Malaysia Unveils Record 2026 Budget: Tax Reforms and Strategic Investments

In a bid to navigate external uncertainties and bolster government revenue, Malaysia has announced a record budget of 470 billion ringgit for 2026. Prime Minister Anwar Ibrahim revealed the plans in parliament, emphasizing tax reform and social protection as key strategies for economic stability.

The revised spending plan represents a significant increase from earlier proposals and includes measures like a new carbon tax targeting industries such as iron, steel, and energy, alongside heightened excise duties on alcohol and tobacco. These efforts form part of Kuala Lumpur's broader strategy to reduce its fiscal deficit and lessen dependency on oil revenues, which have been impacted by fluctuating global tariffs.

With an anticipated relaxation in commodity-based income, Malaysia aims to cut subsidies and boost development in promising areas such as semiconductors and digital technology, alongside significant ventures in AI and rare earths in collaboration with international partners, particularly China. As Malaysia stays the course on fiscal discipline, it projects economic growth of 4% to 4.5% in 2026, despite current headwinds.

(With inputs from agencies.)