Malaysia Budget 2026: Key Highlights, Beneficiaries & Spending

Malaysia Budget 2026, tabled on 10 October 2025, allocates RM419.2 billion to rakyat welfare, targeted subsidies and cash aid, keeps income tax unchanged, and uses measures and subsidy retargeting to support 4.0 to 4.5 growth.

Key takeaways

• STR and SARA continue with higher annual aid, plus a one off RM100 for all adults, prioritising B40 households.
• Childcare, disabled child support, insurance, vaccination, tourism and green home purchases get expanded tax reliefs for B40 and M40.
• Gig and informal workers gain i-Saraan Plus EPF matching, subsidised SOCSO coverage and wider access to TVET based training.
• Targeted subsidies keep RON95 and key diesel uses affordable, while boosting support for paddy farmers, smallholders and fishermen's incomes.
• MSMEs receive large loan and guarantee schemes, automation and AI incentives, and benefit from mandatory e invoicing and digital tax stamps.

Malaysia Budget 2026 – Key Beneficiaries

Tax Updates and Individual Tax Reliefs

Budget 2026 does not introduce new broad-based taxes. Instead, the focus is on improving enforcement through nationwide e-invoicing, digital stamp duties, and stronger anti-smuggling measures. For individuals and households, several tax reliefs were expanded and new incentives introduced.

1. Excise Duties on Cigarettes, Vaping Products and Alcohol

Excise duties were increased to support public health and strengthen revenue.

• Cigarette duty increased by RM0.02 per stick.
• Loose tobacco, including materials used in vape products, increased by RM20 per kg.
• Cigar duty increased by RM40 per kg.
• Alcoholic beverages saw a 10% excise duty increase.

These adjustments aim to reduce consumption of harmful products and provide additional funding for national health programmes.

2. Childcare and After-School Care Relief

The childcare fee relief remains at RM3,000 per year, but coverage has been expanded. It now includes registered daycare and after-school centres for children up to 12 years old instead of only for children aged 6 and below. This supports working parents who require transit or after-school supervision for primary-school-aged children.

3. Support for Disabled Children

The tax relief for expenses related to education, therapy and care for children with disabilities has been increased from RM6,000 to RM10,000 per year. This recognises the higher long-term commitment required for special-needs support.

4. Life Insurance and Takaful

The RM3,000 relief for life or takaful insurance premiums is expanded to include policies purchased for children. Parents who pay for life, education or protection plans for their children may now claim these premiums under the existing relief.

5. Vaccination Expenses

The tax relief for vaccinations, previously limited to a list of specific vaccines, is expanded to cover all vaccines approved by the National Pharmaceutical Regulatory Agency. This includes routine immunisations, travel vaccines and annual boosters.

6. Domestic Tourism Relief

A new personal tax relief of up to RM1,000 is introduced for entrance fees to local tourist attractions and cultural performances. This supports domestic tourism ahead of Visit Malaysia Year 2026.

7. Environmental and Home-Safety Purchases

The lifestyle-related relief of RM2,500 is extended to include:

• Food-waste composting or grinding machines
• Home CCTV and security systems

This is available for the years of assessment 2026 and 2027, with a combined maximum claim of RM2,500 once within the two-year period.

8. Stamp Duty for Homebuyers

The full stamp duty exemption on transfer and loan documents for first-time homebuyers purchasing properties priced up to RM500,000 is extended until 2027. This reduces upfront costs for Malaysians entering the housing market.

For non-citizens, stamp duty on property ownership will now follow a tiered structure between 4% and 8%, replacing earlier preferential tiers.

9. Incentives for Education, Social Enterprises and Tourism

• The income tax exemption for certified social enterprises is extended until 2028.
• Tourism operators may claim deductions of up to RM500,000 for renovation and refurbishment of their premises to strengthen the sector for 2026 and beyond.

10. Encouraging Housing Supply Through Building Conversion

A special income tax deduction of 10% (capped at RM10 million) is provided to developers or building owners who convert commercial buildings into residential units. This encourages the repurposing of underutilised commercial spaces into housing.

