KUALA LUMPUR, RHB Investment Bank Bhd (RHB IB) projects that Budget 2026 will allocate between RM86 billion and RM89 billion for development expenditure, in line with the 13th Malaysia Plan’s (13MP) total RM430 billion allocation for 2026-2030.
In a note, RHB IB said the government’s top priority will be enhancing regional connectivity to reduce development disparities across Peninsular Malaysia, Sabah, and Sarawak, promoting more balanced growth.
The bank added that subsidy rationalisation, particularly for RON95 petrol, is expected to continue, ensuring support reaches those most in need while minimising fiscal leakages. “This targeted approach reflects efforts to balance social protection with fiscal sustainability,” RHB IB noted.
Budget 2026 is also likely to focus on improving Malaysia’s competitiveness, attracting quality foreign direct investment (FDI), and supporting micro, small, and medium enterprises (MSMEs). Policies encouraging innovation, regulatory efficiency, and ease of doing business are expected to be introduced.
Targeted incentives may be provided for priority sectors driving growth and technology adoption, including renewable energy, digitalisation, electrical and electronics (E&E), advanced manufacturing, and agriculture.
RHB IB highlighted three critical sectors for investors in the medium term: rare earth elements, E&E, and Islamic finance innovation, noting their high growth potential under 13MP frameworks, international collaboration, and significant investment commitments.
The bank concluded that Budget 2026 will be a key tool in steering Malaysia toward sustainable and inclusive growth amid global uncertainties. Anchored in the 13MP and MADANI Economy framework, the budget aims to balance short-term fiscal prudence with long-term strategic investments.
With a projected budget deficit of 3.5 per cent of GDP in 2026, narrowing to 3.2 per cent in 2027, the government signals its commitment to fiscal consolidation while maintaining flexibility to support economic growth.
