FMM urges Budget 2027 to boost manufacturing capacity, skills and higher-value jobs

FMM In The News: THEMALAYSIANRESERVE.COM, September 3, 2026

THE Federation of Malaysian Manufacturing (FMM) called on the government to prioritise expanding productive capacity, industrial transformation and better-paying jobs in Budget 2027, while supporting businesses to reinvest in technology, innovation, skills and domestic supply chains. 

FMM president Jacob Lee said the federation’s recommendations aim to create a cycle where stronger retained earnings lead to greater investment, higher productivity, better wages and stronger manufacturing capabilities, ultimately supporting exports and a broader revenue base for the government.

Among its key proposals, FMM reiterated its call for GST to be introduced at a 3% rate, with safeguards for essential consumption, simplified SME compliance and timely refunds.

If selected GST features are incorporated into the existing SST, FMM wants input-tax credits or offsets, relief for essential goods and exports, and faster refunds to reduce tax cascading and manufacturers’ cash-flow pressures.

He said FMM proposed a tiered corporate tax rate for qualifying SMEs of 15% on the first RM1 million of chargeable income, 17% on the next RM1 million and 24% thereafter, allowing businesses to retain more earnings for productive investment.

To accelerate industrial digitalisation, FMM is seeking a RM1.5 billion Smart Manufacturing Support Package for 2027-2030, comprising RM500 million for automation, RM750 million for manufacturing digitalisation and RM250 million for AI adoption.

The federation also proposed a RM1 billion Manufacturing Research and Innovation Endowment Fund, jointly funded by the government and industry.

On supply-chain resilience, FMM called for a RM100 million National Supply Chain Resilience Fund to help manufacturers secure critical inputs, qualify alternative suppliers and diversify sourcing.

He said FMM also wants stronger government and GLC procurement linkages to develop Malaysian vendors and strengthen ‘Made by Malaysia’ capabilities.

For talent development, Lee proposed channelling foreign-worker levy collections into a Malaysian industry skills financing mechanism or national manufacturing skills endowment fund supported by RM100 million in seed funding.

“This will help to develop Malaysia’s industry skills and to establish a National Automation and Industry 4.0 Fund with RM500 million in seed funding and 40% of foreign workers’ levy proceeds to drive automation and productivity improvement,” he said during FMM’s Business Conditions Survey press conference today.

During the presentation, Lee also called for expanded industry-led TVET, teaching factories and apprenticeships, including a 50% apprenticeship wage subsidy capped at RM1,000 a month for 12 months.

On energy transition, FMM urged targeted and time-bound relief for industrial energy costs while proposing financing at 3% or below, government guarantees covering up to 80% of financing and grants covering up to 30% of qualifying SME green investments.

It also called for a phased carbon-pricing framework, stronger recycling infrastructure and a national Waste Exchange Platform, alongside a RM100 million SME effluent-treatment upgrade grant.

“We want to create an environmentally friendly, green and decarbonised manufacturing industry so that we can receive future growth,” he added.

FMM said the proposals are aligned with the 13MP, NIMP 2030 and NETR, with the ultimate aim of helping Malaysian manufacturers move up the value chain, strengthen economic resilience and create better-paying jobs.

Source of article: themalaysianreserve.com