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Joseph Sipalan

Hadi Azmi

Malaysia’s government on Friday pledged to build more hospitals, upgrade airports, expand rural digital access and help youth boost their income, as Prime Minister Anwar Ibrahim unveiled a record budget with an eye on coming state elections.
Anwar’s administration plans to spend a total of 470 billion ringgit (US$111.4 billion) next year – up nearly 4 per cent from this year – part of which will go towards upgrading rural infrastructure, helping start-ups and encouraging entrepreneurship among the youth.
Funds are also aimed at bridging the rural-urban divide by expanding education and healthcare access in the country’s remote regions.
The focus on public well-being underscores the growing pressure on Anwar to win over a sceptical vote base, as his government coalition faces a series of state polls seen as a temperature test of public support midway into his term.
“The Madani Economic Framework is for the rakyat, to ensure we have the capacity to provide amenities for the rakyat, create jobs, generate income and ease the cost of living,” Anwar said in his speech when tabling the budget in parliament, using his government tagline which roughly translates from Malay to civilisation.

The government will set aside 81 billion ringgit for development spending, with a focus on rural roads and digital connectivity, expanding primary healthcare access for far-flung regions and increasing cash aid for the most vulnerable groups, according to its economic outlook released ahead of the budget.
Total spending on subsidies and cash aid is expected to fall 14.1 per cent to 49 billion ringgit, following the government’s move to slash costly blanket fuel subsidies over the past two years and on lower global crude oil prices.
But of the money available, more than half will be spent on social assistance and incentives to help uplift vulnerable groups.
This includes more than 20 billion ringgit to subsidise operational costs for farmers and fishermen, provide access to discounted necessities and direct cash aid for lower- and middle-income families and the elderly.
“Cash transfer allocations … should help alleviate the financial burden among the middle- and low-income groups,” said Mohd Afzanizam Abdul Rashid, chief economist with Bank Muamalat.
To promote a healthy lifestyle and boost revenue collection, the government will raise taxes on tobacco products by at least 2 Malaysian cents per cigarette stick, and increase the excise duty on alcoholic drinks by 10 per cent.
Anwar said to bolster digital connectivity in Sabah and Sarawak – two key pillars holding up his administration – the government would spend 2 billion ringgit to lay undersea cables to connect the peninsula with Malaysian Borneo.

The government will also expand several airports in various states, including the key hubs of Penang and Kota Kinabalu, to improve air travel and cargo connectivity.
Government-linked investment firms will pump in 30 billion ringgit next year to help local companies and industries grow in scale.
The government will also set aside an additional 1 billion ringgit in loans and investments to upscale local companies in Malaysia’s vital semiconductor and electrical and electronics sectors.
Malaysia’s youth can draw from a 1 billion ringgit fund to get a start on small enterprises, such as through vending machines or in agriculture, according to Anwar.
The government expects growth to come in at between 4 and 4.5 per cent next year, driven by domestic demand and a record 47 million visitors the country hopes to pull in during its Visit Malaysia 2026 tourism campaign.
Experts said the budget was smaller than expected, given the sharp drop in annual dividends from national energy firm Petronas to 20 billion ringgit, the lowest in nearly a decade.
The government has long been reliant on dividend payouts from Malaysia’s sole Fortune 500 firm, which gave 32 billion ringgit to help fund the 2025 budget.

Second Finance Minister Amir Hamzah Azizan acknowledged the drop in Petronas dividends, but stressed that it was equally important for the company to have enough funds to continue growing its business both domestically and abroad.
“Even if Petronas dividends are lower this year, we have enough revenue to have a bigger budget … using support that we have from other sources,” Amir told reporters in parliament.
Growth in exports is expected to moderate to 2.8 per cent in 2026 on a projected broad slowdown in demand for key products across the manufacturing and agriculture sectors.
Next year’s exports forecast is markedly down from the 3.3 per cent pace pencilled down for this year, propped up by sustained demand for Malaysia’s semiconductors and front-loading activities by US businesses ahead of US President Donald Trump’s tariffs, which came into effect in August.
“Even with moderate growth spending, the government is directing funds towards key sectors and boost domestic demand, setting Malaysia on a steady path for growth expansion,” said Muhammad Saifuddin Sapuan, an economist with Malaysia-based Kenanga Investment Bank.


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New schools, hospitals and help for youth as Malaysia unveils record budget

Malaysia’s Prime Minister and Finance Minister Anwar Ibrahim delivers his speech on the 2026 national budget in parliament on Friday. Photo: Malaysia’s Department of Information/AFP

A worker walks out of a construction site, next to the Petronas Twin Towers, on Friday. Malaysia plans to spend 470 billion ringgit to boost infrastructure, expand rural digital access and help youth boost their income. Photo: Reuters

Kota Kinabalu International Airport. Malaysia’s government will expand several airports in various states, including key hubs of Penang and Kota Kinabalu, to improve air travel and cargo connectivity. Photo: Shutterstock

Malaysian fishermen load freshly caught fish from a ship into plastic containers in Kota Kinabalu. Malaysia’s budget has earmarked funds to help subsidise operational costs for farmers and fishermen. Photo: Shutterstock

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The focus on public well-being underscores the growing pressure on Anwar to win over a sceptical vote base ahead of coming state elections


The focus on public well-being underscores the growing pressure on Anwar to win over a sceptical vote base ahead of coming state elections.


Anwar Ibrahim

Malaysian politics

Amir Hamzah

New schools, hospitals and help for youth as Malaysia unveils record budget

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The focus on public well-being underscores the growing pressure on Anwar to win over a sceptical vote base ahead of coming state elections

The focus on public well-being underscores the growing pressure on Anwar to win over a sceptical vote base ahead of coming state elections