Macroeconomic outlook, public revenue & fiscal strategy

• Malaysia's economy is projected to expand by a commendable 4.2%-5.2% in 2027, from 4.8-5.3% this year, with private consumption remaining a key growth driver
• Investment activity is likely to remain robust, with private investment projected to expand 7.1% in 2027 and public investment to grow 6.8%
• Government revenue is estimated to increase 4.7% to RM380.8 billion in 2027, with PETRONAS dividends expected to contribute RM32 billion, higher than 2026's estimate of RM27 billion
• The total budget expenditure rises to RM510 billion for 2027, from RM470 billion for 2026; the actual federal government outlay is RM459.8 billion. Government-linked investment companies provide RM25 billion, public-private partnerships RM11 billion, and statutory bodies and the Ministry of Finance RM14.2 billion
• Higher operating expenditure representing 16.2% of GDP due to higher allocations for emoluments, retirement charges, debt service charges as well as supplies and services
• The largest development expenditure allocation will be for the economic sector with 45.4%, followed by social (33.7%), security (14.7%) and general administration (6.2%)
• The fiscal deficit is likely to further narrow to 3.3% of GDP in 2027 from the estimated 3.6% in 2026, with consolidation calibrated to economic conditions and anchored by sustainable revenue improvements and expenditure efficiency
• Subsidies, assistance, incentives to exceed RM80 billion in 2027
• Fuel subsidies to remain high at RM40 billion

Personal taxation & reliefs

• The individual tax relief limit, which has not been reviewed since 2010, is increased from RM9,000 to RM12,000
• The individual income tax rate for residents to be reduced by one percentage point; the taxable income bracket between RM70,000 and RM100,000 to be reduced to 18%; and the taxable income bracket between RM100,000 and RM150,000 to be reduced to 24%.
• The income tax rate is set at 30% for earners above RM1 million
• The increase in tax relief and reduction in individual tax rates to provide an additional disposable income of up to RM1,600 to roughly five million taxpayers
• Individual tax reliefs to be expanded to cover medical expenses, care for parents and grandparents, sports equipment, education and skills training, and lifestyle expenses
• Socso tax relief expanded to cover mandatory contributions to the Lindung Kendiri scheme, with additional relief of up to RM150 for voluntary contributions to Lindung 24 Jam and Lindung Kendiri
• Visitors staying at least 48 hours in Langkawi or Labuan to get a higher RM10,000 duty-free shopping limit
• Expanded lifestyle tax relief to explicitly include pet vaccination expenses and adoption fees from registered shelters
• Full stamp duty exemption on opening savings and current accounts starting Jan 1, 2027

Corporate incentives, stamp duty & sectoral tax measures

• MSME tax rates to be lowered to 14% on first RM150,000 and 16% on next RM450,000 of taxable income
• Malaysia to enhance Global Services Hub tax incentives from Jan 1, 2027, offering a 5% concessionary tax rate, extensions up to 30 years, and withholding tax plus stamp duty exemptions for treasury operations, including under the JS-SEZ package
• 40% tax exemption for shariah-compliant fund management service providers for assessment years 2028 to 2030
• Prisma Sukuk issuers to be eligible for a tax deduction on issuance costs approved by the Securities Commission Malaysia for years of assessment 2027 to 2030
• Tax deductions for private companies participating in Bakat Madani will be available from June 29, 2026 until Dec 31, 2030
• Donors contributing food supplies and cooking equipment to the Dapur Siswa Madani initiative will receive tax deductions from Jan 1, 2027 until Dec 31, 2030
• First-time homebuyers to get full stamp duty exemption for homes up to RM500,000, and 50% exemption for homes priced above RM500,000 and up to RM750,000, for sale and purchase agreements signed from 2027 to 2030
• Full stamp duty exemption for developers and buyers of abandoned housing projects from 2027 to 2030
• Service tax on elderly care services to be cut to 6% from 8%, effective Jan 1, 2027
• Entertainment duty exemption for arts, cultural, entertainment and sporting events at Stadium Negara and Stadium Merdeka
• Full entertainment duty waiver for tickets to local films and theatrical performances in Kuala Lumpur, Putrajaya, and Labuan
• To curb undocumented foreign labour, non-MSMEs can only claim tax deductions on wage expenditures if wages are paid through compliant bank accounts permitted under the Employment Act 1955
• A Multi-Family Office scheme will be introduced in Forest City to allow licensed fund managers to manage wealth for multiple families. This builds on its existing Single Family Office model, which offers zero tax on qualifying income for up to 20 years
• To strengthen the domestic maritime industry, full income tax exemption for Malaysian shipping companies will be extended until year of assessment 2036
• Companies settling PTPTN dues on behalf of employees can claim tax deductions for all repayments made from Jan 1, 2027 to Dec 31, 2028

