SHAH ALAM - The government appears to be more focused on building long-term national capacity while still addressing near-term social needs, a clear signal that Malaysia is entering a new phase in its economic journey.
Economists said the 2026 Budget marked a shift from short-term cushioning to deeper structural reforms, aiming to strengthen the country’s foundations while maintaining people-centric policies.
O2 Research chief researcher Anis Anwar Suhaimi said the latest fiscal plan reflected a maturing approach to nation-building.
"The earlier budgets were designed to provide fiscal cushioning in uncertain times, but this one signals a shift towards structural adjustment. What I see is an effort to strengthen both economic foundations and public trust,” he told Sinar Daily.
He added that the budget recognised that economic growth must be inclusive and fair.
Instead of only expanding the economy, he said this budget was beginning to ask deeper questions about who benefits from that growth and how it can be sustained over time.
He also highlighted the stronger link between investments and the well-being of Malaysians.
He said the focus on attracting quality investments in semiconductors, green energy and digital sectors was important, but what was even more important was ensuring these industries created better jobs for the local workforce.
"When public resources are tied to measurable outcomes like skills training, wage progression or vendor development, the benefits of investment can be felt more widely.
"This is a shift away from seeing investment purely as capital inflow and towards treating it as a lever to upgrade our people and our economy," he added.
He said the government appeared to be striking a delicate balance between fiscal discipline and social support.
"The decision to maintain targeted subsidies and expand social support, while introducing modest revenue measures, shows an awareness of both fiscal and social pressures. The approach avoids sudden shocks to the economy but still signals that we cannot continue with business as usual," he said.
Universiti Malaya Faculty of Business and Economics, Research and Innovation Deputy Dean Professor Dr Izlin Ismail shared a similar view, saying the 2026 Budget was both people-friendly and strategically forward-looking.
"The allocation for 2026 is higher than 2025, but it still achieves a lower budget deficit. Plugging leakages and channeling funds back to people via targeted handouts will help households cope with cost of living issues.
"This budget is people-friendly, with some new incentives for businesses. Efficiency improvement, if successful, will lead to more tax collection without introducing new taxes," she said.
Izlin also pointed out key development priorities, including major infrastructure investments such as the undersea cabling project to East Malaysia, aimed at improving internet access and digital inclusivity.
She said Malaysia’s growth in 2026 will likely be driven by domestic consumption and government expenditure, compensating for slower private investment and export performance.
"Direct handouts to consumers are being used instead of broad tax cuts to sustain spending. Fiscal debt reduction seems on track to meet the 3 per cent target, barring unexpected external shocks," she said.
Earlier, the Finance Ministry officially tabled the 2026 Budget, marking the fourth budget under the Madani administration and the first under the 13th Malaysia Plan (2026–2030).