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MALAYSIA’S new Outcome-Based Incentive Framework will ensure that economic rewards are only distributed when clearly defined performance targets are met, according to the Minister of Investment, Trade and Industry, Tengku Datuk Seri Zafrul Abdul Aziz.
Speaking on Bernama TV’s ‘Ruang Bicara’ programme on Tuesday, the Minister said that unlike previous frameworks which disbursed incentives at an early stage, the new structure mandates actual performance before any disbursement is made.
Among the key performance indicators are the creation of high-skilled jobs and increased investment in research and development, which are expected to raise the country’s economic complexity.
“This framework is different from the previous one, which channelled incentives at the initial stage. The new framework ensures rewards are only distributed after real performance is achieved,” Tengku Zafrul said.
“The government wants to see real economic spillovers. Therefore, the development of local small and medium-sized enterprises (SMEs) is also important if they can meet the performance metrics.”
The framework will be fully implemented for the manufacturing sector in the first quarter of 2026, followed by the services sector in the second quarter of the same year. It will be executed through the Malaysian Investment Development Authority (MIDA), an agency under the Ministry of Investment, Trade and Industry (MITI).
According to Tengku Zafrul, the initiative aims to attract high-growth activities, generate high-value employment and reduce regional economic disparities, aligning with the objectives of the New Industrial Master Plan (NIMP) 2030.
“This will ensure high-quality investments and increase wages,” he said.
The new framework was announced by Prime Minister Datuk Seri Anwar Ibrahim during the tabling of Budget 2026. It is designed to support high-growth activities and prioritises investments that generate high-value jobs while addressing economic imbalances across regions.
Tengku Zafrul also stressed the importance of strengthening Malaysia’s export capabilities. As part of Budget 2026, the Malaysia External Trade Development Corporation (MATRADE) will provide Market Development Grants and allocate RM60 million to assist micro, small and medium enterprises (MSMEs) in exporting Malaysian-made products to both existing and new markets, including Africa, Latin America and Central Asia.
This effort, he said, will help diversify Malaysia’s export markets and reduce dependence on traditional trading partners.
To support this initiative, EXIM Bank will offer RM500 million in soft loans to assist companies affected by global trade tensions, ensuring the continuity of SME exports. MITI will also ensure that SMEs can fully leverage Malaysia’s 18 existing Free Trade Agreements (FTAs).
“We expect more FTAs to be finalised, which will further help these SMEs,” he added. - October 15, 2025
