MSIA urges Budget 2027 to boost automation allowance to RM100 million and double R&D tax relief

The Malaysia Semiconductor Industry Association (MSIA) has presented a package of policy suggestions for Budget 2027, calling for the automation capital allowance limit to be lifted from RM10 million to RM100 million. It also recommends a 200 percent tax deduction on qualifying research and development costs. MSIA president Wong Siew Hai said the proposals aim to reflect the scale of automation and advanced manufacturing projects in the semiconductor and E&E sectors and to support firms already operating in Malaysia to reinvest, expand and pursue higher-value work.

The association’s broader agenda includes enhanced reinvestment incentives, accelerated capital allowances, and a framework that distinguishes new strategic investments from expansion by existing players. It also seeks to broaden eligible R&D activities, provide dedicated semiconductor R&D grants, develop shared research infrastructure and deepen collaboration with universities. These recommendations form part of MSIA’s six-pillar wishlist for the upcoming budget, which also covers business-friendly reforms, talent development, stamp duty modernization and ecosystem strengthening.