Kuala lumpur: Granting tax exemptions to companies undertaking new food production projects is a strategic approach to position the industry as a high-impact investment sector while strengthening food security. General Manager of the National Farmers Organisation (NAFAS), Muhammad Faris Arriffin, said the move demonstrates the government's commitment to transforming the food sector beyond a mere social or welfare endeavour, to a field worthy of investment on par with the electrical and electronics (E and E) and green energy sectors.
According to BERNAMA News Agency, Muhammad Faris emphasized that the full tax exemption would increase the return on investment for food projects, establishing Malaysia as a premier destination for agri-food investment. This initiative is expected to attract both domestic and foreign capital, encouraging many entities that were previously cautious about entering the food sector to consider large-scale investments in areas such as contract farming, food processing, agricultural automation, aquaculture, and intensive livestock farming.
Muhammad Faris also highlighted that the five-year incentive for expansion projects would allow existing players to upgrade their operations through automation, seed research and development, and strengthening the downstream value chain. This measure aligns with the government's policy to boost domestic production, reduce import dependency, and transform the agricultural sector into a more sustainable, profit-driven model with fiscal incentives.
Meanwhile, Dr Shamsul Azahari Zainal Badari from Universiti Putra Malaysia's Department of Resource Management and Consumer Studies noted that the government's initiative would not only create more job opportunities in supporting sectors like logistics, engineering, and marketing but also stimulate the economy. He emphasized that this proposed tax exemption is strategic and, with responsible implementation and careful monitoring, has the potential to significantly strengthen the nation's food resilience and security.
Shamsul Azahari, who is also the Secretary of the Malaysian Consumer and Family Economics Association (MACFEA), pointed out that the tax incentive is expected to attract more investment into the food sector by lowering company costs, particularly during the capital-intensive initial stages of a project. The extended eligibility period for the incentive until Dec 31, 2030, provides investors ample time to plan and develop their projects, demonstrating the government's serious commitment to developing the food sector sustainably.
During the tabling of Budget 2026, Prime Minister Datuk Seri Anwar Ibrahim announced a proposed 10-year full income tax exemption for companies undertaking new food production projects. Existing companies carrying out expansion projects will also enjoy a 100 percent income tax exemption for five years, with the application period extended until Dec 31, 2030.
The Muda Agricultural Development Authority (MADA) stated that the RM2.62 billion allocation for various subsidies and assistance for padi farmers will help them cope with operating costs and boost rice production yields. MADA also mentioned that the Jeniang Water Transfer Project, costing RM1.28 billion and set to begin next year, will enhance the irrigation system's capacity to support increased padi output in the Muda area, the country's main rice bowl located along the Kedah-Perlis border. It added that as a forward-looking measure, MADA will continue to focus on adopting smart agricultural technologies, improving water management efficiency, and developing farmers' human capital through continuous training and guidance.