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Budget 2026 to be tabled by PM Anwar today at 4pm - paultan.org

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  Published in Automotive and Transportation on Monday, October 20th 2025 at 15:40 GMT by Paul Tan
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Malaysia’s 2026 Budget to Be Presented by Prime Minister Anwar Ibrahim Today at 4 pm

In a highly anticipated move, Prime Minister Anwar Ibrahim will unveil the National Budget 2026 today at 4 pm, according to a press release from the Prime Minister’s Office (PMO). The new budget, scheduled to cover the fiscal year 2026 (April 1, 2025 – March 31, 2026), is expected to outline Malaysia’s economic strategy in a post‑pandemic environment, addressing inflationary pressures, fiscal sustainability, and the country’s long‑term sustainability goals.

Key Highlights of the Proposed Budget

1. Fiscal Position and Economic Growth Targets

The budget proposes a modest growth target of 5.0 % for 2026, a slight uptick from the 4.5 % forecast for 2025. Anwar’s team aims to keep the fiscal deficit within 2.5 % of GDP, a reduction from the 3.2 % target for the current year. This move follows a period of increased public spending on infrastructure and social welfare programs, with a focus on maintaining macro‑economic stability.

2. Revenue Measures

Revenue estimates stand at RM 1.2 trillion, up 2.3 % from 2025 figures. The PMO is proposing a modest increase in the corporate tax rate from 24 % to 25 % to broaden the tax base, while introducing a new digital services tax for large multinational tech firms operating within Malaysia. Import duties on high‑carbon vehicles will be raised by 1.5 % to accelerate the shift toward low‑emission transport.

3. Expenditure Priorities

The budget earmarks RM 300 billion for social spending, including healthcare subsidies, education grants, and a new “Rural Innovation Fund” aimed at supporting small‑to‑medium enterprises (SMEs) in the hinterlands. On the infrastructure front, RM 250 billion will be allocated to the development of a national EV charging network, with a target of 5,000 charging stations by 2027. The Ministry of Transport is also set to roll out a comprehensive “Smart Mobility Plan,” featuring incentives for electric and hydrogen fuel cell vehicles.

4. Automotive‑Sector Specific Policies

A significant portion of the budget’s appeal to the automotive community is the revised subsidy framework for electric vehicles (EVs). The new policy will increase the government subsidy for EVs from RM 10,000 to RM 15,000 per vehicle, contingent upon meeting certain battery‑capacity thresholds. Import duties on EVs will be reduced by 5 % for models with a battery capacity above 50 kWh, encouraging local adoption of greener technology.

Additionally, a new “Green Mobility Voucher” program will provide consumers with up to RM 7,500 for the purchase or lease of new or second‑hand EVs, provided the vehicle meets the Ministry of Transport’s emissions criteria. These measures align with the “Green New Deal” announced by the government, which aims to reduce national CO₂ emissions by 30 % by 2035.

5. Tax Incentives and Business Support

The budget includes tax incentives for automotive manufacturers investing in research and development (R&D). Companies that spend at least 2 % of their annual revenue on R&D will qualify for a 20 % tax deduction. Furthermore, the government will expand the “Automotive SME Export Incentive,” offering a 3 % reduction in excise duties for exporters of automotive components.

6. Social Welfare and Education

On the social front, the budget expands the “Malaysian Student Scholarship Programme” to cover 30 % more students, particularly those enrolled in STEM fields. Healthcare spending will increase by 6 % to expand public hospital capacity and improve chronic disease management. The “Digital Literacy Initiative” will also receive an additional RM 50 million to bridge the digital divide in rural areas.

Expected Impact on the Auto Market

Analysts predict that the combination of increased EV subsidies and a reduced import duty on high‑capacity batteries will drive a surge in domestic EV sales. Car‑makers like Proton, Perodua, and international brands operating in Malaysia will likely adjust their product mix to feature more electric models in response to the new fiscal incentives. The lower cost of EVs, combined with the government's push for sustainable transport, is expected to accelerate Malaysia’s transition toward a low‑carbon automotive sector.

Moreover, the introduction of a digital services tax will raise revenue from large tech conglomerates, which may influence the pricing of imported automotive parts and technology solutions. This, in turn, could affect the cost structure for both OEMs and aftermarket service providers.

Conclusion

Prime Minister Anwar Ibrahim’s budget presentation today marks a pivotal moment in Malaysia’s economic planning. The proposed fiscal framework balances the need for robust growth, fiscal prudence, and a decisive push toward sustainability, especially within the automotive sector. As the country moves toward a more electrified and digitally connected future, the new budget’s policies on EV subsidies, tax incentives, and infrastructure investment will play a critical role in shaping the automotive landscape over the next decade.