KUALA LUMPUR (Oct 10): The government has ramped up infrastructure spending for East Malaysia under Budget 2026 as it intensifies efforts to narrow the regional development gap and strengthen national connectivity.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said the higher allocation reflects the government’s commitment to address the distinct infrastructure needs of every state.
“The government has taken into account each state’s development priorities under the 13th Malaysia Plan, ensuring that public investment benefits all regions and communities,” Anwar said when tabling the budget in Parliament on Friday.
For 2026, Sabah and Sarawak will continue to receive the highest federal allocations for development projects, at RM6.9 billion and RM6 billion respectively — both significantly higher than in 2022. In addition, the special grant for both states has been raised to RM600 million, doubling from RM300 million in 2023.
The funds will cover critical road, utility and connectivity projects across both states, including RM1.67 billion for the Pan Borneo Sabah Highway and completion of Pan Borneo Sarawak’s nine highway packages, among others, which collectively form part of RM48 billion worth of ongoing infrastructure projects.
An additional RM1 billion is also allocated for water supply upgrades in Sabah, and RM765 million for the Southern Link Transmission Line to strengthen power reliability across Sabah’s east coast.
In terms of other connectivity, the federal government will also fund the installation of new transmission pipelines and replacement of ageing water pipes in Kota Kinabalu, Penampang and Putatan, benefitting close to two million residents once completed next year.
Meanwhile, the Sambungan Kabel Dasar Laut Madani (Salam) project, spanning 3,190km and costing RM2 billion, will enhance digital connectivity by linking Peninsular Malaysia with Sabah and Sarawak.
Complementing this, the Jendela 2 programme will expand broadband access to 2,700 new rural and school locations nationwide with RM780 million in funding.
Mobility and transportation
In the aviation sector, the government reaffirmed plans to expand the Subang Airport, which has been designated a national strategic project led by government-linked entities to safeguard Malaysia’s aerospace interests.
“The empowerment of Malaysia Airports Holdings Bhd (MAHB) opens new investment opportunities to strengthen airport management efficiency,” Anwar said.
MAHB will channel RM2.3 billion towards airport development in Penang, Kota Kinabalu, Tawau and Miri, slated for completion by 2028. Upgrades to Short Take-Off and Landing Ports (STOLports) in Marudi and Redang are expected to be completed by 2027.
The inter-terminal transfer project between KLIA Terminal 1 and Terminal 2 will also be implemented to improve passenger connectivity, while the Selangor Aero Park (SAP) — a 600-acre logistics and cargo hub in Sepang — will be jointly developed with the Selangor government.
On rail transport, Anwar noted that construction will begin on the LRT Mutiara Line in Penang, serving up to 1.8 million residents, while the Kelana Jaya Line in the Klang Valley will add 26 new trains worth RM1 billion to improve service frequency.
In Johor Bahru, RM200 million has been allocated to enhance bus routes and fleets in preparation for the RTS Link, which will begin full operations on Jan 1, 2027.
Regional and social infrastructure
In the Federal Territories, flood mitigation projects and the Waterfront Labuan Phase 1 will be implemented, alongside upgrades to the Kuala Lumpur Swimming Complex and river rehabilitation works under the Sungai Gombak and Sungai Klang revitalisation plan.
The government also continues to prioritise water resource and flood management, with Pengurusan Aset Air Bhd investing RM13 billion over five years in water treatment and supply projects. This includes the Langat 2 Water Treatment Plant, which will supply 760 million litres per day to 1.5 million residents across Selangor, Kuala Lumpur and Putrajaya.
In Kedah, the Machang, Sungai Karangan and Sidam Kiri treatment plants will deliver an additional 200 million litres per day, while the National Non-Revenue Water (NRW) Programme worth RM3 billion will replace over 820km of ageing water pipes across six states — Johor, Melaka, Negeri Sembilan, Kelantan, Pahang and Selangor.
Tourism infrastructure also gets a major boost, with RM700 million allocated to support Visit Malaysia Year 2026, including RM25 million for the conservation of Unesco sites such as the Gunung Mulu National Park, Lenggong Valley and FRIM Forest Park.