MALAYSIA’S upcoming Budget 2026, the fourth in the Ekonomi MADANI series, will build upon the reform trajectory of previous years by strengthening public service delivery, targeted subsidies, and long-term growth levers.
Unveiled today in the Pre-Budget Statement by the Ministry of Finance, Budget 2026 will also be the first under the 13th Malaysia Plan (13MP) 2026–2030 and is expected to maintain focus on fiscal resilience, economic transformation and raising the quality of life for Malaysians.
“Budget 2026 will continue to deliver on the three pillars of Ekonomi MADANI — Raising the Ceiling of national growth, Raising the Floor of living standards and Driving Reform, particularly in Good Governance,” said the Ministry.
Despite global uncertainty, Malaysia’s economy expanded by 4.4% in the first quarter of 2025 and is forecast to grow between 4.0% and 4.8% this year. Inflation fell to 1.1% in June 2025 — the lowest in over four years — while unemployment declined to 3.0% in May, the lowest since April 2015.
The Government remains committed to narrowing the fiscal deficit to 3.8% this year, compared with 4.1% in 2024. New debt issuance also fell to RM76.8 billion in 2024, down from RM99.4 billion in 2022. The Ministry noted that these consolidation efforts are underpinned by the Fiscal Responsibility Act (Act 850), which caps the deficit at 3% of GDP and public debt at 60% in the medium term.
Malaysia’s ringgit was also reported as one of Asia’s best-performing currencies as of 6 August 2025, appreciating 5.8% to RM4.2270 against the US dollar.
Among key achievements cited were RM384.4 billion in approved investments for 2024 — a second consecutive record-breaking year — and a 3.7% year-on-year rise in the first quarter of 2025 to RM89.8 billion. Credit ratings remain stable across all three major agencies, with the country’s economic and institutional fundamentals drawing confidence.
Under the GEAR-uP programme, Government-linked Investment Companies (GLICs) have pledged RM25 billion in investments, of which RM11 billion has already been deployed into high-growth sectors. As part of wage reforms, 34 GLICs and their linked companies are now providing a minimum living wage of RM3,100, benefitting 153,000 workers.
The Ministry reaffirmed its focus on fiscal reforms such as the expanded Sales and Service Tax (SST), introduction of a Global Minimum Tax, and targeted subsidy programmes. These measures, it said, would sustain fiscal resilience and allow for more precise redistribution of assistance.
“Following the announcement of Sumbangan Asas Rahmah (SARA) for all by YAB Prime Minister on 23 July 2025, the combined allocation for Sumbangan Tunai Rahmah (STR) and SARA rose from RM10 billion to RM15 billion — more than sevenfold since the Government’s direct cash transfer programme was first introduced in 2012.”
On infrastructure, Budget 2026 continues to support strategic upgrades including LRT3, ETS extension to Johor Bahru, the East Coast Rail Link (ECRL), the Johor–Singapore RTS Link and the Pan Borneo Highway.
In Sabah and Sarawak, access to basic utilities remains a priority, including clean water in Sarawak’s Landeh, and electricity supply infrastructure in Sabah’s Paitan.
As Malaysia gears up for Visit Malaysia 2026, the tourism sector is expected to provide further stimulus to growth, supported by increased domestic investment and strategic public projects.
Three main focus areas will anchor Budget 2026
Driving Reform and Good Governance
The Government aims to further digitalise public services and financial administration through artificial intelligence, data analytics and automation to reduce leakages and improve efficiency. The upcoming Government Procurement Act, Ombudsman Act, Freedom of Information Act, and State-Owned Enterprises Act are part of wider institutional reforms to boost transparency and public trust.
Civil service reform will be governed by the Public Service Efficiency Commitment Act 2025 (Act 867), focusing on merit-based evaluations and digitisation.
Raising the Ceiling of Growth
To break structural economic limitations, Budget 2026 will emphasise growth in high-growth, high-value sectors such as digital technology, renewable energy, semiconductors and artificial intelligence.
A suite of policy frameworks will support this effort including the New Industrial Master Plan 2030, the National Energy Transition Roadmap, the National Semiconductor Strategy, the KL20 Action Plan for startups, the National AI Plan 2026–2030, and the Bumiputera Economic Transformation Plan (PuTERA35).
The New Investment Incentive Framework will also be launched in the third quarter of 2025, aiming to attract quality investments through tailored fiscal incentives and reduced red tape.
Raising the Floor of Living Standards
Budget 2026 will prioritise labour market reform, wage growth, social assistance, and inclusive development.
Assistance such as SARA and STR will continue to be strengthened, while targeted subsidy reform will ensure public funds are channelled to the most vulnerable.
The healthcare system will see reform to curb rising private healthcare costs, particularly via expanded digital health tools and rural care access.
Education reform will be spearheaded by the Majlis Pendidikan Negara, with continued investment in STEM, TVET and lifelong learning to ensure workforce readiness for emerging industries.
Efforts to bridge urban-rural disparities will focus on roads, treated water, electricity and high-speed internet.
The Budget will also address the needs of marginalised groups, with tailored programmes for youth, women, senior citizens, persons with disabilities, indigenous communities and the Bumiputera population.
“Reforms cannot be completed overnight,” the Ministry said. “For the fourth year running, the MADANI Budget continues the Government’s agenda to correct the structural impediments that have long held Malaysia back from realising its full potential.”
The Government is expected to table Budget 2026 in Parliament on 10 October 2025. The Ministry of Finance will also be coordinating public and stakeholder engagements to ensure alignment with the rakyat’s needs.
Comments and proposals may be submitted via the official Budget 2026 portal at [https://belanjawan.mof.gov.my](https://belanjawan.mof.gov.my). - August 8, 2025
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