ECKL and KSI leaders say the Budget must balance fiscal discipline, governance reforms and investment in future growth sectors
By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Sept 30 – Malaysia’s upcoming 2026 Budget must strike a fine balance between easing household burdens and driving long-term reforms, according to a joint statement by Datuk Seri Mohd Iqbal Rawther, Chairman of the Economic Club of Kuala Lumpur (ECKL), and Tan Sri Michael Yeoh, President of the KSI Strategic Institute for Asia Pacific (KSI).
“This Budget is a turning point,” the two leaders said. “The balancing act is delicate – to provide relief in a high cost-of-living environment without losing sight of long-term stability and reform.”
They stressed that credibility will depend not just on intentions but on consistent delivery. “Investors will be watching how subsidy savings are redeployed. Fiscal space must genuinely fuel development,” they added.
Datuk Seri Mohd Iqbal Rawther, Chairman of the Economic Club of Kuala Lumpur
Their views come ahead of Prime Minister Datuk Seri Anwar Ibrahim’s tabling of Budget 2026 in Parliament on October 10, under the official tagline “MEMACU EKONOMI MADANI: MEMPERKASA RAKYAT.”
This will be the fourth MADANI Budget, designed to advance the vision of Ekonomi MADANI: restoring fiscal resilience, strengthening economic foundations and uplifting the dignity and livelihoods of the rakyat.
As with earlier MADANI Budgets, the 2026 edition will continue to deliver on the three pillars: Raising the Ceiling of national growth, Raising the Floor of living standards, and Driving Reform, particularly in governance and institutional transparency.
Growth Prospects
Malaysia is projected to chart 3.8–4.6% growth in 2026, anchored by resilient domestic demand, infrastructure spending, and high-value sectors like digital services and advanced manufacturing. Upside potential lies in a stronger semiconductor cycle and tourism recovery, though global trade headwinds remain a risk.
Tan Sri Michael Yeoh, President of the KSI Strategic Institute for Asia Pacific.
Fiscal Discipline
The deficit is targeted at 3.4–3.6% of GDP, potentially as low as 3.3%. The government is relying on e-invoicing, tighter tax enforcement, and subsidy rationalisation. Development spending of about RM86 billion is expected, focused on infrastructure, healthcare, and education.
“Investors will be watching how subsidy savings are redeployed. Credibility depends on whether fiscal space truly fuels development,” Iqbal and Yeoh said.
Inflation Pressures
Headline inflation is forecast at 2.5%, though sticky costs in food, housing and services will continue to pressure households. Targeted relief will remain crucial.
Policy Pillars to Watch
- Subsidy rationalisation – recalibration of RON95 under BUDI95; potential reforms to electricity, water and food subsidies.
- Tax and compliance – higher excise duties, e-invoicing enforcement, and carbon pricing pilots.
- Governance reforms – Procurement Act, SOE Act, and stronger oversight of state-linked companies.
- Growth engines – AI, automation, renewables, transport infrastructure.
- Social inclusion – expanded cash aid, skills training, and rural development.
Winners and Losers
Beneficiaries: infrastructure, renewable energy, digital economy, and green finance.
Challenged sectors: energy-intensive manufacturers and subsidy-dependent firms.
Investor Signals
Ringgit – stabilisation possible with credible consolidation.
Rates – BNM may hold or trim OPR if growth softens.
Bonds – continued appetite for MGS and ESG-linked sukuk.
Equities – tilt toward infrastructure, renewables, and digital plays.
FDI – clarity on incentives and governance reforms will attract inflows.
Risks and Roadblocks
Execution gaps, political resistance to subsidy cuts, and global shocks remain risks. “Intentions are clear, but Malaysia’s credibility will be judged on delivery,” Iqbal and Yeoh cautioned.
The Big Picture
Budget 2026 is more than an annual fiscal plan. It is Malaysia’s economic reset button — a test of whether the government can ease household burdens while advancing structural reforms and long-term competitiveness under the banner of Ekonomi MADANI.
For businesses and investors, the message is clear: digitalisation, renewables, infrastructure, and inclusion will define the winners of tomorrow.
- TNS NEWS