RHB IB Sees RM89 Bln Development Spending In Budget 2026

KUALA LUMPUR, Sept 24 (Bernama) -- RHB Investment Bank Bhd (RHB IB) expects about RM86 billion to RM89 billion to be allocated for development expenditure in Budget 2026, aligned with the 13th Malaysia Plan’s (13MP) total allocation of RM430 billion for 2026–2030.

In a note, it said the government’s central priority would be strengthening regional mobility, aiming to close development gaps between states and promote more equitable growth across Peninsular Malaysia, Sabah, and Sarawak.

The investment bank added that the government is likely to continue subsidy rationalisation measures, particularly for RON95 petrol, to ensure assistance reaches those most in need while minimising fiscal leakages.

“This targeted approach reflects ongoing efforts to balance social protection with fiscal sustainability,” RHB IB said.

Budget 2026 is also expected to prioritise initiatives that enhance Malaysia’s competitiveness, attract quality foreign direct investment, and bolster support for micro, small, and medium enterprises (MSMEs).

Policies aimed at fostering innovation, streamlining regulations, and improving the ease of doing business are likely to be introduced.

The government is anticipated to provide targeted incentives for priority sectors driving growth and technological advancement, including renewable energy, digitalisation, electrical and electronics (E&E), advanced manufacturing, and agriculture.

“In this regard, we highlight three key industries as critical focus areas for investors and financial stakeholders in the medium term: rare earth elements, E&E, and Islamic finance innovation.

“These sectors are emphasised in the 13MP and present high-growth potential supported by policy frameworks, international collaboration, and substantial investment commitments,” it said.

RHB IB concluded that Budget 2026 is poised to be a pivotal tool in steering Malaysia towards sustained and inclusive growth amid a complex global environment.

“Anchored firmly within the framework of the 13MP and the MADANI Economy, it balances immediate fiscal prudence with long-term strategic investments,” it added.

With a likely budget deficit target of 3.5 per cent of gross domestic product in 2026, narrowing to 3.2 per cent in 2027, the government signals its commitment to fiscal consolidation while retaining flexibility to support growth.

-- BERNAMA