BUDGET 2027 is expected to strike a delicate balance between supporting economic growth, easing household pressures and keeping the country’s fiscal consolidation efforts on track.
According to MBSB Research, the fifth MADANI Budget and second budget under the 13th Malaysia Plan (13MP) is likely to remain moderately expansionary, with greater emphasis on infrastructure, household support and economic transformation.
Budget 2027 is scheduled to be tabled on Oct 9, with the Government expected to focus on raising the ceiling for economic growth, raising the floor for household living standards and driving governance and public administration reforms.
MBSB Research forecasts Federal Government expenditure could reach RM440.9 bil in 2027, compared with RM421.2 bil under Budget 2026.
Development expenditure is expected to increase to between RM85 bil and RM90 bil from RM81 bil, as projects under the 13MP move from planning and approvals into physical implementation.
Despite higher spending, the fiscal deficit is projected to narrow to between 3.3% and 3.5% of GDP in 2027, compared with an estimated 3.7% this year.
According to MBSB, infrastructure is expected to be one of the biggest beneficiaries, with potential allocations for flood mitigation, water infrastructure, rural roads and bridges, public transport, schools, hospitals, ports, airports and industrial infrastructure.
Sabah and Sarawak could also receive stronger attention, particularly for roads, electricity and water access, telecommunications, healthcare facilities, ports, airports, flood protection and industrial connectivity.
The construction sector therefore offers the clearest immediate exposure, although MBSB Research noted that companies with strong tender visibility, working capital and execution capabilities would be better positioned to benefit.
Energy security is another key theme, as Malaysia seeks to support data centres, semiconductor factories and industrial parks while moving towards a 35% renewable-energy share by 2030.
Potential measures include incentives for solar and battery storage, grid upgrades, energy efficiency and electric commercial fleets.
The Government is also expected to push its AI and semiconductor agenda beyond data-centre construction, with possible support for enterprise AI adoption, cybersecurity, chip design, advanced packaging, automation and research and development.
For households, Budget 2027 could bring more targeted assistance through food credits, school meals, transport passes, electricity support, fuel assistance and tax relief for childcare, caregiving and medical expenses.
Middle-income households may receive greater attention as they continue to face pressure from housing, healthcare, education and childcare costs.
Healthcare and food security are also likely to feature prominently, with potential measures ranging from hospital digitalisation and rural healthcare to farm mechanisation, irrigation, cold-chain infrastructure and agrofood financing.
On the revenue side, MBSB Research expects the Government to favour compliance, e-Invoicing, selected excise duties, subsidy rationalisation and potentially a phased carbon tax rather than introducing a broad-based new tax.
Overall, Budget 2027 is expected to prioritise targeted spending over blanket measures, with the key test being whether announced projects translate into actual implementation and stronger economic productivity.—Sept 11, 2026
