Kuala lumpur: RHB Investment Bank Bhd (RHB IB) anticipates an allocation of approximately RM86 billion to RM89 billion for development expenditure in Malaysia’s Budget 2026, aligning with the 13th Malaysia Plan’s (13MP) total allocation of RM430 billion for the years 2026-2030.
According to BERNAMA News Agency, RHB IB indicated that a central priority for the government would be enhancing regional mobility. This initiative aims to bridge the development gaps between states and promote equitable growth across Peninsular Malaysia, Sabah, and Sarawak. Additionally, the government is expected to continue subsidy rationalisation measures, especially concerning RON95 petrol, to ensure that assistance is directed toward those most in need while minimizing fiscal leakages.
Budget 2026 is projected to emphasize initiatives to boost Malaysia’s competitiveness, attract quality foreign direct investment, and support micro, small, and medium enterprises (MSMEs). Policies are likely to focus on fostering innovation, streamlining regulations, and improving the ease of doing business. Furthermore, the government is anticipated to offer targeted incentives to priority sectors that drive growth and technological advancement, such as renewable energy, digitalisation, electrical and electronics (E and E), advanced manufacturing, and agriculture.
RHB IB identifies three critical industries as key focus areas for investors and financial stakeholders in the medium term: rare earth elements, E and E, and Islamic finance innovation. These sectors are highlighted in the 13MP and are seen as having high-growth potential, supported by policy frameworks, international collaboration, and significant investment commitments.
RHB IB concludes that Budget 2026 is set to be a pivotal tool in steering Malaysia towards sustained and inclusive growth amid a complex global environment. Anchored within the framework of the 13MP and the MADANI Economy, it balances immediate fiscal prudence with long-term strategic investments. With a projected budget deficit target of 3.5 percent of gross domestic product in 2026, narrowing to 3.2 percent in 2027, the government demonstrates its commitment to fiscal consolidation while maintaining flexibility to support growth.