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Top business highlights include the launch of the ASEAN Business Entity (ABE) status, continuation of the Residence Pass-Talent (Fast-Track) scheme which waives off the EP requirements, and focus on research & innovation to become an AI nation by 2030.
Report by Sarah Gideon and Aditi Sharma Kalra.
Malaysia's leader PM Anwar Ibrahim commenced the reading of the fourth Madani budget by calling it a "People's Budget" and sharing that he expects the economy to grow at a rate of 4 to 4.5%.
Valued at RM470bn, the Budget 2026 sees the following outlay:
a. Operating Expenditure: RM338.2bn
b. Development expenditure: RM81bn
c. Government-Linked Investment Companies i.e. GLIC investment (GEAR-uP Initiative): RM30bn
d. Public-private Investment: RM10bn
e. BBP (Federal statutory bodies, or badan berkanun persekutuan) and MKD (Ministry of Finance incorporated) company investment: RM10.8bn
Here are some of the top takeaways for business leaders and employers to note from Belanjawan 2026.
Workforce and labour updates (including for youth and specific worker segments)
- Salary threshold for stamping employment contracts with the prescribed duty has been set to RM3,000 per month starting 1 January 2026.
- RM7.9bn is going to be set aside to strengthen the TVET ecosystem.
- A one-year research leave or sabbatical will be provided to public university lecturers who are founders of spin-off companies to encourage the commercialisation of R&D results.
- For youth, the following will be provided:
- On-the-job training by Khazanah for 11,000 youth without a degree (RM200mn)
- Almost RM30mn by MARA to train Bumiputera children with job guarantees
- Financing for youth entrepreneurs by BSN (RM150mn)
- To increase staff at public health facilities in 2026, 4,500 contract doctors will be offered permanent positions and nearly 935 graduates of the Ministry of Health Training Institute will be offered permanent positions as nurses.
- Youngsters will be given opportunities to further their education through scholarships, loans, and educational allowances provided by the Government and GLICs; as well as through double tax deduction on scholarship-sponsored expenses by private parties extended to professional qualification certificates.
- Special financial assistance is on the way for civil servants:
- RM500 to all civil servants grade 15 and below, including contract appointments
- RM250 to all Government retirees
- These will be disbursed in early March 2026 in conjunction with Aidilfitri.
Business ecosystem updates (growth, expansion and incentives)
- Launch of ASEAN Business Entity (ABE) status - To be regulated by Securities Commission Malaysia (SC), gaining this status will enable public listed and mid-cap companies with extensive market presence in ASEAN to get incentives.
- Launch of the Investor Pass which will provide a Multiple Entry Visa for up to 12 months for foreign investors. To be facilitated by Malaysian Investment Development Authority (MIDA), the authority is expected to take a proactive approach in offering this pass multinational corporations and prospective investors.
- In tandem, the Residence Pass-Talent (Fast-Track) scheme will continue to support investors in bringing in talent quickly and efficiently. In effect, the requirement for an Employment Pass will be waived for eligible foreign professionals for the first three years.
- To fulfil the mission of becoming an "AI Nation by 2030", the following will be set aside:
- Allocation for activities (~RM5.9bn) related to RDCI, i.e. for research, development, commercialisation, and innovation
- Additional 50% tax deduction to PMKS for AI-related training costs (i.e. for micro, small, and medium enterprises)
- Establishment of Sovereign AI Cloud
- Malaysia Digital Acceleration Grant (RM53mn)
- Carbon Tax will be introduced to companies in the iron, steel and energy sectors in 2026, in addition to the drafting of the National Climate Change Bill.
- EXIM Bank will stand ready to provide a soft loan to help companies affected by the global trade tariff tensions, to be funded by a RM500mn allocation.
- Double tax deduction for companies sponsoring training for the disabled will be extended to companies that sponsor care workers who follow programmes at training institutions recognised by Ministry of Women, Family and Community Development (KPWKM).
- Through Malaysian Technology Development Corporation (MTDC), Malaysia will launch SemiconStart in collaboration with global incubators.
- The halal industry will see additional support, such as through financing of halal PMKS (i.e. micro, small, and medium enterprises) by SME Bank up to RM100mn, and increased Government guarantees for halal SME financing by SJPP up to RM2bn.
Updates for local businesses, entrepreneurs, start ups, and gig workers
- RM50bn will be put aside for Government loan and guarantee facilities for local entrepreneurs.