Business financing, strategic investment & trade

• Business financing guarantees of up to RM32 billion, with the guarantee limit raised to RM50 million
• Financing guarantees of up to RM1 billion to support local firms through mergers and acquisitions
• Micro-financing funds to be raised to RM6.6 billion for 2027, including RM3 billion via Amanah Ikhtiar Malaysia and RM1.3 billion via Tabung Ekonomi Kumpulan Usaha Niaga or Tekun Nasional for Bumiputera business development
• Bank Negara Malaysia to allocate an additional RM5 billion financing facility for SMEs affected by the West Asia conflict
• The Johor-Singapore Special Economic Zone (JS-SEZ) has attracted RM132 billion in investments, with its blueprint set to launch by year end. The Sedenak industrial hub is eyeing RM12 billion in investments and 45,000 jobs
• Khazanah’s Jelawang Capital, KWAP’s Dana Perintis to invest RM450 million in start-ups
• Khazanah Nasional Bhd and InvestPenang to establish a RM100 million fund for semiconductor and advanced manufacturing firms
• The government will develop infrastructure in the Chuping Valley Development Area and the NCER AgriBio Economic Zone
• MSMEs can get up to RM5,000 in matching grants for their first halal certification
• The price adjustment clause will be reinstated to cover rising diesel and bitumen costs for construction contractors

Bumiputera agenda & vendor development

• GLCs and PETRONAS target RM45 billion in procurement from Bumiputera companies
• GLC procurement guidelines to be updated from 2027, with vendor success measured by company growth, innovation, and new market entries
• GLICs to invest RM2 billion to strengthen Bumiputera companies; Ekuinas, Pelaburan Hartanah to support Bumiputera listings
• Khazanah and Teraju to establish a RM250 million Dana Ciptawan to support the growth of Bumiputera mid-sized companies
• Teraju to provide financing of up to RM1 billion, while its capacity will be strengthened to enable more effective monitoring of Bumiputera projects across all departments, agencies and companies

Agriculture, fisheries & commodities

• Paddy farmers to receive about RM4,300 per hectare under a RM2.62 billion aid allocation
• The government to provide RM100 million in hybrid financing to assist with oil palm replanting for 4,500 smallholders
• Special sampan licences for fishermen to be expanded to 20,000, with RM30 million allocated, plus RM178 million for incentives and allowances
• Paddy harvesting incentive doubled from RM50/ha to RM100/ha per season
• Rubber production price support raised to RM3.30 per kg from RM3.00, to aid over 300,000 smallholders

Labour, wages & human capital

• The minimum wage will be raised to RM2,000 from RM1,700 starting June 2027
• MSMEs with annual sales below RM50 million to be exempt from the RM2,000 minimum wage policy
• Putrajaya to introduce a minimum monthly salary of RM2,500 for semi-skilled workers and graduates as the initial step in reforming the wage framework
• GLICs and GLCs to raise the living wage benchmark to RM3,400 per month from RM3,100, benefitting 230,000 workers
• Malaysia targets 30,000 new jobs under Bakat Madani in 2027, roping in the private sector alongside six GLICs, PETRONAS, and GLCs
• Spouses of expatriate Category I employment pass holders on a dependant pass will be allowed to work in Malaysia starting Jan 1, 2027, subject to conditions
• DE Rantau Nomad Pass holders reaching their two-year limit to receive a two-year extension to live and work remotely in Malaysia, subject to conditions
• More than RM40 million to be channelled through HRD Corp to train 8,000 workers in elderly care

