MALAYSIA’S petroleum-related revenue is projected to decline by 24 per cent in 2026 compared with the government’s estimate for this year, as the nation moves to lessen its dependence on oil income in the face of volatile global crude prices.
Prime Minister Datuk Seri Anwar Ibrahim said petroleum-linked revenue is expected to total RM43 billion next year, down from the estimated RM56.6 billion in 2025.
“Of this amount, dividends from PETRONAS for 2026 are projected to decrease to RM20 billion compared with the estimated RM32 billion in 2025,” he said in a written reply published on Parliament’s website.
Anwar was responding to a question from Hassan Abdul Karim (PH–Pasir Gudang), who asked what realistic approaches the government would take for the 2026 National Budget given declining PETRONAS dividends, as global crude oil prices are expected to fall from around US$50 per barrel to below US$40.
From a fiscal management perspective, the Prime Minister said the Federal Government will continue focusing on optimising expenditure, ensuring sustainable revenue generation and strengthening the implementation of comprehensive economic plans to drive national growth.
To partly finance the 2026 Budget, federal revenue is estimated at RM343.1 billion.
Anwar said several fiscal reform measures are being implemented to ensure sustainable revenue, including the phased rollout of the e-invoicing system to enhance tax administration efficiency and compliance, thereby reducing leakages.
Other initiatives include the expansion of the Sales and Service Tax (SST), with import sales tax on low-value goods beginning in January 2024, an increase in the service tax rate from six to eight per cent starting March 2024, and a review of sales tax rates along with a broader scope for the service tax from 1 July 2025.
The government is also gradually adopting the Medium-Term Revenue Strategy (MTRS), which plays a crucial role in broadening the tax base and improving tax administration for long-term revenue sustainability.
Beyond revenue measures, Anwar said the government will maintain strict expenditure controls in line with the Fiscal Responsibility Act (FRA) 2023, ensuring collected revenues are sufficient to fund spending.
Among these controls are the retargeting of subsidies to ensure spending is more focused, tightening procurement under the Government Procurement Act 2025 to strengthen governance and ensure public expenditure is prudent, transparent and accountable.
He added that spending must be conducted efficiently and responsibly, consistent with Treasury Circular PB3.1 — the Public Expenditure Control Guidelines. - October 29, 2025