11. No Changes to Income Tax Rates

Personal income tax brackets and rates remain unchanged for 2026. The government expects higher revenue through stronger enforcement and digitalisation rather than through raising tax rates. Full e-invoicing beginning 2026 and the move to stamp-duty self-assessment are expected to reduce under-reporting and strengthen compliance.

12. Corporate and Investor Incentives

To support innovation and economic growth, several targeted incentives were introduced or expanded:

• Venture capital companies will be taxed at 5%, and venture capital management companies at 10%. Dividends from venture investments received by individuals will be tax-exempt.
• Companies undertaking food-production projects may receive up to 100% income tax exemption for up to 10 years. Expansion projects may qualify for a 5-year exemption.
• Firms installing locally produced green-technology equipment certified under MyHIJAU may claim a 100% Green Investment Tax Allowance.

Subsidies and Cost of Living Support

Budget 2026 places strong emphasis on easing living costs, especially for low- and middle-income households. Most measures focus on direct cash assistance, controlled prices for essential goods and continued aid for groups most affected by rising costs.

1. Cash Assistance for B40 and Vulnerable Groups

The Sumbangan Tunai Rahmah (STR) programme continues in 2026 for about nine million eligible Malaysians. Payments vary depending on household income, number of children and category (households, senior citizens, single individuals).

To strengthen support, the government is also expanding the Sumbangan Asas Rahmah (SARA) programme. All STR recipients will receive a fixed SARA top-up each month. Low-income households in the national poverty database receive the highest level of support, at up to RM200 a month. Single individuals with low income also qualify for monthly assistance. For many households, the combination of STR and SARA significantly boosts annual cash aid.

2. One-Off RM100 to All Adults

To ensure every adult citizen benefits from the budget, the government will provide a one-time RM100 payment to Malaysians aged 18 and above. This nationwide payout acts as a general cost-of-living support, including for youths and individuals who may not qualify for STR.

3. Early Disbursement of Final 2025 STR

The final STR payment for 2025 was brought forward to October to help families prepare for the year-end festive period. This early release ensures that lower-income households receive financial relief at a crucial time.

Subsidies on Essential Goods and Services

The government is maintaining several major subsidies to keep daily expenses manageable.

1. Fuel and Energy

Fuel subsidies continue, particularly for lower-income groups and sectors that depend on diesel. Fishermen are assured a fixed diesel price of RM1.65 per litre, helping stabilise seafood prices. Rural Air Services in Sabah and Sarawak will continue receiving subsidies to keep air travel to remote areas affordable. Work on a database for targeted fuel subsidies is ongoing to ensure that future assistance reaches the right groups.

2. Rice, Agriculture Inputs and Food Supplies

Allocations continue for ensuring stable supply and prices of rice and other essential items. While detailed amounts differ by programme, the support includes subsidies for farmers’ fertilisers and seeds, income support for paddy farmers, and other agriculture inputs that indirectly keep food prices under control.

3. Electricity

Although the budget does not announce new tariff reductions, ongoing support mechanisms for lower-usage households are expected to continue so that electricity prices remain stable for lower-income groups.

4. Transporting Essentials to Sabah and Sarawak

A dedicated allocation is provided to reduce the cost of transporting key goods such as food staples and cooking gas to rural and remote parts of Sabah and Sarawak. This measure is crucial for price stability in East Malaysia, where transport costs are typically higher.

5. Support for Civil Servants and Pensioners

A one-off financial assistance will be given to civil servants (Grade 56 and below) and government retirees. This helps cushion rising living expenses and is timed before major festive seasons. Additionally, retirees under certain community service schemes will see an increase in their monthly cost-of-living allowance.

6. Support for Farmers, Smallholders and Fishermen

A substantial allocation targets the agriculture and fisheries sectors to improve income stability and food production.

