Kuala Lumpur:Malaysia's fiscal deficit is projected to decrease to RM76 billion, equivalent to 3.3% of the gross domestic product (GDP), by 2027, down from an estimated 3.5% in 2026. This aligns with the government's medium-term objective of achieving a 3.0% deficit by 2028.
According to BERNAMA News Agency, Apex Securities Bhd highlighted that Budget 2027 is set to remain mildly expansionary but measured, focusing on targeted household support, fiscal discipline, and investments aimed at enhancing productivity. The firm anticipates a revenue increase to RM383.3 billion, up by 5.5% year-on-year, with operating expenditure rising by 4.6% to RM378.4 billion. Additionally, gross development expenditure is expected to reach RM82.4 billion compared to RM80 billion in 2026.
Budget 2027, the fifth MADANI Budget and the second under the 13th Malaysia Plan, aims to balance supporting households, strengthening Malaysia's growth capacity, and maintaining fiscal discipline. While the rise in development expenditure is viewed positively, it does not indicate a new fiscal stimulus cycle.
The report from Apex Securities also emphasized the importance of how quickly budget allocations will translate into project tenders, awards, and execution, benefiting contractors with established order books and strong execution capabilities. The execution of the existing infrastructure pipeline, particularly in transport, highways, water, and East Malaysia connectivity, is seen as a key opportunity rather than initiating new mega-projects.
Regarding household support, the combined allocation for Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah is expected to increase to approximately RM17 billion from RM15 billion in 2026, providing a buffer for lower- and middle-income households and supporting mass-market consumption. However, the extent of this support will be limited by the increased fiscal burden from energy subsidies.
On tax policy, Apex Securities does not foresee major new broad-based taxes. However, attention will be on incorporating selected goods and services tax features into the sales and service tax (SST) framework, expanding SST exemptions, adopting e-invoices more widely, and clarifying the carbon-tax timetable.
The stockbroking firm identified artificial intelligence, semiconductors, and data center infrastructure as key structural growth themes, suggesting that Budget 2027 should reinforce an ongoing investment cycle. The data center expansion underscores the need for improved grid capacity, transmission, renewable power, and storage. There is an anticipation of potential extensions of green investment tax allowances and income tax exemptions to storage, continued support for rooftop solar, clarification on the automatic fuel adjustment mechanism, and pathways for energy-transition investment. A standalone storage incentive would be seen as a positive surprise.
Apex Securities predicted that Budget 2027 would have a mildly positive impact on the FTSE Bursa Malaysia KLCI (FBM KLCI) but does not expect a broad-based re-rating of the benchmark index. Fiscal consolidation remains the policy anchor, and the anticipated increase in development expenditure is modest, suggesting that earnings impacts will be concentrated in selected sectors, maintaining their end-2026 FBM KLCI target of 1,770.