Budget 2027: Resilient Economic Growth Driving Rakyat's Well-being
By Sharifah Hunaini Syed Ismail, Niam Seet Wei and Kisho Kumari Sucedaram
KUALA LUMPUR, Oct 9 (Bernama) -- Malaysia’s Budget 2027 totalling RM459.8 billion is aimed at translating resilient economic growth into tangible benefits for the people through better wages, more efficient targeted assistance, stronger fiscal discipline, and aggressive shift towards higher-value industries.
Of the total budget, 30.2 per cent or RM138.85 billion is allocated to the Ministry of Education (MOE), the Ministry of Health (MOH), and the Ministry of Defence.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, in presenting Budget 2027 in the Dewan Rakyat today, said the total allocation of RM459.8 billion comprises federal operating expenditure of RM376.8 billion and federal development expenditure of RM83 billion.
With an additional RM25 billion in investments from government-linked investment companies (GLICs), RM11 billion in public-private investments, and RM14.2 billion in investments from federal statutory bodies and Minister of Finance Incorporated (MOF Inc) companies, the fifth MADANI Budget, which continues an expansionary fiscal policy, reaches a total of RM510 billion.
Anwar said the measure of a budget lies not in the thickness of its pages, the size of its allocations, or the number of its announcements.
“The measure is far more fundamental: are more Malaysians able to live with dignity, and will the Malaysia we hand over to the next generation be fairer than the one we inherited?” he said.
Anwar said Budget 2027 is built on eight principal foundations, namely: addressing the people’s cost of living; prioritising every state; safeguarding the welfare of all Malaysians; elevating the quality of services for the people; safeguarding national suppliers and preparedness; surpassing the limits of economic potential; preserving the nation’s identity; and managing the people’s money with integrity.
HIGHER REVENUE PROJECTION FOR 2027
The Prime Minister said federal revenue this year is projected to be higher at RM363.6 billion compared with the original estimate of RM343.1 billion.
For 2027, revenue is expected to rise further to RM380.8 billion, he said.
“The fiscal deficit for 2026 is now projected at 3.6 per cent, compared to the original target of 3.5 per cent. Nevertheless, this rate remains on a downward trajectory from 5.5 per cent in 2022 and 3.7 per cent last year.
“Insya-Allah, the 2027 deficit will decrease further to 3.3 per cent, towards the three per cent target by 2028,” he said, adding that the federal government’s debt-to-GDP ratio is expected to drop further to 63.7 per cent next year.
Themed “Reaching for the Skies, While Anchored on Our Values”, this fifth MADANI Budget is the second budget under the 13th Malaysia Plan (13MP), ensuring households are protected through targeted assistance and supported by improved access to infrastructure, education, healthcare, mobility and social protection.
NATIONAL COVENANT BY A RESPONSIBLE GOVERNMENT
The Prime Minister emphasised that a national budget is a moral statement -- the national covenant by a responsible government.
He said the nation would not abandon those crushed by hardship, and that every Malaysian child — regardless of family background, region or station, has the right to see their potential and reach it.
“Nor is this covenant one-sided. The nation provides the room and opportunities, while the people fill it with knowledge, work, creativity, and courage.
“The government keeps its trust; the people strengthen the nation through their effort and excellence,” he said.
TAX RELIEF THRESHOLD REVISION
Anwar stated that the government recognises the concerns of the middle-income group (M40), who continue to bear the cost-of-living burden with patience and resilience.
Consequently, he announced that the government is raising the individual tax relief threshold, which has not been reviewed since 2010, to RM12,000 from RM9,000.
At the same time, the government is committed to progressive taxation by adjusting the tax rate applicable to high-income earners, specifically those with income of over RM1 million, to 30 per cent.
BUMIPUTERA ECONOMIC EMPOWERMENT
To strengthen the bumiputera economy, Anwar said the government has agreed to provide 50 acres (20.23 hectares) of strategic land in the Kuala Lumpur area, valued at RM1 billion, as a new endowment for Yayasan Pelaburan Bumiputra.
At the same time, government-linked investment companies (GLICs) will invest RM2 billion to empower bumiputera companies.
Government-linked companies (GLCs) and Petronas are targeting RM58 billion in procurement from bumiputera companies.
And starting in 2027, the GLC procurement guidelines, which have not been reviewed since 2006, will be updated, he said.
SURPASSING LIMITS OF ECONOMIC POTENTIAL
The government is also focusing on surpassing the limits of economic potential, projecting that gross domestic product (GDP) will continue to grow by between 4.2 and 5.2 per cent in 2027 given Malaysia’s strong economic fundamentals although global uncertainty is expected to persist.
Anwar said the government has also listened to the concerns of micro, small and medium enterprises (MSMEs), which are facing rising operating costs.
In response, the government has agreed to reduce the income tax rate for MSMEs by one percentage point.
Following the conflict in West Asia, Bank Negara Malaysia (BNM) has provided up to RM5 billion in financing to assist small and medium-sized enterprises (SMEs) affected by the situation.
“BNM has agreed to provide an additional RM5 billion in financing, as the response to the existing facility has been very encouraging,” he said.
The Prime Minister also said that Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) and Credit Guarantee Corporation Malaysia Bhd (CGC) will provide financing of up to RM32 billion next year.
“SJPP's coverage will be expanded to include mid-tier companies across all sectors, with the guarantee limit also increased to RM50 million.
“A total of RM1 billion in SJPP guarantees will be allocated specifically to support the expansion of local companies through mergers and acquisitions,” he said.
This means the total financing and loan guarantee facilities will be increased from RM50 billion to RM57 billion in 2027.
TAKING MSME CONCERNS SERIOUSLY
On trade issues, Anwar said the government is taking the concerns of small traders seriously, particularly regarding foreign e-commerce companies entering the domestic market without proper oversight and enforcement.
“Therefore, the government is moving swiftly to examine legislative and enforcement measures to safeguard local MSMEs from unfair competition and ensure that products bought by the public are safe,” he said.
He added that the E-Commerce Bill will be tabled at the next parliamentary sitting as part of efforts to strengthen the accountability among online platforms and sellers.
To facilitate business operations so it is easier for global companies to operate in Malaysia and bring in top skilled talent, the government will enhance the Global Services Hub (GSH) tax incentives from Jan 1, 2027.
“Among the changes is a preferential tax rate of five per cent on income from GSH activities for new companies,” he said.
The GSH incentive period will be extended in five-year increments, up to a maximum of 30 years.
To strengthen the cross-border economy, Anwar said he and Singapore Prime Minister Lawrence Wong will launch the Johor-Singapore Special Economic Zone (JS-SEZ) Masterplan and Blueprint at the end of this year.
BUILDING THE NATION FOR A GENERATION
Towards the end of his Budget 2027 presentation, Anwar said the government is not building the nation for a single fiscal year, but for a generation.
“Our responsibility is not measured by what we have spent, but by what we have prepared for those who will live tomorrow,” he said.
The Prime Minister said he task of a generation is not merely to enjoy what it has inherited, but to enlarge what it will bequeath.
-- BERNAMA