Budget 2026 SME Digitalisation Grants: What Sarawak Businesses Should Know

SME Digitalisation Support in Budget 2026

Malaysia's Budget 2026, tabled on 10 October 2025, keeps money behind SME digitalisation. The Budget 2026 speech says development financial institutions are providing nearly one billion ringgit in financing and grants to support process automation and the digitalisation of business operations. For Sarawak businesses still running manual processes or legacy systems, this can reduce the cost of modernising.

If you need accounting software, a proper HRMS, or AI workflow automation, a grant or co-funding programme may cover part of the cost. Check each programme's own page for whether applications are open before you commit to a purchase. Not sure which programme fits? Run our free SME Grant Finder tool for an instant shortlist.

What Is Available in Budget 2026?

Budget 2026 includes several measures relevant to Malaysian SMEs: financing and grants for digitalisation through development financial institutions, a proposed further 50% tax deduction for MSMEs on recognised AI training, and RM53 million for the Malaysia Digital Acceleration Grant for high-tech projects. Each programme has different eligibility criteria, funding limits, and application processes, and not every programme is open at any given time.

Malaysia Digital Acceleration Grant (MDAG)

The Budget 2026 speech allocates RM53 million to the Malaysia Digital Acceleration Grant, run by MDEC, to speed up the growth and adoption of technologies such as AI, blockchain and quantum computing. MDAG suits technology companies that are building or scaling digital products, not businesses buying basic off-the-shelf software.

MDAG is open only to companies with MSC Malaysia or Malaysia Digital status, or that gain that status within the grant period. MDEC's MDAG page still showed "Application Closed" when we checked on 23 September 2026, so confirm whether a new intake is open before you plan a project around it.

MSME Digital Grant MADANI (Geran Digital PMKS MADANI)

The MSME Digital Grant MADANI is the federal digitalisation grant most relevant to typical SMEs. Under BSN's terms, it covers up to 50% of the invoice for an approved digital solution, to a maximum of RM5,000 per business. The full RM5,000 applies to an invoice of RM10,000, and you pay anything above that yourself. The solution must come from a digitalisation partner on MDEC's panel. The grant was introduced in line with Budget 2025, and its 2025 intake closed on 5 September 2025. BSN's page still shows an Apply Now button, but the application form it links to is closed. Last checked 23 September 2026.

BSN lists nine categories of digital service: e-POS and digital payment, HR or CRM systems, digital marketing and sales, cybersecurity, ERP or accounting and tax, digital signature, IoT and smart systems, AI, and e-Invoice. A business can apply for up to three of them. In the 2025 intake you chose a partner from MDEC's panel and applied through the MDEC-appointed online platform linked from BSN's page, with the partner's quotation or invoice. It was not a reimbursement: once approved, you paid the partner the balance of the invoice within 14 days, and BSN paid the grant portion directly to the partner. BSN's page lists the documents it asks for.

MOF's Budget 2026 touchpoints document lists BSN grants for 2026, including an SME Digital Matching Grant and a Hawker Digital Grant. We could not find an application page for a 2026 round when we checked on 23 September 2026, so watch BSN's page before you buy.

Extra 50% Tax Deduction for AI Training

The Budget 2026 speech proposes an additional 50% tax deduction for SMEs on AI and cyber security training endorsed by MyMahir NAICI. It is a further 50% deduction on top of the normal deduction for the same training expense.

MOF's Budget 2026 tax measures set out the proposal in detail: it is for MSMEs, the training must be AI training recognised by the MyMahir National AI Council for Industry (NAICI), the deduction can be claimed once every two years, MSMEs that contribute to HRDF are included, and it covers applications received by TalentCorp from 1 January 2026 to 31 December 2027. The tax measures document names AI training only; the speech also mentions cyber security. A Budget proposal applies only once it is legislated, and we have not confirmed the final rules, so check with TalentCorp or your tax agent before counting on the deduction, and budget for staff training alongside any AI tools you buy.

Who Is Eligible?

Each programme sets its own rules. For the MSME Digital Grant MADANI, BSN asks for:

• At least 60% owned by Malaysian citizens.
• Registered with SSM or holding a local authority business licence (cooperatives with SKM, professional firms with their regulator).
• In operation for at least six months.
• Average annual sales of at least RM50,000.
• No earlier Digitalisation Matching Grant, unless the new application is for an e-Invoice solution.

For other programmes, check the SME Corp definition and the programme's own page.

Sarawak businesses should also check the state programmes run by SDEC (Sarawak Digital Economy Corporation). SDEC's GoDigital Sarawak grant, worth up to RM10,000 for hardware and software, has been closed since 19 May 2026, with no reopening date announced when we checked on 23 September 2026. Confirm on each programme's own page whether it can be combined with a federal grant before applying.

How to Apply: Step by Step

The application process is more straightforward than many businesses expect. Use this sequence:

• Confirm your SME status: verify your SSM registration, annual turnover, and equity structure meet the requirements.
• Identify the right programme: the MSME Digital Grant MADANI for general digital tools, MDAG for advanced tech projects, or financing facilities for larger investments.
• Choose an approved digital solution: MADANI only co-funds solutions from digitalisation partners on MDEC's panel, so check the vendor is listed before you sign.
• Apply through the programme's own channel: for the 2025 MADANI intake this was the MDEC-appointed online platform linked from BSN's page. Other programmes use their own portals.
• Submit the documents the programme asks for. For MADANI these were identity documents, your business registration, recent financial statements or two months of bank statements, and the partner's quotation or invoice.
• Pay your share and implement: under MADANI you paid the partner the balance within 14 days of approval, and the partner then delivered the service. Keep all receipts and implementation records.
• Keep proof of activation: BSN pays its share directly to the partner and may ask you to show that the service was activated.

What Kinds of Tools Grants Have Covered

MADANI covered the nine categories listed above, from vendors on MDEC's panel; other programmes set their own lists. Grouped, the MADANI categories were:

• ERP, accounting and tax, and e-Invoice solutions. Before buying an e-Invoice solution, check the e-Invoice exemption rules: many small businesses do not need one.
• HR and CRM systems.
• e-POS and digital payment, and digital marketing and sales tools.
• Cybersecurity and digital signature.
• Artificial intelligence, and IoT or smart systems. If you are weighing a WhatsApp chatbot, the WhatsApp chatbot price and setup guide shows what a build costs and what Meta bills on top.

A tool can fit a category without its vendor being on the panel. Check that the vendor is on the programme's panel before you sign.

Why Sarawak SMEs Should Prepare Early

Grant allocations are finite. BSN's terms say the MADANI grant depends on the allocated budget, and the 2025 intake closed on 5 September 2025. There is no guarantee of a top-up if demand exceeds supply, so have your documents and a partner quotation ready in case a new intake opens.

Sarawak businesses can also look to SDEC, which runs acceleration programmes through its Digital Innovation Hubs alongside its SME digitalisation initiatives. Check SDEC's SME Digital Initiative page for what is currently running.

How GreatRise IT Can Help

GreatRise IT has helped Sarawak SMEs adopt digital tools for years, from Biztrak ERP deployments and FlexHRMS implementations to custom AI automation workflows. Our team can help you identify the right grant, prepare your application, and deploy the solution.

Many Sarawak businesses miss these grants because they do not know they exist or assume the application process is too complicated. Talk to us first and we can tell you which programme fits before you apply.

The Bottom Line

Budget 2026 gives Malaysian SMEs a mix of grants, financing, and a proposed tax incentive for AI training. If your business still runs on manual processes, outdated software, or disconnected systems, check which programme is open before you buy.