This article first appeared in The Edge Malaysia Weekly on October 12, 2026 - October 18, 2026

CONSUMER goods companies are looking to Budget 2027 for a lift in household spending, as higher cash assistance, tax cuts, expanded personal tax relief and a higher minimum wage promise to put more money in consumers’ pockets.

The government estimates that changes to individual income tax rates and relief thresholds will provide additional disposable income of up to RM1,600 for about five million taxpayers.

Investors appeared to welcome the measures. Dutch Lady Milk Industries Bhd (KL:DLADY), Nestlé (Malaysia) Bhd (KL:NESTLE), Heineken Malaysia Bhd (KL:HEIM) and 99 Speed Mart Retail Holdings Bhd (KL:99SMART) were among the top gainers on Bursa Malaysia last Friday.

Analysts expect the measures to support sales across the consumer sector, although the extent of the benefit will depend on how much of the additional income households spend and how effectively companies manage their costs.

Malacca Securities head of research Loui Low expects earnings across the sector to continue improving through 2027. But stronger earnings do not necessarily mean that consumer stocks will command higher valuations than companies in other sectors.

Investors are already paying more for the sector’s earnings. The price-to-earnings ratio of Bursa-listed consumer stocks has risen to 21.5 times, from 20 times at the end of 2025 and 14.6 times at the end of 2024.

That increase comes despite a difficult year for the sector. The Consumer Products & Services Index has fallen 15% since the beginning of the year, making it Bursa’s second-worst-performing sector after the Telecommunications & Media Index, which has declined 17.6%. The benchmark FBM KLCI has fallen 4.3% over the same period, closing at 1,608.45 points last Friday.

Rakuten Trade head of research Kenny Yee describes Budget 2027 as a strong “sweetener budget” for consumer companies, noting that its measures could translate into stronger earnings.

“The tax deduction for the middle-income segment will certainly boost the consumer sector. We’ve been waiting for this for more than 10 years,” he tells The Edge.

Under the national budget, income tax rates for resident individuals will be cut by 1% in two brackets: from RM70,000 to RM100,000, where the rate will fall to 18%, and from RM100,000 to RM150,000, where it will decline to 24%.

The personal income tax relief threshold, unchanged since 2010, will rise from RM9,000 to RM12,000.

The government is increasing allocations for Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara) to RM16 billion in 2027, from RM15 billion this year.

All nine million STR recipients will receive Sara assistance of up to RM150 per month. Malaysians aged 18 and older who do not receive STR will be eligible for RM100 twice a year. The combined measures are expected to benefit as many as 13 million people.

Low is less concerned about the impact of the higher minimum wage, which will take effect in June 2027. He noted that large companies already tend to pay monthly wages above the proposed RM2,000 minimum.

His preferred consumer stocks following the budget announcements are 99 Speed Mart, Eco-Shop Marketing Bhd (KL:ECOSHOP) and Farm Fresh Bhd (KL:FFB).

99 Speed Mart, which is seeking to increase the average value of customers’ purchases, reported a 13.36% year on year (y-o-y) rise in net profit to RM163.95 million for the second quarter ended June 30, 2026. The increase was supported by higher customer traffic as the company expanded its outlet network.

Eco-Shop recorded its highest-ever quarterly net profit of RM72.63 million for the quarter ended May 31, 2026, helped by improved margins and store expansion.

Farm Fresh, in contrast, reported an 18% y-o-y decline in net profit to RM26.82 million for the quarter ended June 30. Higher fuel and plastic bottle costs, attributed to the Iran war, weighed on its earnings.

Rakuten Trade’s Yee expects the budget’s benefits to extend beyond basic consumer staples to a broader range of retailers and food and beverage operators. Among his picks are 99 Speed Mart, MR D.I.Y. Group (M) Bhd (KL:MRDIY) and Oriental Kopi Holdings Bhd (KL:KOPI).

The impact of the minimum wage hike is likely to vary across companies. According to a Kenanga Research report dated Oct 8, AEON Co (M) Bhd (KL:AEON) is expected to face the largest earnings impact, at 2.74%.

Nestlé and Padini Holdings Bhd (KL:PADINI), on the other hand, are expected to experience minimal impact as most of their employees already earn close to RM2,000 per month.

Kenanga Research said targeted fiscal assistance and higher wages should help sustain household purchasing power, with essential goods and lower-priced purchases likely to remain more resilient than discretionary spending.

While higher wages would raise costs for labour-intensive companies, they could also increase disposable income and potentially improve consumers’ ability to absorb selective price increases.

Regulatory changes could provide another source of support for local retailers. Analysts say the proposed E-Commerce Bill could help domestic businesses strengthen their competitive position by bringing foreign e-commerce platforms operating in Malaysia under greater oversight.

During the budget tabling, Prime Minister Datuk Seri Anwar Ibrahim said the government was taking seriously complaints from small traders about foreign companies entering the domestic market without adequate oversight.

For consumer companies, Budget 2027 offers a potential lift from both ends of the spending equation: more money in households’ hands and a policy environment that could give local retailers greater room to compete. Whether that translates into sustained earnings growth and justifies the sector’s rising valuations will depend on how consumers spend the additional income and how companies navigate higher operating costs. 

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