Economist Shan Saeed says the RM470 billion spending plan balances fiscal discipline with inclusive, reform-driven growth under Anwar Ibrahim’s MADANI Government.
BY TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Oct 10 — Malaysia’s Budget 2026, tabled in Parliament this afternoon by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, signals a new phase of fiscal maturity and strategic renewal.
Valued at RM470 billion, the spending plan reflects a calibrated balance between prudence and progress, reaffirming the Government’s intent to build a resilient, reform-driven, and future-ready economy.
The fiscal deficit is projected to narrow to 3.5 percent of GDP, down from 3.8 percent in 2025, while economic growth is forecast to expand between 4.0 and 4.5 percent, supported by robust domestic demand, infrastructure modernisation, and digital transformation. Operating expenditure is set at RM338.2 billion, while development expenditure rises to RM81 billion, underscoring the Government’s commitment to long-term capital formation.
Shan Saeed – Budget 2026 reflects Malaysia’s steady transition from resilience to renewal, balancing fiscal discipline with digital and green transformation.
Shan Saeed, Global Chief Economist at Juwai IQI, spoke to TNS News when asked to comment on the 2026 Budget here, describing it as a reflection of Malaysia’s steady transition “from resilience to renewal.”
“Budget 2026 encapsulates Malaysia’s ambition to achieve equilibrium between fiscal prudence and economic dynamism,” he said. “Infrastructure investment has a direct correlation with GDP growth — and Malaysia is leading from the front in the ASEAN region.”
Shan described the shift toward targeted fuel subsidies, expected to save RM3–4 billion annually, as “intelligent consolidation,” allowing fiscal space to be redirected toward high-multiplier sectors such as infrastructure, digitalisation, and sustainability.
“Technology and productivity will go hand in hand over the next three to five years,” he noted. “Malaysia’s growth strategy is not just reactive but reform-anchored, reflecting foresight and fiscal discipline.”
Shan welcomed the Public Finance and Fiscal Responsibility Act (FRA) as a “structural inflection point” for Malaysia’s fiscal architecture, embedding transparency, quarterly disclosures, and a medium-term expenditure framework that institutionalises credibility and enhances investor confidence.
“Such consistency lowers risk premiums and reinforces confidence across bond, equity, and ESG markets,” he said. “It signals to global investors that Malaysia’s policy environment is predictable, transparent, and reform-oriented.”
The FRA’s implementation complements Malaysia’s governance agenda — anchored by Anwar’s zero-tolerance stance on corruption, which Shan describes as both “an ethical and economic imperative.”
“Integrity reduces capital costs, enhances sovereign credibility, and amplifies Malaysia’s value proposition as a transparent investment destination,” he added.
Budget 2026’s green orientation underscores Malaysia’s determination to embed sustainability at the core of its growth strategy. Allocations for renewable energy, electric-mobility ecosystems, and ESG-linked financing are designed to position Malaysia as a regional leader in the energy-transition value chain.
Analysts expect the RM87 billion development expenditure to catalyse projects in infrastructure, digital connectivity, and green industrial ecosystems, reinforcing Malaysia’s credentials as an ASEAN frontrunner in sustainable investment.
“The government’s clear direction on green transition provides visibility to investors. Sustainability is no longer peripheral — it is central to Malaysia’s economic identity,” Shan remarked.
On the technological front, allocations for AI incentives, GovTech integration, MyDigital ID, and fintech acceleration will enhance service efficiency and strengthen the digital economy.
“Malaysia’s competitive edge will no longer rest solely on cost,” said Shan. “It will increasingly be defined by digital velocity, institutional agility, and innovation capacity. These reforms are building the digital scaffolding for the private sector to scale and export competitiveness.”
Fiscal incentives such as the ASEAN Business Entity (ABE) status and the Investor Pass will streamline market entry and reduce regulatory friction, making Malaysia more attractive to multinational investors.
“Malaysia’s pragmatic policy continuity gives it a comparative advantage,” Shan said. “Over the next five years, the country could attract between USD3 to 5 billion annually in strategic FDI — particularly in semiconductors, clean energy, and digital services.”
Amid global headwinds — from tariff realignments to geopolitical fragmentation — Saeed said Malaysia’s Budget 2026 “positions the country as a resilient, reform-minded economy within the broader Asia-Pacific investment narrative.”
At its core, Budget 2026 reaffirms Malaysia’s confidence in its people, governance, and reform trajectory. It blends fiscal rectitude with development continuity, while embedding sustainability and digital innovation as central growth drivers.
“This Budget is not merely a fiscal document,” Shan concluded. “It is Malaysia’s strategic blueprint for inclusive prosperity — a declaration that governance, sustainability, and digital transformation can coalesce to secure long-term macroeconomic stability. I am buoyant on Malaysia’s economic outlook for 2026.”
As Malaysia steps into 2026, the message is clear: the nation is fiscally disciplined, structurally resilient, and resolutely forward-looking — prepared not just to recover, but to lead.
– TNS NEWS