Incentives for manufacturing companies in the form of Accelerated Capital Allowance (ACA) and Automation Equipment Capital Allowance (AEA) for automation equipment are currently given to the following categories:

  • First Category: for high labour intensive industries (such as rubber products, plastics, wood, furniture and textiles), an automation capital allowance of 200% (ACA of 100% and AEA of 100%) is provided on the first RM4 million of qualifying capital expenditure incurred; and
  • Second Category: for other industries, automation capital allowance of 200% (ACA of 100% and AEA of 100%) is provided on the first RM2 million of qualifying capital expenditure incurred within 8 years of assessment from 2015 to 2023.

Relevant Link

Reinvestment Allowance

  • RA is a special tax incentive available for company
    • resident in Malaysia which has been in operation for no less than 36 months
    • incurred capital expenditure to expand, modernize, automate, or diversify existing manufacturing business or approved agricultural project
  • 60% of Qualifying Capital Expenditure incurred and can be utilized against 70% of statutory income
  • LHDN Public Rulings No. 10/2020 & 11/2020


  • Industry 4.0 (Industry4WRD)
    • Industry4WRD Intervention Fund
    • Industry4WRD Domenstic Investment Strategic Fund (DISF)
  • Smart Automation Grant
    • for Small And Medium Enterprises (SMEs) and Mid-Tier Companies (MTCs) in Manufacturing and Services Sector
    • given on a 1:1 matching basis based on eligible expenditures, up to RM 1 million per company
  • Skim Jaminan Pinjaman Perniagaan (SJPP) – Automation & Digital Guarantee Scheme
  • Soft Loan Scheme for Automation and Modernisation (SLSAM)
  • SME Automation & Digitalisation Facility (ADF)
  • People and Economic Strategic Empowerment Programme (Pemerkasa)
    • SME Bank will provide loan fund of RM200 milion to finance the purchase of machinery with grant incentive up to 20% of the machine value

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