- Bumiputera entrepreneurs will get support, including: RM2.4bn dedicated to G1-G4 Bumiputera (local) contractors implementing small and medium projects; RM10bn in SJPP guarantee value; and development of additional 50 acres of Malay Reserve Land in Bandar Malaysia to begin by end 2026.
- i-Saraan Plus, the voluntary EPF initiative for self-employed individuals, will be introduced for gig, e-hailing and p-hailing workers with matching contribution incentives of up to RM600 per year or RM6,000 for life.
- Agribusiness entrepreneurs can look forward to RM1.1bn Agrobank financing; 100% income tax exemption for new food production projects; automation tax incentives extended to selected animal husbandry; increase in ploughing and pesticide incentives to RM160 and RM300 per hectare per season; and introduction of Paddy Harvesting Incentive at the rate of RM50 per hectare per season.
Transport and connectivity updates
- Sabah and Sarawak highway projects costing nearly RM48bn will include: Pan Borneo Sabah, Sarawak-Sabah Link Road Project, Trans Borneo Project, and upgrading of the red line alignment in Durin and Salim, Sibu, Sarawak.
- Malaysia Airport Holdings Berhad (MAHB) will undertake the following projects:
- Development of airports in Penang, Kota Kinabalu, Tawau and Miri (RM2.3bn),
- Inter-terminal transfer project between KLIA Terminals 1 and 2,
- Selangor Aero Park in Sepang will be developed as a regional logistics and cargo hub in collaboration with the Selangor Government.
- National rail connectivity is in process of being strengthened. The progress is as follows:
- ETS to Johor Bahru Sentral (final phase)
- LRT3 (Bandar Utama - Johan Setia)
- ECRL (Kota Bharu - Gombak)
- LRT Kelana Jaya (replacement of 26 trains)
- Ministry of Transport (MOT) is in the final stages of setting speed limit regulations for heavy vehicles in an effort to reduce the risk of road accidents.
Initiatives of interest to the general public:
- EPF withdrawal limit for the purpose of Hajj has been increased from RM3,000 to RM10,000.
- The Consumer Protection Act will be amended to include elements of Lemon Law to protect the rights of consumers against defective products.
- Purchases of new Proton and Perodua local cars by taxi and private hire car owners will be fully exempt from excise duty and road tax.
- RM700mn will be allocated to develop the tourism sector to attract 47mn visitors. As such, special individual income tax relief of up to RM1,000 can be claimed on expenses for entrance fees to local tourist centres and cultural programmes.
- Individual income tax relief of up to RM3,000 for life insurance and takaful premium payments has been expanded to cover children.
- The Government has agreed to table the Anti-Bullying Bill 2025 with a view to combat bullying.
- Excise duty rates on cigarette products will be increased in phases starting 1 November 2025 by:
- 2 sen per stick for cigarettes
- RM40 per kg for cigars, cheroots and cigarillos
- RM20 per kg of tobacco content for heated tobacco products
- The National Ageing Blueprint 2025–2045 will be formulated as a comprehensive guide.
- RM18.6bn allocation given to the Ministry of Higher Education, including over RM400mn to maintain infrastructure and replace obsolete equipment.
Initiatives to uplift and empower all segments of society
- RM 1.4bn will be set aside to provide assistance for chronically homeless disabled people, disabled people unable to work, and for the Disabled Workers Allowance. Prasarana will organise 100 special mobility vans to facilitate the movement of disabled people.
- Initiatives to address the cost of living will take up an allocation of RM1bn, including increasing the RAHMAH Umbrella Programme, which typically utilises cash allowance and subsidies on essential goods, in all State Legislative Assembly constituencies nationwide, also known as the Dewan Undangan Negeri (DUN) constituencies.
- RM1.26bn has been allocated for the welfare of the elderly, involving 180,000 elderly, including pocket money, socio-economic assistance, and activity centres.
- Initiatives to ensure that children from poor families receive education include:
- Federal Small Scholarship (RM150mn)
- Supplementary Food Scheme (RM870mn)
- General School Assistance extended to Form 5 students (RM180mn)
- Welfare and education of special children to be taken care of through:
- Construction of two new special education schools
- RM150 allowance per month to 150,000 disabled students (RM270mn)
- Disabled-friendly school facilities and equipment (RM30mn)
- RM120mn to be assigned in support of free education through PTPTN (The National Higher Education Fund Corporation) for 5,800 children from poor families studying at IPTA (Institusi Pendidikan Tinggi Awam, i.e. public universities in Malaysia).
- Free MyRailLife Passes will be given to the disabled community, school students, and children under six years old.
Lead image / PM Anwar's Facebook
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