Professor Geoffrey Williams says Budget 2026 is fiscally disciplined and sound but offers limited relief for the public.
BY TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Oct 12 — Budget 2026, tabled by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, marks a shift toward fiscal discipline and technocratic management, with a focus on efficiency over populism.
Valued at RM419.2 billion, the Budget is lower than last year’s allocation — a surprise move that reflects fiscal restraint and the government’s intention to spend smarter through subsidy rationalisation and targeted development.
“The overall budget is lower than last year at RM419.2 billion. This is a surprise but reflects fiscal discipline and the possibility to keep spending within a lower budget due to savings primarily from subsidy rationalisation,” said Professor Geoffrey Williams, Founder and Director of Williams Business Consultancy Sdn Bhd, when speaking to TNS News.
Williams described the deficit target of 3.5 percent as achievable and the growth forecast of 4.0–4.5 percent as realistic — closer to Malaysia’s actual potential rather than politically inflated expectations.
“The growth forecast is more sensible and closer to the underlying potential of the economy,” he said.
Fiscal Tightening and No New Tax Burdens
He noted that the RM15.5 billion in savings from subsidy reforms, while slightly below the earlier projection of RM17 billion, helps reduce pressure for new taxes.
“The savings can be reallocated, thus avoiding new taxes and easing fiscal pressure,” Williams said, adding that the only new levy — the carbon tax — is “unnecessary.”
“We must remember the hike in SST last year that will raise RM10 billion in 2026. So, there is no need for new taxes,” he said.
Strategic Investment, Measured Intervention
Williams said the heavy allocations to semiconductors, clean energy, and digital infrastructure are consistent with previous government blueprints — including the National Semiconductor Strategy (NSS), National Energy Transition Roadmap (NETR), and Malaysia Digital Economy Blueprint (MDEB).
“It is expected but it remains to be seen whether such high government interference will crowd in or crowd out private investment,” he said.
He described Budget 2026 as technocratic and sound from an economist’s standpoint, but noted that it lacked a strong people-focused component.
“This was a technocratic budget, good from an economic perspective in terms of fiscal management, but it was not a people-friendly budget with no obvious handouts in priorities such as health, education, and social protection,” he said.
Social Spending and Public Services
Williams said that while the Health Ministry’s allocation increased, it still “falls behind health price inflation,” forcing continued austerity and efficiency drives.
He welcomed the government’s initiative to provide free education for students from households earning below RM2,700, but described it as too limited.
“There was scope to provide free education to everyone,” he said.
He added that the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) programs — now extended to nine million recipients — were steps in the right direction, though the unchanged payout rates suggested cautious generosity.
“Another universal payment will be made in February, and this signals more of these during the year. These are small steps toward a universal basic income (UBI),” Williams observed.
However, he noted there was no clear strategy to address the pensions crisis or the need for sustained income growth.
Targeted Development, Fewer Patronage Projects
Williams commended the Budget’s development priorities, noting a welcome shift away from wasteful spending patterns.
“Although there was the usual long list of projects, what was unusual is that these are much more focused on government priorities rather than unnecessary ‘boys’ toys’ projects often seen in the past,” he said. “This is very positive and signals fewer patronage cascades.”
He also praised the government’s recovery of RM15.5 billion in stolen public funds, calling it “a strong moral statement” consistent with Anwar’s message of reform and accountability.
Red Flags and Missing Links
Still, Williams warned of three “red flags” — the MCMC sovereign cloud initiative, which he said could restrict private-sector innovation; the new TVET Council, given the underperformance of past skills programs; and the lack of measures to raise incomes or address cost-of-living pressures.
“So technically sound and good for economists, but very little for the general public in terms of raising incomes,” he concluded.
A Budget of Restraint, Not Redistribution
For Williams, Budget 2026 succeeds in tightening governance and improving fiscal management, but falls short in addressing everyday challenges faced by Malaysians.
“It’s a disciplined, technocratic budget — competent, clean, but cautious,” he said — one that restores fiscal credibility yet leaves room for more inclusive ambition in the years ahead.
– TNS NEWS