KUALA LUMPUR – Malaysia’s Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim, today tabled the Malaysia Budget 2026, unveiling a record federal spending plan of RM470 billion to steer the nation through rising global uncertainties and domestic cost-of-living pressures.
The 2026 allocation marks the first under the newly launched 13th Malaysia Plan and the fourth “MADANI Budget”, underscoring the government’s push to blend economic reform with social inclusivity.
In his speech to the Dewan Rakyat, Anwar defended the administration’s path, saying: “We choose the winding, difficult path of reform, strict fiscal discipline and institutional strengthening, as the only path that ensures the nation is saved in the long run.”
Key Measures & Reforms
To raise revenue without imposing broad tax hikes, the budget introduces a carbon tax targeting iron, steel and energy sectors while further adjusting excise duties on alcohol and tobacco.
One notable consumer-oriented reform is the plan to incorporate a Lemon Law into the Consumer Protection Act following the passage of the Consumer Credit Act. This aims to protect buyers who unknowingly purchase defective goods, such as automobiles.
To stimulate local industry and attract outside capital, Anwar announced the ASEAN Business Entity (ABE) status, along with an Investor Pass allowing foreign investors multiple-entry visas valid up to 12 months.
Social and welfare policies received attention as well. Households will benefit from the advance payout of Sumbangan Asas Rahmah (STR) phase 4, and a one-off RM100 credit via MyKad will be extended to all adult Malaysians.
In a bid to enhance road safety and reduce vehicle emissions, the budget offers up to RM4,000 incentive to owners who scrap vehicles older than 20 years and shift to new national models.
Fiscal Framework & Challenges
The government projects operating expenditure to rise to about RM338.2 billion, with RM81 billion allocated for development programmes. Revenue forecasts estimate growth of 2.7 percent to RM343.1 billion.
However, the outlook is not without obstacles. Analysts warn that a fall in dividends from state energy giant Petronas, expected to pay only RM20 billion next year, could squeeze revenue.
Further, ongoing U.S. trade tariffs of 19 percent on Malaysian exports inject uncertainty into the export sector, a key driver of Malaysia’s economic growth.
To cushion households from subsidy cuts, the budget edges subsidies downward, relying instead on targeted support for the most vulnerable.
Observers say this budget strikes a delicate balance, reformist in spirit but mindful of political sensitivities. One report notes Anwar “hit the brakes” on sweeping tax increases and subsidy withdrawals to avoid public backlash.
As Malaysia braces for global headwinds, Malaysia Budget 2026 is poised to test the government’s ability to maintain growth, social stability and fiscal discipline in unison.