Penang’s 2025 Budget Aims for Fiscal Harmony and Innovative Revenue Streams

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The Penang Budget 2025 is set to prioritize fiscal balance and the exploration of new revenue resources, aligning with the broader national economic strategies outlined in Malaysia’s Budget 2025. According to reports, the Penang state government is focused on achieving fiscal balance by increasing revenue channels and sources, rather than reducing spending.

This approach is consistent with the national budget’s emphasis on fiscal responsibility and expanding the tax base. Malaysia’s Budget 2025, the largest ever at RM421 billion, is divided into RM335 billion for operating expenditure and RM86 billion for development expenditure. The budget aims to reduce the fiscal deficit to 3.8% of GDP from the projected 4.3% in 2024.

In Penang, the budget is still being finalized, but it is clear that introducing new revenue sources will be a key strategy to support planned initiatives. As stated by Chow, the focus is on balancing finances and revenue growth to ensure the sustainability of the state’s economic plans.

At the national level, Malaysia’s Budget 2025 is themed ‘Reinvigorating the Economy, Driving Reforms, and Prospering the Rakyat,’ and it follows the MADANI economic framework. The budget includes several strategic revenue measures, such as broadening the Sales and Service Tax (SST) to include additional services and non-essential goods, which is expected to generate RM1.5 billion in additional revenue annually. Additionally, a dividend tax on individuals earning substantial dividend income will be introduced for the first time.

The national budget also emphasizes economic recovery through innovation, infrastructure investment, and digitalization. It targets GDP growth between 4.5% and 5.5% in 2025, driven by robust domestic demand and export recovery. Key sectors such as services, manufacturing, and construction are expected to continue growing.

Fiscal responsibility is a key pillar of the budget, guided by the Public Finance and Fiscal Responsibility Act 2023, which aims to manage public debt and reduce the fiscal deficit. Governance reforms focus on enhancing transparency and fighting corruption through stronger institutional frameworks and anti-corruption initiatives.

In terms of social welfare, the budget places significant emphasis on improving healthcare, education, and social welfare programs, reflecting the government’s priority to enhance the quality of life and public services for Malaysians.

Both the Penang Budget 2025 and the national Budget 2025 are designed to foster economic growth, ensure fiscal balance, and improve the well-being of the population through targeted policies and revenue strategies.

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