Paddy farmers receive higher total support per hectare through fertiliser subsidies, guaranteed prices and income supplements. Smallholders from the palm oil, rubber and cocoa sectors receive funding for replanting and for obtaining high-quality seedlings. Fishermen continue to receive a monthly living allowance and benefit from subsidised diesel prices. Additional grants support the upgrading of fishing vessels to improve safety and efficiency.

7. Continuation of MySalam Health Protection

The mySalam health protection scheme for B40 households continues in 2026, offering financial support for hospitalisation and critical illnesses. This ensures that lower-income families maintain access to basic health coverage without added financial strain.

8. Vehicle Scrapping Incentive

To help Malaysians replace ageing vehicles, the budget introduces a matching grant of up to RM4,000 when scrapping a vehicle older than 20 years and purchasing a new national car. This reduces the upfront cost of getting a safer and more efficient vehicle.

9. Highway Toll Discount

In conjunction with the Deepavali festive season, a temporary 50% toll discount was offered across highways. While limited in duration, it reflects the government's broader effort to reduce travel costs during peak periods.

Incentives for B40 and M40 Groups

Supporting the B40 (Bottom 40% income earners) and M40 (Middle 40%) is a major theme of Budget 2026. Many measures overlap with the cost-of-living aids above, but here we highlight how the budget specifically benefits these income groups:

1. Enhanced Cash Support for B40

B40 households receive the largest share of STR and SARA assistance. The addition of monthly SARA support raises total annual aid for families, single parents, senior citizens and single individuals. Families with children receive the highest combined assistance.

2. One-Off Aid for M40

All adults, including the M40, receive a one-off RM100 to offset rising costs. M40 households also benefit from expanded tax reliefs for childcare, insurance and lifestyle expenses, which reduce taxable income and increase net savings.

3. Education Support

Every student in government schools receives RM150 in Back-to-School assistance.
For higher education, top B40 students can enter public universities without loans, and PTPTN borrowers who graduate with first-class honours have their loans fully waived.

4. Housing and Homeownership

B40 and M40 first-time homebuyers continue to receive stamp duty exemptions on affordable homes.
Civil servants benefit from higher LPPSA loan limits of up to RM1 million, supporting home upgrades or purchases as property prices rise.

5. Income Opportunities and Community Programmes

RM1 billion under Ikhtiar MADANI funds income-generating projects run by local communities, such as small farms, food production and micro-business activities.
Young entrepreneurs gain access to low-interest loans and training through BSN and SME Corp programmes, supporting business creation among B40 and M40 youth.

6. Improvements to Public Services

Significant allocations enhance hospitals, clinics, schools and public facilities. These improvements benefit B40 and M40 households that rely heavily on public healthcare and education.

7. Worker Welfare

Existing wage support programmes continue, including hiring incentives for employers who recruit B40 jobseekers and persons with disabilities. Minimum wage protections remain in place.

8. Support for Gig Workers and Informal Sectors

Budget 2026 places strong emphasis on strengthening social protection for gig workers and those in the informal economy. This group includes e-hailing drivers, delivery riders, freelancers, self-employed individuals, and small traders. The government aims to improve their financial security, safety, and long-term income prospects.

Enhanced EPF Contributions Through i-Saraan Plus

Gig workers often lack employer-supported retirement savings. Budget 2026 introduces the improved i-Saraan Plus scheme, where the government matches voluntary EPF contributions up to RM600 per year with a lifetime limit of RM6,000. This helps gig workers grow their retirement savings more quickly.

The existing i-Saraan programme continues and provides up to RM500 in annual matching for informal and self-employed contributors such as small traders, taxi drivers, freelancers, and home-based workers.

1. SOCSO Coverage for Gig Workers

The Gig Workers’ Social Security Bill requires certain gig platforms to register their workers with SOCSO for injury and invalidity protection. To ease the transition, the government subsidises 70 percent of SOCSO contributions in the first year and 50 percent in the second year. This ensures gig workers gain social security coverage while keeping their early contribution costs manageable.

