Malaysia Budget 2026 Allocates RM470 Billion Public Funds

Malaysia has unveiled Budget 2026 with total public spending reaching RM470 billion, marking an increase from RM452 billion in 2025. Prime Minister Datuk Seri Anwar Ibrahim presented the budget on October 10, 2025, emphasizing fiscal discipline while expanding support for citizens through targeted subsidies and cash assistance programs.

The government projects economic growth between 4.0 and 4.5 percent for 2026, following an estimated 4.0 to 4.8 percent growth in 2025. The fiscal deficit is expected to decline to 3.5 percent, continuing the downward trend from 5.5 percent in 2022. Federal government revenue is projected to reach RM343.1 billion in 2026.

Operating expenditure will total RM338.2 billion while development expenditure is set at RM81 billion. Government-linked investment companies will contribute RM30 billion in investments, up from RM25 billion in 2025. Public-private investment partnerships will add another RM10 billion to the total spending package.

Cash assistance forms a major component of the budget with RM15 billion allocated for Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah programs benefiting nearly 9 million recipients. Eligible Malaysians aged 18 and above will receive a one-time RM100 SARA payment in mid-February 2026. Monthly SARA payments will continue with households receiving up to RM200 monthly while single recipients get RM50 monthly.

Civil servants will see significant benefits under the restructured salary scheme taking effect in January 2026. All civil servants in grade 15 and below including contract staff will receive a special financial assistance of RM500. Government retirees including pensioned and non-pensioned veterans will receive RM250. These payments will be disbursed in early March 2026.

Subsidy rationalization continues with targeted fuel subsidies saving approximately RM15.5 billion annually. The RON95 petrol subsidy targeting allows eligible citizens to enjoy prices at RM1.99 per liter saving at least RM2.5 billion. Over 10 million Malaysians are currently benefiting from the subsidized RON95 under the BUDI95 system. Diesel subsidies continue for public transport operators fishermen and certain logistics sectors.

Infrastructure development receives substantial allocations particularly for Sabah and Sarawak. Sabah gets RM6.9 billion in development allocation up from RM4.4 billion in 2022 while Sarawak receives RM6 billion compared to RM2.9 billion in 2022. Special grants to both states increase to RM600 million each from RM300 million in 2023. Highway projects including Pan Borneo totaling RM48 billion will proceed as scheduled.

The healthcare sector receives RM46.5 billion allocation increasing from RM45.3 billion in 2025. The government will offer permanent positions to 4,500 contract doctors in 2026 while 935 graduates from Health Ministry training institutes will receive permanent appointments. Medical consultation fees at private clinics are revised to between RM10 and RM80 from the previous RM10 to RM35 range.

Investment incentives focus on high-value sectors including semiconductors artificial intelligence and renewable energy. Government-linked companies will invest RM550 million in the semiconductor ecosystem while Bank Pembangunan Malaysia provides RM500 million in loans for high value-added activities. The Strategic Investment Fund totaling RM200 million will support small and medium enterprises through equity crowdfunding and peer-to-peer financing platforms.

Education receives continued priority with allocations for infrastructure upgrades and special needs education. The government will provide RM270 million in monthly allowances of RM150 for special needs students. A total of RM242 million is allocated for expanding special education facilities including two new special education schools and 35 additional blocks at existing schools.

Tourism promotion ahead of Visit Malaysia Year 2026 receives RM705 million including RM500 million for campaign activities. The government aims to attract 47 million tourists generating RM329 billion in tourism revenue. Various tax incentives are introduced for tourism operators including tax deductions for business premise renovations up to RM500,000.

Small and medium enterprise support includes RM30 billion in government guarantees through Syarikat Jaminan Pembiayaan Perniagaan with RM10 billion specifically reserved for Bumiputera entrepreneurs. Multiple financing schemes from various institutions provide accessible capital with interest rates as low as 4 percent for micro and small businesses.