SHAH ALAM – Economists expect nine key areas to take centre stage in Budget 2026, which will be tabled in the Dewan Rakyat today.
Putra Business School economist Professor Dr Ahmed Razman Abdul Latiff said the government is likely to maintain an expansionary spending approach while continuing efforts to reduce the fiscal deficit.
He said the projection was based on confidence in government revenue collection through new taxes and the retargeting of fuel subsidies.
“The government is also expected to reduce development spending to avoid taking on excessive new debt.
“However, the focus will remain on key sectors, with education likely to receive the highest allocation, followed by healthcare.
“As this is the first budget under the 13th Malaysia Plan (13MP), many initiatives are expected to align with its indicative goals, focusing on digital transformation, green energy and technological innovation,” he told Sinar Harian.
Razman added that the most important initiative would be those aimed at improving citizens’ quality of life through better job opportunities and more competitive wages.
He said cash assistance schemes such as Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara) could be increased to around RM15 billion to RM16 billion, funded through savings from fuel subsidy rationalisation.
“With the diesel subsidy transition, government revenue reached RM4 billion earlier this year and STR and Sara allocations amounted to RM3 billion.
“I believe the RON95 transition could generate another RM4 billion and next year the government could save around RM8 billion to RM10 billion from both transitions.
“With that, I expect cash assistance allocations for the people to be increased,” he said.
He added that Sabah and Sarawak were expected to receive higher allocations to strengthen rural development and basic infrastructure.
When asked whether the government would expand subsidy targeting or focus on enforcement to prevent leakages, Razman said both measures would happen simultaneously.
Meanwhile, Universiti Teknologi Mara’s Economics and Financial Studies Department senior lecturer Dr Mohamad Idham Md Razak said Budget 2026 was expected to emphasise social resilience through allocations for affordable housing, mental health and elderly care.
“In addition, the government may introduce tax incentives for companies investing in local worker training or low-carbon technology, in line with Malaysia’s aspiration to achieve carbon neutrality by 2050.
“The government is also expected to invest in human capital through Science, Technology, Engineering and Mathematics (STEM) education and skills training,” he said.