2. Support for Informal Workers

Informal workers continue to receive support through ongoing retirement schemes. Under i-Suri, homemakers can contribute to EPF until age 60. Informal sector earners also remain eligible for i-Saraan matching contributions of up to RM500 per year.

3. Skills Training and Upskilling Programmes

Budget 2026 expands skills training to help gig workers and informal earners improve their income potential.

Key training-related measures include:

• GiatMARA Training: More than 13,000 individuals will receive vocational training to improve employability.
• HRD Corp Opportunities: Millions of training places will be available in digital, energy and high-tech fields.
• TVET Expansion: Increased funding strengthens technical and vocational colleges, making skills certifications more accessible for vulnerable groups and informal workers.

4. Entrepreneurship and Income Support

Many informal workers operate micro-businesses. Budget 2026 expands financing and support programmes that help them start or grow small enterprises.

Key entrepreneurship measures include:

• Microfinancing: Over RM2.5 billion in micro-loans through BSN and TEKUN.
• Cooperative Financing: RM50 million to support community-based cooperative ventures.
• Support for Delivery Riders: Assistance for low-income youths to obtain B2 motorcycle licences so they can work legally in delivery services.

5. Strengthened Legal Protections

Budget 2026 includes reforms that indirectly benefit gig and informal workers. Consumer protection laws will be strengthened, including the introduction of a Lemon Law to protect buyers from defective products. Planned enhancements to digital identification systems and cybersecurity laws also help protect freelancers and gig workers who operate in digital environments.

Education, Childcare and Healthcare Allocations

Budget 2026 places strong emphasis on education, childcare and healthcare, reflecting the government’s commitment to long-term human development and improving everyday living standards.

1. Education Allocation

The Education Ministry receives RM66.2 billion, making it the largest allocation in the entire budget. This covers the daily operation of public schools and funds several key development projects.

• Upgrading Schools: Almost RM2 billion is reserved to renovate and rebuild more than 520 dilapidated schools, particularly in Sabah and Sarawak. Another RM100 million goes toward expanding classrooms in over 100 overcrowded schools. RM100 million is also provided to build 350 new preschool classes to increase access to early childhood education, especially in underserved communities.
• Student Aid: Every child in public school will continue receiving the RM150 Early Schooling Aid. This benefits more than five million students and eases the financial burden of items like uniforms and school supplies at the start of each academic year.
• Technical and Vocational Training (TVET): TVET is strengthened with RM7.9 billion for skills institutes, vocational colleges and polytechnics. Additional funding is channelled toward high-tech and digital training through the National TVET Council and HRD Corp, supporting youths and mid-career workers who need upskilling.
• Higher Education: The Higher Education Ministry receives RM18.6 billion to fund public universities, community colleges and scholarships. Over RM400 million is allocated to upgrade university facilities, including laboratories, hostels and lecture halls. PTPTN initiatives continue, including first-class loan waivers and targeted sponsorship programmes for low-income students.
• Free Education Scheme: A dedicated RM120 million per year is used to fully fund university education for 5,800 students from low-income families who meet academic requirements.

2. Childcare and Early Childhood Support

Recognising the rising cost of childcare and its impact on working families, several measures are introduced.

• Childcare Tax Relief: Parents can now claim childcare fee relief until their children reach age 12, instead of age 6 previously. This reflects the real cost of after-school care for primary school children.
• Expansion of Preschools: RM100 million is allocated to build 350 new preschool classes, primarily attached to national schools, to expand access to quality early education.
• Support for KEMAS and TABIKA: Funding continues for community preschools under rural and unity ministries. The increase in KEMAS contract staff allowance signals ongoing investment in childcare and early learning services in rural and low-income areas.

3. Healthcare Allocation

The Health Ministry receives RM46.5 billion, continuing an upward trend in healthcare funding. This supports hospital operations, public health programmes and the country’s ongoing effort to strengthen healthcare capacity.

