PUTRAJAYA: A significant simplification of the nation’s research and development (R&D) tax incentives, alongside reformation of the grant system, will be included in the 13th Malaysia Plan (13MP), according to Economy Minister Datuk Seri Rafizi Ramli.
He said the changes aim to address long-standing concerns about the complexity and accessibility of existing mechanisms supporting innovation and business growth.
“The new R&D tax incentive framework will streamline processes, removing unnecessary bureaucratic hurdles that have deterred businesses, particularly small and medium enterprises, from fully benefiting from such schemes.
“The focus is on making the system user-friendly, ensuring that businesses can easily understand and claim these incentives,” Rafizi said at a 13MP engagement session with industry players today.
In addition to the tax incentive reforms, a comprehensive overhaul of the grant system will be included in the plan, Rafizi disclosed.
“This initiative seeks to reduce the layers of complexity that currently hinder businesses from accessing critical funding. By simplifying application processes and eligibility criteria, the government aims to foster a more inclusive and efficient allocation of resources.”
Rafizi said the reforms are part of a broader strategy to enhance the nation’s competitiveness in the global market while ensuring that public resources are effectively utilised.
“The new measures will include clearer guidelines and improved communication with stakeholders, ensuring businesses understand how to navigate the updated systems. The goal is to build trust and confidence among businesses that these incentives and grants can deliver meaningful support,” he explained.
Rafizi said businesses and industry groups have long advocated for such reforms, pointing to the barriers posed by overly complicated processes. “These updates are expected to alleviate frustrations and encourage broader participation across sectors.”
The government will release further details on the implementation timelines and specific changes to the R&D tax incentives and grants soon.
Despite allocating more than RM1 billion annually for R&D, Rafizi noted, there remain significant gaps in translating research into market-ready innovations.
He shared that his ministry, alongside the Ministry of Investment, Trade and Industry, is working on a comprehensive plan to also enhance R&D commercialisation, and foster collaboration among academia, public institutions and the private sector.
“This initiative, expected to be presented to the Cabinet within the next few months, will play a crucial role in positioning Malaysia as a leader in high-value industries and global competitiveness,” he added.
Furthermore, Rafizi said, the 13MP will not only focus on reforming R&D tax incentives and the grants system but also address broader systemic challenges to strengthen the country’s economic structure.
“We are taking a sector-specific approach to economic reform, including energy transition plans under the National Energy Policy. These reforms aim to create a robust foundation for Malaysia’s economic growth and its ability to adapt to global changes.”
The minister said one key focus is optimising Malaysia’s supply chain and logistics system, pointing out that inefficiencies in the supply chain, such as the high logistical costs of moving goods across regions unnecessarily, have hindered economic efficiency.
“By investing in infrastructure, data systems, and regulatory frameworks, the government plans to enable regional distribution systems that minimise costs and improve transparency in pricing. These efforts are part of a broader strategy to streamline the movement of goods and ensure consistency in the supply chain,” he added.
Rafizi also said SMEs face challenges in scaling up and integrating into larger value chains.
“Efforts to strengthen the SME sector will focus on addressing structural barriers and creating opportunities for growth, ensuring that SMEs continue to drive innovation and economic resilience,” he added.
