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Other priorities will include narrowing regional gaps, expanding social protection, improving education and healthcare, strengthening public-service delivery, supporting local businesses, and building energy, food, climate, and cyber resilience.
Malaysia’s Budget 2027 will look to place people-centred growth at its core, with a tightened focus on attracting investments that create high-value jobs, raising workers’ incomes and protections, and helping households manage persistent cost-of-living pressures.
In a pre-Budget statement released on 18 August 2026 (Tuesday), the Government has outlined 10 focus areas for public consultation ahead of the budget’s tabling in Parliament on 9 October 2026 (Friday). The areas are rooted in the three pillars of the Ekonomi MADANI framework – raising the ceiling for national growth, raising the floor for people’s living standards and driving reform in governance, as well as considering the priorities of the 13th Malaysia Plan.
While all 10 areas will shape the final budget, HRO will focus on the following three for the purpose of this coverage: ensuring investment delivers better jobs, equipping workers for a changing economy, and protecting purchasing power amid higher living costs.
Turning investment into high-value jobs
Budget 2027 will place greater emphasis on investments that are not merely approved, but are realised on the ground, build local supply chains, raise productivity, and generate quality employment for Malaysians.
The Government will aim to continue strengthening outcome-based investment incentives, alongside post-approval facilitation, local supplier development, technology transfer, and the commercialisation of research and development.
Strategic sectors will remain central to this effort, including semiconductors, artificial intelligence, digital services, the energy transition, pharmaceuticals, logistics, and aerospace. These priorities are aligned with national plans including the New Industrial Master Plan 2030, National Energy Transition Roadmap, National Semiconductor Strategy, National AI Action Plan 2026–2030, KL20 Action Plan, PuTERA35, and GEAR-uP Programme.
The focus will also be on removing practical bottlenecks that can delay investments, such as approvals for land and utilities, as well as shortages of skilled talent. The Government intends to strengthen monitoring throughout the investment lifecycle to ensure projects deliver the promised economic benefits.
MSMEs are also expected to play a bigger role in this growth agenda. Efforts will include support for digitalisation and financing, including the RM10bn post-crisis BNM-CGC guarantee scheme, so that smaller local firms can benefit more directly from both domestic and foreign investment.
Growth opportunities will also be developed through tourism under Visit Malaysia Year 2026, the halal economy, Islamic finance and regional economic hubs such as the Johor-Singapore Special Economic Zone, Kulim Hi-Tech Park, Penang Silicon Island, and the Sabah and Sarawak economic corridors.
The Government said development must remain sustainable, guided by Environmental, Social and Governance principles and the Sustainable Development Goals. Following Malaysia’s 15th-place ranking in the IMD World Competitiveness Ranking 2026, the STAR Team will continue working towards a top-12 position under the MADANI Economy framework.
Better skills, better wages and stronger worker welfare
Budget 2027 will also seek to ensure that higher industrial standards lead to tangible gains for workers: stronger productivity, improved mobility and more decent wages.
The Government plans to expand industry-led TVET, apprenticeships, and reskilling programmes that are aligned with strategic sectors. AI literacy, digital skills and lifelong learning will be prioritised for workers and SMEs as technology reshapes the labour market.
Employers are expected to be more closely involved in designing curricula, supplying training equipment and offering job placements. This is intended to ensure that training better reflects industry needs and improves graduates’ employability.
The Government will continue efforts to reduce excessive reliance on low-skilled foreign labour through automation and better workforce planning. Its position is that sustainable wage growth must be built on higher productivity, rather than achieved at the expense of business competitiveness.
Women’s participation in the workforce will remain another priority, with the Government maintaining its target of 60% female labour-force participation. Measures under consideration include investments in affordable and quality childcare, incentives for flexible work arrangements, support for employers to bring women back into the workforce, and skills and entrepreneurship programmes for women.
Public consultation will seek views on tackling youth unemployment, improving TVET and apprenticeship quality, encouraging employer-led training and AI adoption, and identifying practical measures to raise women’s participation in the labour force.