• Hospital and Clinic Upgrades: RM1.2 billion is earmarked for repairs and maintenance across government hospitals and clinics. This includes upgrading equipment, improving building conditions and refurbishing patient facilities.
• Community Specialist Services: RM30 million is allocated to enable selected government clinics to provide specialist services at the community level, reducing the need to travel to major hospitals for certain treatments.
• More Permanent Doctors: 4,500 contract medical officers will be absorbed into permanent positions in 2026, improving staffing stability in public hospitals. The increase in on-call allowance for medical officers helps retain talent and improve working conditions.
• Healthcare Access for Low-Income Groups: The mySalam protection scheme continues for the B40 group. Private hospitals will also be encouraged to establish tax-exempt Hospital Welfare Funds to assist underprivileged patients, supported by tax-deductible donations.
• Public Health Initiatives: Part of the revenue from higher tobacco and alcohol duties will support national programmes on lung health, diabetes and cardiovascular disease. Essential rural healthcare services such as mobile clinics and flying doctor services continue to operate.
• Preventive Healthcare: Tax relief for vaccinations is expanded to cover all vaccines approved by the national regulatory authority. This encourages more Malaysians to stay protected through immunisation.

4. Other Social Support Initiatives

Several allocations support social well-being beyond education and healthcare.

• Mental Health and Special Needs: The government will introduce a tokenised cash waqf sukuk to channel public contributions into autism intervention centres, palliative care and other social support infrastructure.
• Youth and National Identity: RM55 million is provided for unity and youth identity programmes. The National Service programme will be relaunched with a substantial budget, and youth development programmes such as Rakan Muda will receive continued support to strengthen community engagement and leadership among young Malaysians.

Measures to Support MSMEs and Businesses

Micro, Small and Medium Enterprises (MSMEs) are the backbone of Malaysia’s economy. Budget 2026 introduces several measures to help businesses access financing, lower operational costs, embrace digitalisation, and expand into new markets. These measures aim to strengthen business resilience, encourage innovation, and support long-term growth.

1. Access to Financing

The Government is expanding the availability of affordable financing to ensure entrepreneurs have the capital needed to operate and grow.

• Loan Facilities and Credit Guarantees: A total of RM50 billion in low-cost loans and guarantees will be made available through development banks and agencies. BSN and TEKUN Nasional will provide more than RM2.5 billion in microfinancing, giving small traders and micro enterprises easier access to funds.
• Syarikat Jaminan Pembiayaan Perniagaan (SJPP): SJPP will allocate RM5 billion to guarantee up to 70% of bank loans for export-oriented mid-tier companies. The guarantee scheme for halal industry financing will be doubled to RM2 billion. These guarantees reduce risks for banks and help businesses secure loans more easily.
• EXIM Bank Soft Loans: RM500 million in soft loans will be provided to exporters facing challenges from global trade tensions. This helps affected companies diversify markets or upgrade operations to remain competitive.
• Support for Bumiputera Entrepreneurs and Cooperatives: MARA will upgrade hundreds of business premises to support thousands of Bumiputera entrepreneurs. An additional RM50 million will support cooperatives, helping strengthen community-based business activities.

2. Tax Incentives and Cost Relief

Budget 2026 includes several tax-related measures designed to cut costs and promote business expansion.

• Listing and Investment Incentives: Tax deductions for eligible listing expenses of up to RM1.5 million are extended to 2030. The Outcome-Based Incentive Framework will be fully implemented in 2026, allowing companies to earn tax benefits when they achieve performance targets such as higher exports or increased automation.
• Reduced Hiring Costs: Employment contracts for salaries up to RM3,000 per month will now be exempt from stamp duty. This removes a cost barrier for businesses hiring lower- and mid-income workers.
• Training and Upskilling Deductions: Businesses investing in certified Artificial Intelligence and cybersecurity training can claim an additional 50% tax deduction. This encourages MSMEs to upgrade digital skills and stay competitive.
• Tax Deductions for Community Contributions: Contributions by companies and individuals to approved programmes related to education, welfare, community development and poverty alleviation will be eligible for income tax deductions. This supports corporate social responsibility efforts.

