KUALA LUMPUR, Sept 19 (Bernama) — Budget 2026, to be tabled on Oct 10, is likely to focus on fine-tuning policies, said CGS International Securities Malaysia Sdn Bhd.
In a note today, the global investment house said much of the heavy lifting has been done over the past several years, and the government is likely to ride on these reforms for its fiscal consolidation efforts.
“We expect no major tax surprises and we think the reform momentum will continue in the areas of governance, wealth disparity, wages, economic competitiveness, and green transition,” it said.
Even without major tax announcements, it expects Malaysia’s fiscal consolidation to continue with its fiscal deficit down to 3.4 per cent of gross domestic product (GDP) in 2026 against 3.8 per cent in 2025.
“The improvement reflects potentially higher revenue collection amid past tax measures like the sales and services tax (SST) expansion and lower growth in development expenditure and subsidy allocation,” it said.
Projecting an improved overall fiscal balance, it expects the government debt to start to turn around with the ratio falling to 63 per cent of GDP in 2026 (2025 estimate: 64 per cent), a significant step in government fiscal consolidation efforts.
“Overall, key points to watch in the Budget 2026 speech are carbon tax details and its implementation; further plans for subsidy reforms, such as for cooking oil and diesel; and cash handouts and social support policies,” it said.
There are loose ends that the investment house thinks will attract the government’s focus, even as major subsidy reforms have been done.
“These could include diesel distribution in the Borneo states, leakages in subsidised cooking oil and subsidised diesel meant for the fisheries industries.
“The government may also heed the public call for a sugar subsidy for manufacturers to be recalibrated in line with the pro-health objectives,” it added.
— BERNAMA
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