Unlock Malaysia government incentives for digital transformation 4.0
Malaysia is accelerating digital transformation with robust government support. Manufacturers can now leverage MIDA’s Automation Capital Allowance (Automation CA) and SIRIM’s Smart Tech Up Grant—two key initiatives designed to enhance digital transformation and boost industrial competitiveness.
1. MIDA’s Automation Capital Allowance (Automation CA)
- 200% tax deduction on the first RM10 million expenditure
- Valid until 2027
- Covers Industry 4.0 retrofits and automation solutions
Source: MIDA’s Automation Capital Allowance (Automation CA) application guidelines
2. SIRIM’s Smart Tech Up Grant
- Up to 50% project funding, capped at RM500,000
- Supports IoT, AI, and automation projects
- Primarily for SMEs & Mid-Tier
Source: SIRIM's Smart Tech Up
Both incentives share the same goals but with their own complementary approaches:
1. Boost productivity & efficiency
- Encourage adoption of automation, IoT, AI, robotics, and Industry 4.0 technologies.
- Reduce reliance on manual labour and optimize operations.
2. Enhance global competitiveness
- Support Malaysian businesses (especially SMEs) in modernizing and competing in high-value markets.
3. Accelerate digital transformation
- Promote smart manufacturing and services through advanced technology integration.
Distinct but complementary approaches:
| Aspect | SIRIM’s Smart Tech Up Grant | MIDA’s Automation Capital Allowance (Automation CA) |
| Type of support | Grant funding (direct financial aid) | Tax incentive (200% allowance on qualifying expenses) |
| Target beneficiaries | SMEs (focused on tech adoption) | Manufacturing & services firms (including large corporations) |
| Scope | Broader smart tech adoption (e.g., AI, IoT, automation) | Focus on automation + Industry 4.0 machinery/software |
| Max. support | Up to RM500k (50% gov’t aid, incl. assessment, proposal, training, post-assessment) | Up to RM10m (tax allowance cap) |
| Verification body | SIRIM (technical evaluation) | Joint assessment by MIDA (non-tech) + SIRIM (tech) |
Combined impact
The Smart Tech Up Grant and Automation Capital Allowance (Automation CA) work hand-in-hand to strengthen Malaysia’s Industry 4.0 ambitions. Together, they provide businesses with both immediate support and long-term incentives.
- Financial flexibility: Grants (Smart Tech Up) help with upfront funding, while ACA provides tax relief for sustained ROI.
- Wider reach: SMEs benefit from direct grants, while larger firms leverage tax incentives.
- Tech-driven growth: Both align with Malaysia’s Industry 4.0 Policy and the National Fourth Industrial Revolution (4IR) Strategy.
Conclusion
These incentives create a two-tier support system that accelerates transformation:
- Smart Tech Up Grant: Lowers entry barriers for SMEs adopting smart technologies.
- Automation CA: Rewards companies scaling automation with tax savings.
The outcome: faster tech adoption, higher productivity, and stronger global competitiveness for Malaysian industries.
Your guide to applying both incentives:
1. Smart Tech Up Grant
Eligibility & requirements
✅ Open to: Malaysian SMEs in manufacturing and services
✅ Must have:
- Valid business registration
- Proof of financial capability (for co-funding, if required)
- A clear project proposal showing how the technology improves efficiency
Application process
1. Submit Online Application
- Visit the Smart Tech Up Grant Portal
- Log in or register a new account
- Fill in company details, project scope, and expected outcomes
2. Technical Evaluation by SIRIM
- Proposal reviewed for feasibility and impact
- May involve site visits or additional supporting documents
3. Approval & Disbursement
- Successful applicants receive grant funding
- Must comply with post-approval reporting (e.g., progress updates)
*Deadline: Rolling intake (check website for the latest updates)
2. Automation Capital Allowance (Automation CA)
Eligibility & requirements:
✅ Open to: Manufacturing & services firms (including large companies)
✅ Must have:
- Valid Manufacturing License (ML) or services sector permit
- At least 36 months of operational history
- Proof of new automation / Industry 4.0 technology (not basic software)
- SIRIM verification confirming productivity gains
Application process
1. Submit Online via MIDA
- Apply through the MIDA Investment Malaysia Portal (login or register a new account).
2. MIDA & SIRIM Evaluation
- MIDA checks non-technical compliance
- SIRIM conducts technical verification (site visits & audits)
3. Approval & Tax Claim
- MIDA issues a Consideration Letter
- Claim tax deduction with LHDN during annual filing
*Deadline: Open for applications until 31 December 2027
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