Protecting households from cost-of-living pressures
The Government said protecting people’s welfare remains its foremost priority, particularly as households continue to face pressures from food, housing, transport, healthcare, education and childcare costs.
Budget 2027 will include a comprehensive assessment of these pressures and seek to improve the targeting of subsidies and social assistance using available data and clear eligibility criteria.
The Government also plans to communicate more clearly how savings from targeted subsidies are channelled back into programmes that protect households and strengthen essential services.
Support through Sumbangan Tunai Rahmah, Sumbangan Asas Rahmah and BUDI MADANI will continue to protect the purchasing power of vulnerable groups. At the same time, the Government will work to stabilise the prices of essential goods through enforcement, Jualan Rahmah MADANI programmes and strategic supply management.
The approach will go beyond direct assistance. The Government is aiming to provide aid programmes to help recipients move into more secure jobs and sustainable income sources, including through progressive wages, high-skilled employment opportunities and community income-generation programmes such as Sejati MADANI.
The experience of the 2026 energy crisis, the Government said, demonstrated the value of data-driven targeted assistance in responding quickly to those most affected by economic shocks.
A wider agenda for inclusive and resilient growth
The remaining focus areas set out a broad agenda aimed at ensuring growth is more balanced, inclusive and resilient.
Social justice and development for all will focus on reducing regional development gaps, especially in Sabah, Sarawak, rural and interior areas. The Government will also consider measures to improve housing affordability, rental access, public transport and urban liveability, while supporting youth, women, cooperatives, MSMEs and vulnerable communities.
Strengthening social protection for affected families will address the adequacy and sustainability of retirement and social-security coverage, particularly for informal workers, gig workers and the self-employed. With Malaysia expected to become an aged society by 2030, the Government will also examine the development of the care economy, long-term care capacity and support for carers, persons with disabilities, single parents and older persons.
Empowering education, healthcare and essential services will cover education reform in literacy, numeracy, TVET, STEM, digital and AI capabilities, as well as improving language proficiency and character development. The Government also intends to expand access to affordable healthcare, reduce congestion at public facilities, strengthen the health workforce and maintain schools, clinics, hospitals and other public infrastructure.
Spending that delivers the best value for the people will focus on fiscal discipline, better subsidy management, stronger tax compliance and outcome-based monitoring. The Government said success should not be judged simply by the amount spent, but by whether people experience shorter waiting times, better services, lower costs and higher incomes.
Governance and the best delivery of public services will continue reforms in fiscal management, procurement, auditing, anti-corruption and public-sector efficiency. Planned improvements include wider GovTech adoption, digital identity, cross-agency data integration, end-to-end digital services and the publication of key performance indicators for public assessment.
Competitive home-grown entrepreneurs and “Made by Malaysia” will seek to help local companies scale up, enter new markets and compete globally. Support will cover financing, technology, talent, certification, marketing and supply-chain access, alongside stronger commercialisation of research from universities and public research institutions.
Finally, building energy, food, climate and cyber security will address Malaysia’s preparedness for geopolitical, climate, technological and commodity shocks. Priorities include renewable energy, battery storage, grid upgrades, ASEAN interconnection, energy efficiency, agri-food productivity, flood mitigation and climate adaptation. Cybersecurity, online fraud prevention, data resilience and the protection of critical infrastructure will also be treated as national-security concerns.
In a Facebook post following the 2027 Budget Engagement Council on 18 August, Prime Minister Anwar Ibrahim shared: "Economic reform must continue, new technology and investments must be driven so that the country is not left behind.
"Yet macro growth figures and achievement should not make us alpha against the gap, poverty and cost of living pressure that still plague some of the population.
"Thus, when we reach for the sky, we must remain rooted on the earth and listen to the pulse of the people in the roots. Every view will be refined before the 2027 Budget is finalised, Insha-Allah."
Feedback and proposals may be submitted through the Budget Portal at https://belanjawan.mof.gov.my.
Lead image / PM Anwar Ibrahim Facebook
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