The government expects to spend more than RM80 billion on subsidies, assistance and incentives in 2027, with fuel subsidies projected to remain high at RM40 billion.
In his budget speech, prime minister Anwar Ibrahim said the cost of living was a priority as it “was the main issue burdening the public”. He announced a raft of cash aid programmes, including RM80 billion in cash aid, subsidies and incentives, and tax breaks for middle-income earners.
The education ministry again receives the largest allocation (RM69 billion), while the health ministry is allocated nearly RM48 billion, and the defence and home ministries will receive RM22 billion each.
The education budget includes RM2 billion for school repairs and maintenance, with nearly RM1.3 billion to upgrade 682 dilapidated schools, particularly in Sabah and Sarawak. National schools will receive RM900 million, while Chinese national-type schools will receive RM100 million, and Tamil national-type schools RM50 million.
Key highlights of the national budget:
Civil servants, pensioners
A special financial assistance of RM1,500 will be given to 1.3 million civil servants in Grade Utama B and below, including contract employees.
More than one million government pensioners, including retired and non-pensionable veterans, will receive RM750 each.
The minimum monthly pension will be increased from RM1,000 to RM1,350, benefitting nearly 59,000 retirees, armed forces veterans, and recipients of derivative pensions.
Subsidies and assistance
More than RM80 billion will go on subsidies, assistance and incentives in 2027, with fuel subsidies projected to remain high at RM40 billion.
Sumbangan Asas Rahmah aid of up to RM150 will be paid every month, benefitting up to nine million people. Malaysians aged 18 and above will also receive RM100 in SARA assistance on two occasions, benefitting up to 13 million people.
Minimum wage to rise to RM2,000
The minimum wage will be raised from RM1,700 to RM2,000 from June next year, benefitting more than four million workers. Micro, small and medium enterprises with annual sales below RM50 million will be exempted from the increase to give them time to adjust their business models.
A minimum starting salary of RM2,500 a month will be introduced for semi-skilled workers and graduates.
The living wage benchmark will be raiced to RM3,400 a month from RM3,100, benefitting 230,000 workers.
Income tax cuts and relief
The individual income tax relief limit will be increased from RM9,000 to RM12,000.
Tax relief will also be expanded to cover a wider range of expenses, including postnatal care, caregiving for parents and grandparents, education and skills training, and artificial intelligence (AI) subscriptions.
The tax rate on chargeable income between RM70,000 and RM100,000 will be reduced to 18% from 19%, while the rate for income between RM100,000 and RM150,000 will be lowered to 24% from 25%.
The tax rate for individuals earning more than RM1 million a year will be raised to 30%.
MSME tax rates to be reduced
Tax rates for MSMEs will be reduced by one percentage point next year.
Under the 2027 budget, the tax rate on the first RM150,000 of chargeable income will be lowered to 14%, while the rate for chargeable income between RM150,000 and RM600,000 will be reduced to 16%.
E-commerce regulations
An e-commerce bill will be tabled at the next parliamentary sitting to strengthen accountability among online platforms and sellers, curb unfair competition from unregulated foreign e-commerce operators, and protect local MSMEs.
Transport and student travel
A new MyKomuter50 pass will be introduced for KTM Komuter users, which is expected to produce savings of up to RM160 a month for passengers.
Free travel passes will be provided to 360,000 school pupils, persons with disabilities and children aged below six.
The FlySiswa Madani flight ticket subsidy for university students will be raised to RM500 from RM400, benefitting more than 60,000 students at public universities.
More permanent posts for contract doctors
More than 9,000 contract doctors in the public healthcare service will be offered permanent positions next year. Graduates who complete their medical degrees will be immediately offered permanent appointments as medical officers.
Paramedics and nurses will receive RM200 a month in post allowance, doubled from the existing RM100 a month.
Private hospitals will adopt standardised billing categories from 2027 to curb price distortions.
Affordable medical insurance
MediAsas, the government’s new affordable basic medical insurance and takaful plan, will be launched in January.
The plan will feature standardised hospital charges based on diagnosis and treatment type, making medical costs more predictable and easier to manage.
PTPTN repayments deferred
The government will defer National Higher Education Fund Corporation (PTPTN) loan repayments in 2027 for borrowers earning RM2,500 or less a month.
Borrowers earning between RM2,500 and RM3,000 a month will only be required to make minimum repayments of RM50 a month.
The measures are expected to benefit more than 400,000 PTPTN borrowers.
Form 6 students allowance
All Form 6 pupils will receive an annual allowance of RM2,500, matching the allowance given to matriculation students.
Sabah and Sarawak grants
Allocations for Sabah and Sarawak are increased by RM1.1 billion each. Sabah will receive RM18.7 billion (up from RM17.6 billion) while Sarawak will receive RM16.2 billion (from RM15.1 billion).
The interim special grant for both states will be increased to RM1.5 billion, with payment to be settled before the end of the year.
The number of Public Service Department scholarships offered to students from Sabah and Sarawak will be doubled to a combined total of 4,200.
Expatriates’ spouses
Spouses of expatriates holding a Category I employment pass and spouses with a dependent pass will be allowed to work in Malaysia from Jan 1.
Holders of nomad visas who have reached the two-year limit will be granted an additional two years to continue living and working remotely in Malaysia.
Youth volunteers
RM100 incentive to youths who complete the required number of volunteer hours with selected NGOs.
Duty-free limit
The limit on duty-free goods purchase limit for visitors and tourists will be increased to RM10,000, subject to a minimum stay of 48 hours.
AI subscriptions
An additional 100,000 free artificial intelligence subscriptions will be provided, extending access to new AI applications such as ChatGPT.
Training
HRD Corp will provide RM3 billion in funding and offer three million skills training opportunities, while the Skills Development Fund Corporation will allocate RM500 million to finance trainees enrolled in skills training programmes.
Drink driving
Drivers who cause accidents while driving under the influence of alcohol or drugs will be required to compensate victims under a new law being drafted.
Road transport
Commercial vehicles will be requited to install telematics systems to monitor speed, location and risky driving behaviour.
The Malaysian Highway Authority will build 15 motorcycle shelters, install 70 CCTV cameras along the North-South Highway and provide 50 electric vehicle charging facilities at strategic locations.
Drug screening for air crew
Mandatory drug and alcohol screening will be introduced for pilots and flight crew, while 48 scanners will be installed at the Kuala Lumpur, Penang and Kota Kinabalu airports. - FMT
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