3. Support for Digitalisation and Technology Adoption

Digital transformation is essential for business productivity. Budget 2026 allocates targeted support to help MSMEs adopt new technologies.

• Malaysia Digital Acceleration Grant: RM53 million will support the adoption of advanced technologies such as AI, blockchain and quantum computing. This enables businesses to modernise operations, enhance efficiency, and prepare for future digital needs.
• Support for Startups: Cradle Fund will receive RM55 million to implement equity investment programmes and expand innovation workshops. This will give Malaysian startups greater access to early-stage funding, market insights and mentorship.
• Improved Digital Infrastructure: Large investments in national connectivity—including a new submarine cable system, expansion of broadband coverage, and development of national AI cloud infrastructure—will improve internet reliability and enable rural and urban SMEs to operate digitally with ease.

4. Sector-Focused Growth Measures

Several strategic sectors will receive targeted support to stimulate innovation and drive long-term economic transformation.

• High-Impact Industries: RM180 million will be allocated for industrial development in sectors such as pharmaceuticals, semiconductors, digital technology, artificial intelligence and green industries.
• Semiconductor Development: A significant investment of RM550 million from key government investment agencies will strengthen Malaysia’s semiconductor ecosystem. This includes initiatives to support chip design, manufacturing, and tech startups in the semiconductor space.
• Domestic Investment Boost through GLICs: Government-Linked Investment Companies will increase domestic investments to RM30 billion in 2026. This ensures robust capital infusion into local projects, benefitting SMEs, startups and larger industries.
• Bumiputera Entrepreneur Development: RM40 million will be dedicated to supporting high-potential Bumiputera companies, helping them scale up operations and compete regionally.
• Export Market Expansion: RM60 million will be provided under the Market Development Grant to assist SMEs entering non-traditional export markets such as Africa, Central Asia and Latin America.

5. Infrastructure Development Supporting Businesses

Better infrastructure reduces business costs and improves reliability in operations.

• Water and Utilities Upgrades: A five-year RM13 billion investment will enhance water treatment and distribution systems. RM3 billion will be used to replace ageing pipes across several states, reducing disruptions for industrial and commercial users.
• Transport and Connectivity Enhancements: Improvements in roads, logistics infrastructure and digital connectivity help businesses move goods more efficiently, reach customers faster, and operate across wider markets.

Digitalisation, ESG and Investment Initiatives

Budget 2026 places strong emphasis on building a digital, innovative and sustainable economy. These measures aim to modernise public services, strengthen governance, attract investments, and accelerate the shift to a greener future.

1. Digital Transformation and Public Sector Modernisation

Malaysia is pushing forward with major digital reforms that affect businesses and the public.

• Mandatory e-Invoicing by mid-2026: All businesses will transition to e-Invoicing, meaning invoices must be issued electronically through the national system. This improves tax compliance, reduces fraud, and encourages even small businesses to digitise their operations.
• Digital tax stamps for goods: Digital tax stamps will be introduced to replace traditional excise stamps. These help reduce counterfeiting and leakages at entry points.
• Digitalisation of government services: A dedicated task force is funded to digitalise public service processes. This includes faster approvals, less paperwork and more online government interactions for citizens and businesses.
• Expansion of MyDigital ID: Malaysia’s national digital identity system will be adopted across key sectors such as banking, telecom, e-commerce and healthcare. This will make digital authentication easier, safer and more uniform nationwide.

2. Improving Internet Access and Digital Infrastructure

Internet availability and connectivity are central to Malaysia’s digital ambitions.

• Madani Submarine Cable (SALAM): A large-scale submarine cable project will connect Peninsular Malaysia with Sabah and Sarawak, greatly increasing bandwidth and internet reliability for East Malaysia.
• Broadband upgrades under JENDELA 2: New fibre access points and expanded coverage will reach thousands of new locations, especially underserved rural and semi-urban areas. This allows more families, students and small entrepreneurs to participate in the digital economy.
• Government-supported AI cloud infrastructure: Investment into a sovereign AI cloud will provide local infrastructure for data processing, research and AI development. This supports home-grown AI startups and ensures sensitive data stays within Malaysia.

