Anwar Unveils Malaysia Biggest Reform Budget 2026: More Aid for Rakyat, Record Farmer Subsidies, and AI Push
Kuala Lumpur, 10 October 2025 — Malaysia Government today tabled Budget 2026 with a record allocation of RM470 billion, charting a decisive course towards fiscal discipline, governance reform, rakyat-focused support, and long-term national competitiveness.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, in delivering the Budget 2026 speech in Parliament, underscored that the government is not merely tabling a fiscal plan, but a reform mandate:
“The Government has chosen the winding and difficult path — reform, strict fiscal discipline and institutional strengthening — because this is the only path that guarantees the nation’s survival in the long run.”
Strengthening Governance and Fiscal Responsibility
Budget 2026 builds on the Ekonomi MADANI framework and is the first to align with the 13th Malaysia Plan (RMK13). It focuses on fiscal consolidation while maintaining growth-supportive spending.
- RM470 billion total federal expenditure, up from RM452 billion last year.
- National revenue projected at RM343.1 billion in 2026, compared to RM334.1 billion this year.
- Subsidy rationalisation to save RM15.5 billion annually, with savings redirected to targeted rakyat programmes.
Anwar emphasised:
“For too long, blanket subsidies have leaked to foreigners and large corporations. Subsidies must be the right and privilege of Malaysians. Savings from diesel subsidy reforms allow us to ease the people’s burden through initiatives such as SARA Untuk Semua.”
Direct Relief for the Rakyat
Budget 2026 prioritises cost-of-living relief for households across income levels:
- RM15 billion STR + SARA 2026 for 9 million households and 1 million e-Kasih recipients. Families with five children and income below RM2,500 will receive up to RM4,600 annually.
- One-off RM100 SARA payment for 22 million Malaysians aged 18 and above in February 2026, ahead of Ramadan and Chinese New Year.
- RM1 billion Jualan Rahmah, with RM600 million to expand affordable goods programmes nationwide.
- RM250 million for subsidising distribution of essentials to remote Sabah and Sarawak communities.
Boosting Agriculture and Food Security
Malaysia will see the largest agricultural subsidy in its history:
- RM2.62 billion for rice farmers, covering fertiliser, seed, padi price support, and new incentives such as RM50/ha paddy harvesting aid.
- Each farmer to receive an estimated RM4,300 per hectare per season, up from RM3,790.
- RM160 million for fishermen allowances and catch incentives, with continued RM1.65 subsidised diesel for the sector.
Anwar reaffirmed:
“It is our rice farmers, farmers, and fishermen who ensure there is rice on our plates and food on our tables. It is only right that we safeguard their livelihoods with the highest subsidies in the nation’s history.”
Driving Investment, Digitalisation and Green Growth
To position Malaysia as a competitive investment hub:
- ASEAN Business Entity (ABE) Status introduced for Malaysian firms expanding across ASEAN.
- Forest City Special Financial Zone family office incentives have attracted nearly RM400 million AUM; target RM2 billion AUM by 2026.
- Performance-Based Incentive Framework to roll out fully in 2026, prioritising high-value manufacturing and services.
- RM2 billion Sovereign AI Cloud investment, plus RM53 million Digital Accelerator Grant to drive blockchain, AI, and quantum technology adoption.
- 100% Green Asset Investment Tax Allowance for firms using locally certified green technology (MyHIJAU).
Housing and Consumer Protection
- Stamp duty exemption for first homes priced up to RM500,000 extended until December 2027.
- 10% tax deduction (capped RM10 million) for converting commercial buildings into housing.
- Stamp duty for foreign residential buyers raised from 4% to 8%.
- Amendments to the Consumer Protection Act to introduce “Lemon Law” safeguards.
A Reformist and Inclusive Budget
Budget 2026, themed “Belanjawan Rakyat” which means People’s Budget in English, sets out nine core commitments (Tekad Utama) anchored on the three pillars of the Ekonomi MADANI — raising the economic ceiling, strengthening the social floor, and restoring governance.
Prime Minister Anwar concluded:
“The broader framework of Ekonomi MADANI is for the people — ensuring access to facilities, creating jobs, generating income, and easing the cost of living. This budget is not just about numbers, but a commitment to build a fairer, more prosperous and resilient Malaysia.”
🇲🇾 BELANJAWAN 2026
Belanjawan Rakyat: Fiscal Discipline, Economic Acceleration & Social Welfare
1. Fiscal & Macroeconomic Strength
The 2026 budget underscores a strong commitment to fiscal consolidation. By optimizing national resources and enhancing tax compliance, the government aims to strengthen the nation’s economic foundation while increasing public spending in critical areas.
RM470B
Total Public Spending
Up from RM452B in 2025RM343.1B
Federal Revenue Estimate
Up from RM334.1B in 20253.5%
Target Fiscal Deficit (% of GDP)
Down from 3.8% in 2025RM15.5B
Annual Subsidy Savings
Funds redirected to welfare2. Economic Acceleration & High-Value Sectors
A significant portion of the budget is dedicated to catalyzing growth in high-value sectors. The focus is on bolstering technology and digital infrastructure, strengthening the semiconductor ecosystem, and providing unprecedented support for local entrepreneurs to enhance global competitiveness.
3. Rakyat Welfare & Social Protection
A cornerstone of the budget is the direct return of savings to the people. Financial aid is significantly expanded, with a major increase in the STR/SARA allocation to ease the cost of living, alongside crucial support for civil servants.
STR/SARA Expansion
RM15 Billion
Total allocation, with SARA extended to all 9 million STR recipients, providing up to RM100/month for necessities.
Civil Servant Support
4,500
Contract doctors will be offered permanent positions in 2026.
Hardcore Poverty
~0%
The rate is on track to be virtually eliminated, dropping from 0.2% to near zero.
4. Policy Changes & Targeted Development
The budget introduces key policy reforms aimed at housing affordability, regional equity, and enhanced consumer protection, reflecting a strategic approach to balanced national development.
Sabah & Sarawak Development
Record-high development allocations of RM6.9B for Sabah and RM6B for Sarawak to accelerate infrastructure growth and honor MA63 commitments.
First Home Buyer Relief
Full stamp duty exemption for first homes up to RM500,000 is extended for two years, until Dec 31, 2027.
Foreign Property Tax Change
Stamp duty for non-citizens and foreign companies is raised from 4% to 8% to help control local property prices.
New Consumer & Business Policies
A “Lemon Law” will be introduced to strengthen consumer rights. A 10% special tax deduction will be offered for converting commercial buildings to housing. Excise duty on alcohol will be increased by 10%.
