KUALA LUMPUR, Oct 13 — The Malaysian ringgit is expected to continue its recent gains, supported by robust domestic spending and the government’s fiscal prudence, Second Finance Minister Datuk Seri Amir Hamzah Azizan said.
The currency could strengthen to “just below” RM4 per US dollar within the next 12 months, Amir Hamzah told Bloomberg Television’s Haslinda Amin on Sunday, a level that would mark its strongest closing since 2018 and represent a gain of more than 5 per cent, according to The Edge.
“The ringgit is still resilient because the fundamentals are still strong,” said Amir Hamzah, who is also in charge of the economy ministry.
He added that even if the US Federal Reserve slows its pace of easing, “the ringgit still has a lot of wind behind it to be able to push ahead along the way.”
The ringgit has risen nearly 6 per cent this year, making it the top-performing currency in South-east Asia.
Measures such as civil servant wage hikes and a high employment rate are bolstering domestic consumption, Amir Hamzah said.
He noted that the government is putting “money in the hands of the people” and small and medium enterprises, adding that these steps support economic growth.
The economy is projected to expand 4–4.5 per cent next year, down slightly from a 4–4.8 per cent expansion forecast for 2025.
Analysts’ median estimates suggest third-quarter growth eased to 4.2 per cent, from 4.4 per cent in the previous quarter.
On Friday, Prime Minister Datuk Seri Anwar Ibrahim unveiled a RM470 billion spending plan for 2026, which also covers expenditures by state-linked companies.
The budget aims to reconcile falling oil revenue and slower growth while reducing the deficit to 3.5 per cent of GDP next year, down from 3.8 per cent in 2025.
Anwar, who also serves as finance minister, did not introduce new subsidies or taxes, but announced higher duties on cigarettes and alcohol from November and confirmed plans for a carbon tax on iron, steel, and energy sectors next year.
Growth is expected to focus on semiconductors, energy, and digital industries.
Amir Hamzah said recent measures to expand the sales and services tax and adopt e-invoicing are improving tax compliance and reducing reliance on oil and gas revenues.
The Institute for Democracy and Economic Affairs (IDEAS) said Budget 2026 lacks major reforms to diversify and strengthen the tax base, though it praised efforts to improve compliance and curb leakages.
With Petronas’ proposed RM20 billion dividend for 2026, revenue growth relative to GDP is slowing, IDEAS added.
“Budget 2026 manages immediate pressures, but lasting progress depends on the government’s ability to turn fiscal restraint into reform,” IDEAS said.
“Expanding the revenue base, improving spending efficiency, and strengthening institutions must take priority to ensure sustainable growth.”
The government is also exploring rare earth mining and processing to meet growing demand for minerals used in electronics, electric vehicles, and green technologies.
Amir Hamzah said the government is conducting mapping exercises to understand reserves and constraints, adding that discussions are ongoing with potential strategic partners.
Some reserves are located in Terengganu, Kelantan, and Kedah, which are controlled by the opposition.
