Budget 2027: RM5m tax break for vendors moving to AHTV

Wholly Malaysian-owned automotive parts makers that move their operations to the Automotive Hi-Tech Valley (AHTV) in Tanjong Malim, Perak, will be able to claim a tax deduction of up to RM5 million on qualifying relocation costs, under Budget 2027 tabled on 9 October 2026. The deduction covers spending from 1 January 2027 to 31 December 2030.

The incentive

• Who qualifies: automotive vendor companies that are wholly locally owned
• What: a tax deduction on qualifying relocation costs, capped at RM5 million
• When: spending from 1 January 2027 to 31 December 2030
• What it is worth (derived): a deduction cuts taxable income, not the tax bill itself. For a company paying 24% on its top band of profit, the full RM5 million is worth up to RM1.2 million of tax. Budget 2027 also proposes cutting small-company rates to 14% on the first RM150,000 of taxable income and 16% up to RM600,000
• Not yet published: which costs qualify, how AHTV's boundary is drawn for the incentive and how to apply. The measure is not among the 36 annexes of the Budget 2027 tax-measures document, so the detailed rules, and the law to put it into effect, are still to come

Why Tanjong Malim

AHTV is being developed by AHTV Alliance Sdn Bhd, 50.1% owned by DRB-HICOM in a joint venture with China's Geely. DRB-HICOM's 2025 annual report says:

• Proton has moved: Proton completed the move of its manufacturing and R&D from Shah Alam to AHTV in 2025, ending 40 years of production in Shah Alam. DRB-HICOM says the move brought Proton's vendor network together and that the vendor community in AHTV had already grown in anticipation
• EV plant: Malaysia's first dedicated EV assembly plant opened at AHTV in September 2025, with initial capacity of 20,000 units a year
• Targets: 500,000 vehicles a year by 2030, and one million units of component output, half of it for export
• New master plan: a layout approved in 2025 zones land for heavy, medium and light industry, commercial use and public amenities. AHTV is one of five high-impact national projects under the 13th Malaysia Plan
• Rail: a September 2025 agreement with KTMB and the Railway Assets Corporation will study a rail spur linking AHTV to the national network
• Land sales: DRB-HICOM's industrial lots at Proton City (Parcel 5, launched January 2024) were 73.0% sold

The incentive followed a Budget 2027 consultation with automotive companies at AHTV on 11 September, chaired by Finance Minister II Amir Hamzah Azizan. DRB-HICOM group managing director Tan Sri Syed Faisal Albar welcomed the measure: "A stronger vendor presence will deepen local supply chains."

Land around AHTV

Industrial land near Proton's plant:

• Tanjong Malim Hi-Tech Park: Setia Awan's 447-acre park beside Proton City, launched in September with phase 1 land from RM55 psf
• Lembah Beringin: across the state line in Hulu Selangor, Land & General plans to launch 240 acres of factories and plots in 1Q 2027, next to Chery's new car plant
• KLK TechPark: BYD dropped its planned Tanjung Malim car plant there in September

Whether a vendor moving into one of these parks qualifies will depend on how the rules define AHTV.