developing small- amd medium-sized enterprises, government agencies will provide various loan facilities and financing support for this segment. This includes a RM3.8 billion fund by Bank Negara Malaysia to support greater adoption of digitalisation and automation.

“Overall, Budget 2025 covers a wide spectrum in addressing issues concerning people and businesses. The budget has salient features that prioritise the welfare of the people, accelerate the nation’s economy, attract more investments, help pave the way to new markets, and embrace digital adoption,” Kam said.

“For 2025, the government expects [a] gross domestic product (GDP) growth of 4.5% to 5.5%, which reflects positive economic momentum. The country’s economic growth rate is driven by healthy labour market conditions. Positively, Malaysia’s unemployment rate in August 2024 declined further to 3.2%, while the labour force continues to increase, resulting in a high labour participation rate of 70.4% in August 2024,” he said.

The government has revised the GDP growth projection for 2024 to between 4.8% and 5.3%, from between 4% and 5% previously.

On Oct 18, Malaysia unveiled Budget 2025, with the largest allocation ever at RM421 billion. This compared with RM408 billion for 2024.

Budget 2025 aims to further narrow the country’s fiscal deficit to 3.8% in 2025, compared with 4.3% for 2024.

“The budget is a testament to the government’s commitment to responsible fiscal management and continued priority for effective governance,” said Kam.

Click here for all you need to know about Malaysia's Budget 2025.