Prime Minister Datuk Seri Anwar Ibrahim today tabled Budget 2026, Malaysia’s largest-ever spending plan worth RM397 billion, focusing on three big goals: helping Malaysians cope with daily costs, building future-ready industries, and strengthening good governance.
Framed under the Madani Economy philosophy, the budget continues the government’s promise to “raise the ceiling and raise the floor” helping the rakyat today while laying the groundwork for tomorrow.
Relief for the people
The government is doubling down on its mission to ease the cost of living, ensuring no Malaysian is left behind as prices and expenses continue to climb.
Among the key measures announced:
- SARA Appreciation Grant: RM100 will be credited to 22 million Malaysians aged 18 and above in mid-February 2026.
- BUDI MADANI Subsidy: Keeps RON95 fuel at RM1.99/litre, supported by RM1.1 billion allocation.
- MyKasih Food Aid: RM200 per month for low-income households, extended for another year.
- Electricity rebates and rice price controls will continue, alongside expanded agriculture subsidies to stabilise essential goods.
Education gets a big boost
From household relief, the budget shifts its focus to education and youth empowerment, recognising that the next generation is Malaysia’s most valuable investment.
The Ministry of Education receives RM64.1 billion, the highest allocation in the nation’s history.
Key highlights include:
- Free Education via PTPTN: RM120 million to support 5,800 students from low-income families pursuing degrees at public universities (IPTA).
- MyRailLife Pass: Free train rides for OKU, school students, and children under 6 years old.
- TVET & AI Training: Expanded nationwide under HRD Corp to prepare youth for high-tech, digital, and green jobs.
Strengthening healthcare
To keep Malaysians healthy and supported, the Health Ministry receives RM46.5 billion, an increase from RM45.3 billion in 2025.
Funds will go toward upgrading 26 hospitals, building new clinics in Sabah and Sarawak, and enhancing mental health services and emergency response systems.
The goal? Better healthcare that’s closer to home, faster in service, and stronger in capacity.
Building connections, literally
Moving from wellbeing to mobility, transport infrastructure takes centre stage as Malaysia aims to improve nationwide connectivity.
- 50% toll discount for all major highways during Deepavali 2025, helping families travel affordably.
- Completion of major rail lines like ETS to Johor Bahru, LRT3 (Bandar Utama–Johan Setia), and ECRL (Kota Bharu–Gombak).
- The long-awaited Inter-Terminal Transfer Project will finally connect KLIA Terminal 1 & 2, improving convenience for millions of travellers.
- Selangor AeroPark in Sepang will be developed into a regional logistics and cargo hub, a move that could boost trade and jobs in the aviation sector.
Going green for the future
As the world races toward sustainability, Malaysia is taking firm steps to lead in Southeast Asia’s green transition.
Budget 2026 introduces the nation’s first-ever Carbon Tax, set to begin in 2026, targeting the iron, steel, and energy sectors. It will be rolled out alongside the long-awaited National Climate Change Bill.
Complementing this, RM200 million is allocated for renewable energy and EV ecosystem development.
However, imported CBU EVs will lose their duty-free status starting next year, meaning higher prices, while locally assembled (CKD) EVs remain tax-free until 2027 to encourage domestic manufacturing.
Civil servants & the public sector
Next, the Prime Minister turned his attention to those who keep the country running, civil servants and government retirees.
- RM500 Special Aid for civil servants (Grade 15 and below, including contract staff).
- RM250 Aid for pensioners, disbursed in March 2026 ahead of Hari Raya Aidilfitri.
- Early GCR withdrawal of up to RM10,000 for those performing Hajj.
- Judges’ salary to be raised by 30% beginning Jan 1, 2026.
Empowering communities
Beyond financial relief, the budget also emphasises social inclusion and community empowerment.
- Orang Asli Development: RM412 million for housing, education, and economic programmes.
- Women & Family Development: RM300 million for childcare subsidies, women entrepreneurs, and shelters for domestic violence survivors.
Powering businesses & innovation
For businesses and the economy, Budget 2026 outlines Malaysia’s roadmap towards a high-income, innovation-driven future.
- RM500 million Digital Economy & AI Fund to accelerate automation, local tech startups, and AI adoption.
- RM1 billion SME Transformation Grant for small businesses embracing digitalisation and green practices.
- Continued support for semiconductors, EV, and clean energy sectors.
- Stronger tax compliance and digital systems under the Fiscal Responsibility Act to boost national revenue without raising broad-based taxes.
Reforming governance & transparency
To ensure long-term accountability, the government will table a series of landmark laws in 2026:
- Government Procurement Act
- State-Owned Enterprise (SOE) Act
- Ombudsman Act
- Freedom of Information Act
All are anchored under the Public Finance and Fiscal Responsibility Act 2023, which aims to keep public debt below 60% of GDP and the fiscal deficit at 3.5%.
At its heart, Budget 2026 is about balance between compassion and caution, between today’s relief and tomorrow’s resilience.
Anwar summed it up with a Chinese proverb during his speech:
居安思危，思则有备，有备无患” — When in peace, prepare for danger; with preparation, one has no worries.
It’s a timely reminder that while Malaysia’s economy is stabilising, staying prepared is the key to lasting growth and security.