Gig economy & social security

• To strengthen social protection, every citizen will be automatically registered as an EPF member upon turning 18 so that retirement savings can start earlier
• To encourage retirement savings among e-hailing and p-hailing drivers, the government is offering an EPF matching contribution incentive of up to RM600 per year or RM6,000 over a lifetime
• Putrajaya to offer a 35% Socso matching contribution incentive to e-hailing and p-hailing workers; the rate will be increased to 50% if platform companies also co-fund contributions for the workers
• The government and Grab will jointly fund a RM160 million package from 2027 to boost net earnings and improve welfare of e-hailing and p-hailing workers
• Beyond e-hailing and p-hailing riders, the government will cover 70% of Socso contributions for over 200,000 self-employed individuals across 17 non-mandatory sectors
• BSN and Agrobank to provide RM270 million in financing for gig workers looking to start businesses or buy their first homes
• GLICs, GLCs to provide RM100 million in matching grants, including support for childcare
• The government will fully regulate the p-hailing sector under the APAD and LPKP

Cost of living, social safety nets & housing

• STR, Sara allocation raised to RM16 billion in 2027 from RM15 billion
• All STR recipients to receive Sara of up to RM150 monthly, to benefit up to nine million people
• Non-STR recipients aged 18 and above (including M40) to receive RM100 Sara aid twice — before Aidilfitri and ahead of the Merdeka celebrations next year — benefitting 13 million Malaysians 
• Jualan Rahmah Madani and Jualan Agro Madani allocation will rise to RM750 million next year from RM630 million
• Total assistance for persons with disabilities raised to RM1.5 billion
• The income qualification threshold for the Disabled Workers Allowance (EPOKU) to be raised from RM1,700 to RM2,000
• Senior citizen aid for next year raised to RM1.3 billion, benefitting nearly 200,000 recipients
• Over 10,000 small traders renting DBKL premises — including markets, food courts, and hawker centres — will get a 50% rental discount throughout 2027, with festive bazaar fees starting as low as RM400
• Syarikat Jaminan Kredit Perumahan (SJKP) to provide up to RM20 billion in housing financing guarantees to help 80,000 first-time homebuyers, particularly self-employed individuals without fixed income
• About RM1 billion to go to Program Residensi Rakyat and Rumah Mesra Rakyat
• 50 acres of prime Kuala Lumpur land worth RM1 billion to be granted as new endowment to Yayasan Pelaburan Bumiputra for PNB to develop affordable housing and advance Bumiputera economic interests — the first such grant since 1981
• At least 2,500 Rumah Madani units planned in Belfield, KL, with 70% earmarked for Bumiputera
• A one-off special financial assistance of RM1,000 will be disbursed next week to 38,000 taxi and rental car drivers and 15,000 school bus drivers nationwide, funded by proceeds from the recent special 'H' series vehicle plate sale
• Monthly assistance for bedridden persons with disability and chronically ill patients to be raised from RM500 to RM600
• Financial aid from National Disaster Management Agency to repair disaster-damaged homes to be doubled from RM5,000 to RM10,000