3. High-Technology, Industry 4.0 and Innovation Investments

Budget 2026 directs significant resources into growing advanced industries.

• Funding for strategic sectors like semiconductors and AI: Allocations continue to support semiconductor development, artificial intelligence, and other high-value technology industries. These funds help Malaysia compete in high-tech manufacturing and R&D.
• Modernisation of agriculture: Investment is also channelled into adopting modern technology in agriculture, including automation, drones and smart farming solutions to raise productivity.
• Regional business facilitation: The government will introduce the ASEAN Business Entity (ABE) status to support companies expanding across Southeast Asia. Investor-focused passes and talent visas will also make it easier for professionals and investors to operate in Malaysia.

4. Green Economy and ESG Initiatives

Malaysia continues its transition toward sustainable development.

• Introduction of Carbon Tax in 2026: The carbon tax will begin with high-emission industries such as iron, steel and power generation. It encourages companies to reduce emissions and shift to cleaner technologies, aligning Malaysia with international climate standards.
• Green financing support: Green Technology Financing Scheme (GTFS) 5.0 will offer loans and guarantees for renewable energy, clean transport, waste management and energy-efficient projects. This lowers capital barriers for businesses investing in green solutions.
• Renewable energy expansion: The National Energy Transition Roadmap (NETR) will continue with support for solar farms, battery storage, hydrogen projects and large-scale renewable energy programmes. Additional quota for renewable energy generation has been released to encourage new installations.
• Cross-border green electricity integration: Malaysia’s utilities are working with regional partners on international power links that enable the import and export of renewable energy. This diversifies the country’s clean energy sources and strengthens energy security.
• Support for conservation and waste reduction: Funds are allocated for state-level conservation efforts such as reforestation. Personal tax relief will now include home-use food waste management equipment, encouraging responsible waste handling.
• ESG support for SMEs: To help smaller businesses meet global ESG standards, the government is preparing simplified frameworks and tools so MSMEs can comply with environmental and social requirements demanded by international buyers.

5. Sustainable Transport and Low-Emissions Mobility

Transport plays a key role in Malaysia’s ESG progress.

• Vehicle scrapping incentive: A cash incentive is available for individuals who scrap old vehicles and purchase new ones, supporting safer and more fuel-efficient cars on the road.
• Support for taxis and e-hailing drivers: Tax exemptions continue for drivers buying new locally manufactured vehicles, helping them adopt modern, more efficient models.

6. Governance Strengthening and Anti-Corruption Efforts

A strong governance framework complements Malaysia’s ESG commitments.

• Increased funding for key enforcement agencies: Agencies such as MACC, the Royal Malaysian Police and other regulators receive allocations to improve equipment, training and enforcement capabilities.
• Consumer protection enhancement: Updates to consumer protection laws, including the introduction of “Lemon Laws”, will provide stronger rights and safeguards for buyers of defective products.
• Strengthening Parliament and oversight bodies: Additional resources are allocated to parliamentary committees and oversight institutions to improve transparency, accountability and public trust.

Major Government Spending Areas and Macroeconomic Outlook

Malaysia’s Budget 2026 focuses on balancing immediate household support with long-term fiscal responsibility. The government maintains an expansionary stance to sustain growth while gradually reducing the deficit under the Fiscal Responsibility Act. The following sections summarise the main components of spending and key macroeconomic expectations for 2026.

Conclusion on the Economic Outlook

Overall, Budget 2026 aligns with the long-term principles of the Ekonomi MADANI framework, which aims for a more innovative, sustainable and equitable economy. The direction is steady and focused on execution rather than drastic policy shifts. 

Success will depend on effective implementation, timely project delivery and disciplined fiscal management. The government has strengthened oversight mechanisms to support these goals and ensure public funds translate into meaningful outcomes for the rakyat.