10 October 2025, Kuala Lumpur – Budget 2026 charts Malaysia’s next phase of reforms by promoting inclusive growth and building capacity beyond resilience. The Budget demonstrates continued investment in strategic industries, social protection, and infrastructure, while maintaining a focus on long-term competitiveness and sustainable public finance.

Strong Alignment with Malaysia’s Reform Priorities

Industrial Transformation

‍Budget 2026 continues the national industrialisation agenda, guided by the National Industrial Master Plan (NIMP) 2030 and the National Energy Transition Roadmap (NETR). The mobilisation of domestic capital through Government-Linked Companies (GLCs) and Government-Linked Investment Companies (GLICs) to catalyse investment in various high impact sectors such as semiconductors, renewable energy, and Artificial Intelligence, is a welcomed support towards technological advancement.

Agriculture and Food Security

‍Budget 2026’s food security agenda takes an inclusive and comprehensive approach, moving beyond production to address equitable access, affordability, and nutritional well-being. The government’s allocations demonstrate an effort to strengthen the food system from farm to household. Measures such as Payung RAHMAH Programme and Ikhtiar Dapur MADANI reflect a maturing understanding of food security. By linking food assistance to nutritional outcomes and community well-being, the Budget moves closer to a food policy that not only feeds Malaysians but nourishes them.

Health and Well-being

‍The government’s continued commitment to quality, universal healthcare is commendable, reflected in increased investment in public healthcare infrastructure, measures to mitigate medical inflation, and improved workforce welfare. Excise duties on unhealthy products, such as tobacco and alcohol, demonstrate continued efforts to promote healthier lifestyles. KRI encourages that revenue from these duties be channelled more towards health promotion and preventive care. Prevention is better than cure.

Progress Achieved, but More Reform Needed

Social Protection and Care

‍KRI welcomes the reallocation of subsidy savings towards expanding social assistance, particularly through Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA). These measures demonstrate fiscal prudence and a clear effort to prioritise the welfare of low-income households. However, the government’s flagship programmes continue to target the ‘B40’ through hard income thresholds rather than addressing life-cycle risks. A more holistic approach is required. One that integrates social insurance, active labour market policies, and care infrastructure.

Climate and Industrial Financing

‍KRI supports the government continued steadfastness to invest in building resilience in the face of rising climate risks, with funding for flood mitigation and the NETR. However, the commitment to a carbon tax on energy may have inflationary spillovers that needs to be carefully managed.

Local Talent and Wages

‍The government’s focus on high-growth sectors and the expansion of Technical and Vocational Education and Training (TVET) talent development is encouraging. The strengthened collaboration between TVET institutions, universities, and industry partners can help ensure that training remains relevant to the evolving needs of priority sectors, and that graduates are better equipped for high-value employment. Yet, without parallel reforms in wage-setting, industrial upgrading risks proceeding without equivalent gains for local talent.

Conclusion

We commend the Government’s continued commitment to undertake reforms and strengthening the fiscal state of affairs. True resilience is not merely about enduring economic shocks. It is about emerging stronger and being more adaptive. Malaysia must now move beyond a defensive posture towards strategic, forward-looking efforts that would unlock its full potential on the journey to becoming a high-income nation.

In this effort, KRI stands ready to support the Government’s reform agenda through independent, evidence-based insights and constructive engagement. We hope to serve both as a partner in progress and a principled voice for accountability. Only through such balance can today’s resilience evolve into tomorrow’s shared prosperity.

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