Education & higher learning

• The Education Ministry continues to receive the largest allocation at nearly RM69 billion, up from RM66.2 billion
• The allocation goes up from RM1 billion to RM2 billion for repair and maintenance of all types of schools
• The national school allocation goes up to RM900 million. Chinese schools get RM100 million, and Tamil schools RM50 million. For religious schools, the allocation for tahfiz and pondok institutions is raised to RM200 million, expanded to cover operating aid
• RM1.3 billion allocated to upgrade 682 dilapidated schools, particularly in Sabah and Sarawak
• 3,500 additional classrooms are being built using the industrialised building system ahead of higher Year One intake
• School aid to be raised to RM200 per pupil from RM150, benefitting 5.3 million students. Overall, they get an allocation of RM1 billion
• RM870 million for the Supplementary Food Plan (RMT)
• Form Six students to get a RM2,500 living allowance for first time in history, matching the matriculation rate
• The monthly allowance for special needs education students to be raised from RM150 to RM200, benefitting 150,000, including children with autism
• The FLYsiswa flight ticket subsidy will be increased to RM500 in 2027, benefitting 60,000 public university students
• The Dapur Siswa Madani initiative will be expanded to polytechnics and teacher education institutes with a RM20 million allocation, providing cooking equipment, groceries, and RM5 meals
• KWAP to invest RM750 million in student housing at six universities under Vista Kampus
• PTPTN borrowers earning up to RM2,500 a month will qualify for a repayment deferment next year, while those earning RM2,500 to RM3,000 will pay a minimum monthly instalment of just RM50
• Higher Education Ministry will introduce a new legal framework to replace the Universities and University Colleges Act to restore institutional autonomy and student rights
• All pending disciplinary proceedings at public universities relating to peaceful assembly, public criticism, and free expression will be ceased immediately
• PTPTN borrowers to get 10% discount if they have no arrears and consistently service their repayments

Healthcare & public health

• Allocation for the Health Ministry to rise to RM47.7 billion from RM46.5 billion
• RM1.2 billion allocated to upgrade and repair public health facilities
• The government is committed to offering permanent medical officer positions to future doctors who complete housemanship
• More than 9,000 contract doctors to be offered permanent posts in 2027
• In recognition of 47,000 paramedics and nurses handling heavy fieldwork duties, the post-basic incentive allowance rate will be increased from RM100 to RM200 monthly
• Air health service incentive payment more than triples to RM100
• The MediAsas insurance plan will be launched in January 2027. EPF members under 55 can pay MediAsas premiums through Account Sejahtera. SMEs with fewer than 75 employees will receive a RM200 subsidy per worker for the first-year premium, capped at 50 employees per company, benefitting up to 200,000 workers
• Licensing for private healthcare facilities will be 100% online starting 2027 via the newly developed e-CKAPS portal, targeting up to a 65% cut in processing times
• Private hospital bills to use standardised charge categories starting 2027 to curb price distortions, while the use of electronic medical records will be expanded nationwide under the 'one individual, one record' principle

Regional development & rural well-being

• Federal allocations for Sabah and Sarawak to remain the highest in 2027 at RM18.7 billion and RM16.2 billion respectively
• MA63: The interim special grant for Sabah and Sarawak will be raised to RM1.5 billion, with payment settled before the end of the year
• Malaysia and Indonesia to fast-track reopening of the Tebedu-Entikong border trade route, supported by road infrastructure upgrades across the Sabah-Sarawak-Kalimantan frontier
• RM3.3 billion allocated for basic rural infrastructure, including for clean water and electricity
• Higher allocation of RM2.3 billion for rural road development
• RM445 million allocated for Orang Asli development, including for replanting and preschool projects
• RM1.26 billion to be allocated to strengthen Felda’s finances, maintain roads, and provide housing for the next generation of Felda settlers
• Allocation for Chinese New Village infrastructure repairs increased to over RM100 million, including funds to repair and rebuild dilapidated infrastructure

Transport, grid & digital infrastructure

• The government agrees to implement the Elevated Autonomous Rapid Transit (E-ART) system in Johor Bahru. It will also increase stage bus routes and frequencies, increase KTM Komuter frequency, and provide Grab shuttle services in high-traffic hotspots ahead of the RTS Link opening
• The government will procure 42 new train sets for Electric Train Service (ETS) and KTM Komuter services
• My50 retained for 300,000 Prasarana users in the Klang Valley, with MyKomuter50 introduced for 40,000 KTM Komuter users
• TNB to invest RM15 billion to strengthen the national grid and ensure the continuity of the nation's electricity supply
• RM5 billion allocated under the Jendela project for internet connectivity expansion, targeting orang Asli villages, roads, and rail

