This article is written by Shan Saeed, Global Chief Economist of Juwai IQI, who shares his expert insights on global economic trends.
A Budget to Reshape Business Priorities
Malaysia’s Budget 2026, to be unveiled on October 10, is poised to reshape business priorities by balancing subsidy rationalisation, new fiscal incentives, and regulatory reforms within a tightening global environment.
With GDP growth projected between 4.5% and 5.5%, the government aims to anchor sustainable expansion while containing the fiscal deficit to around 3.5% of GDP.
A disciplined trajectory compared with 5.0 % in 2022.
Redirecting Subsidies Toward Growth Sectors
The subsidy rationalisation programme, expected to save RM 10 – 12 billion annually, will redirect resources toward productivity-enhancing sectors such as digital infrastructure, renewable energy, and logistics modernisation.
Meanwhile, RM 3 – 4 billion in fresh tax incentives are anticipated for AI, semiconductor design, and green manufacturing, further aligning Malaysia with the ASEAN Digital Economy Framework 2030, projected to unlock US$2 trillion in regional digital value.
Corporate Transformation and Investment Outlook
For corporates, these measures are both transformative and testing. Rationalised energy subsidies could raise industrial operating costs by 5 – 8 %, pushing firms to accelerate efficiency and ESG adoption.
Yet, targeted R&D credits and capital allowance extensions could boost private-sector investment by an estimated RM25 billion in 2026, according to early analyst consensus.
Strategic Adaptation in a Changing Policy Landscape
In a climate where policy shifts can redefine business models overnight, clarity and engagement with regulators have become strategic imperatives.
Companies that pivot early investing in technology, energy efficiency, and transparent governance, will be the clear winners in Malaysia’s new growth architecture.
Allocative Precision for a Resilient Future
Ultimately, Budget 2026 is not about austerity; it’s about allocative precision. Reallocating capital from consumption to innovation, from dependence to competitiveness — positioning Malaysia as ASEAN’s most resilient mid-tier economy by 2027.
