KUALA LUMPUR, 10 October 2025 — Malaysia’s Fourth MADANI Budget 2026, themed “The People’s Budget”, marks a decisive stride toward fiscal discipline, targeted subsidies, and inclusive national renewal under the leadership of Prime Minister and Finance Minister Dato’ Seri Anwar Ibrahim.
With a total allocation of RM470 billion, Malaysia’s largest yet, the Budget balances economic prudence with social compassion, reinforcing the nation’s long-term resilience as it enters the 13th Malaysia Plan (RMK13) era.
“A budget is not merely a collection of figures; it is a moral statement and a covenant between government and people,” Anwar declared in Parliament.
Fiscal Highlights
- Total expenditure: RM470 billion
• RM338.2b operating | RM81b development | RM30b GLIC | RM10b PPP | RM10.8b GLCs - Revenue: RM343.1 billion (↑ from RM334.1b in 2025)
- GDP Growth 2026: Projected 4.0–4.5%
- Deficit: To narrow to 3.5% of GDP, targeting 3% by 2028
Malaysia’s fiscal reforms and stronger governance have already reduced the deficit from 5.5% in 2022 to 3.8% in 2025, supported by enforcement-led recovery of RM15.5 billion in national revenue.
Three Pillars, Nine Commitments
1. Exemplary Governance
- Fiscal Responsibility Act and Procurement Bill enhance transparency and ministerial accountability.
- Enforcement bodies (MACC, PDRM, Customs, MyCC) strengthened with RM700 million.
- E-invoicing to be fully rolled out by 2026.
- Luxury car tax exemptions in Langkawi and Labuan capped at RM300,000.
2. Meeting the People’s Priorities
- Targeted subsidies save RM15.5 billion yearly, ensuring aid benefits Malaysians only.
• RON95 capped at RM1.99/litre; BUDI95 reaches 10 million citizens.
• Diesel, electricity, chicken, and egg price controls retained. - Sumbangan Tunai Rahmah (STR): RM10.2 billion cash aid for 8.5 million recipients.
- SARA MADANI 2.0 expands cashless food vouchers to 500,000 recipients.
- Ikhtiar MADANI Untuk Rakyat (RM1b) empowers rural and youth income projects.
- Record allocations to Sabah (RM6.9b) and Sarawak (RM6b), advancing Pan Borneo, SSLR, and Trans-Borneo Highway projects worth RM48b.
3. Championing a High-Value Economy
- RM200m Strategic Co-Investment Fund and RM550m Khazanah-KWAP semiconductor push.
- RM7.9b for TVET, focusing on AI, EV, and digital skills.
- Visit Malaysia Year 2026: Target 35 million visitors, RM165b receipts.
- RM3b Green Tech Financing Scheme to spur solar, hydrogen, and bioenergy.
- Carbon market phase 2 launches 2026 under Bursa Malaysia.
- Progressive Wage Policy: RM1b to incentivise 10–15% pay hikes; Minimum wage to reach RM1,800 by 2027.
Sectoral Highlights
Education & Human Capital – Largest ever RM80b allocation, including RM2b for new schools and RM400m for MRSM modernisation.
Healthcare – RM43.1b, with 6,000 new doctors, 1,500 permanent posts, and digital health records.
Housing – RM2.4b Perumahan MADANI, RM10b BSN loans for first-time buyers, and RM15b SJKP guarantee scheme.
SMEs & Startups – RM10b financing via SME Bank, BPMB, and TEKUN; RM3b Green Investment Fund; RM150m digitalisation grants.
Women & Youth – RM100m childcare centres, RM30m women leadership fund, RM500m Youth MADANI Programme.
Infrastructure – RM17b transport allocation for MRT3, LRT3, Penang LRT, ECRL, and Pan Borneo projects.
Defence & Security – RM19.8b, including RM1.5b for air and naval assets, and RM6.5b for PDRM modernisation.
Tax & Fiscal Measures
- Capital Gains Tax: 10% (unlisted shares)
- Luxury Goods Tax: 5–10% from January 2026
- Service Tax: Retained at 8% (excludes F&B and telecom)
- E-Invoicing and Digital Audit Hub to reduce evasion and increase compliance
- RM5b savings expected from procurement reforms under Value-for-Money framework
The Ledger Asia Analysis
Budget 2026 reflects Malaysia’s pivot to structural maturity, prioritising governance over populism, and resilience over short-term spending.
Investors will note the sustained fiscal discipline paired with targeted social welfare, the rapid expansion of digital and green initiatives, and the growing regional ambition through the Johor–Singapore SEZ and ASEAN connectivity plans.