Climate preparedness, energy transition and green incentives

• RM100 million allocated to develop retention ponds and maintain rivers to reduce flood risks in the Klang Valley
• Rebate of up to RM200 for consumers purchasing energy-efficient (4- or 5-star) air conditioners and refrigerators under Nur Madani.
• Green tax incentives extended to Dec 31, 2030, with companies investing in green technology projects, EV charging stations, or green assets for own use eligible for up to 100% investment tax allowances
• Malaysia to channel RM15 million from palm oil cess collection into environmental conservation, prioritising habitat protection for the Malayan tiger, Borneo elephant, and orangutan

Security, religious affairs & community

• The Home Ministry and Defence Ministry are each allocated RM22 billion
• Malaysia to raise its Islamic affairs allocation to RM3.1 billion from RM2.6 billion, introduce a RM150 monthly incentive for special needs Kafa (Kelas Al-Quran dan Fardhu Ain) teachers, and to fully fund Socso contributions via Tabung Haji for 40,000 mosque officials and teachers
• RM80 million allocated for maintenance of registered non-Muslim houses of worship

Youth, sports & tourism

• Youths who complete designated volunteer hours with approved NGOs will receive a RM100 e-wallet incentive
• 100,000 more free AI subscription slots for youth, including access to ChatGPT
• Malaysia extends the Visit Malaysia Year campaign into 2027, allocating RM935 million for tourism and culture
• RM240 million to be allocated for 2027 SEA Games; the sports sector gets RM460 million with a RM30 million sports matching grant for sports bodies, clubs, and NGOs

Consumer protection, transport safety & insolvency

• The E-Commerce Bill will be tabled at the next parliamentary sitting to hold online platforms and sellers accountable, and to curb unregulated foreign e-commerce competition and protect local MSMEs
• Drunk or drug-impaired drivers will have to pay direct compensation to their victims, under an amendment to the Road Transport Act
• Commercial vehicles will be required to install telematics systems — tracking speed, location, and pre-trip alcohol interlocks — with voluntary adoption running until 2027 while an enforcement database is built
• Socso to provide health screening vouchers to commercial vehicle drivers to detect health risks that could impair their driving ability
• Bankruptcy threshold raised to RM150,000 from RM100,000 starting 2027

Civil service and public sector welfare

• Minimum pension raised from RM1,000 to RM1,350 per month, benefitting nearly 59,000 pensioners, Malaysian Armed Forces veterans, and derivative pension recipients
• Special aid of RM1,500 for 1.3 million civil servants of Premier Grade B and below (including contract appointees), and RM750 for over one million government pensioners and veterans (pensionable and non-pensionable) — disbursed in two equal tranches before Aidilfitri and ahead of the 70th Merdeka celebrations. (move from current labour, wages & human capital)
• Total lifetime maternity leave entitlement increased from 360 days to 490 days throughout service (maximum 98 days per childbirth)
• Maximum one-off lump-sum payment to next-of-kin of federal civil servants who die in the line of duty increased from RM20,000 to RM50,000 (dependent on length of service), effective retrospectively from Jan 1, 2026
• RM2.3 billion allocated to construct and maintain government quarters for police, military personnel, medical officers, teachers, and firefighters
• More than RM500 million allocated to build Armed Forces family housing in Skudai (Johor) and new quarters at Immigration Detention Depots in Langkap (Perak) and Papar (Sabah), benefitting nearly 900 personnel

Governance, procurement & social financing

• A dedicated bill will be drafted to regulate statutory bodies and government companies to prevent financial abuses and misuse of public assets, such as what happened at 1MDB, Tabung Haji and Felda
• A tokenised retail savings sukuk will be launched that allows individual Malaysians to invest into and choose where their money goes: education, healthcare or social protection for the poor
• High-impact projects (quarters, clinics, schools, hostels, community halls) valued up to RM5 million with pre-approved JKR plans can bypass open tenders and proceed via the quotation method