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Malaysia Budget 2026 live updates (auto/transport) - paultan.org

  //automotive-transportation.news-articles.net/co .. 026-live-updates-auto-transport-paultan-org.html
  Published in Automotive and Transportation on Monday, October 20th 2025 at 15:39 GMT by Paul Tan

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Malaysia 2026 Budget: A Deep Dive into the Auto & Transport Reforms

On 10 October 2025, the Malaysian government unveiled the 2026 Budget, outlining a comprehensive strategy to modernise the nation’s automotive landscape. With a focus on sustainability, local manufacturing, and improved mobility, the budget introduces a mix of fiscal incentives, tax reforms, and infrastructure investments that promise to reshape the way Malaysians drive, buy, and maintain vehicles.

1. A Major Push for Electric Vehicles

The most headline‑grabbing element of the budget is the acceleration of electric‑vehicle (EV) adoption. The Ministry of Finance has slashed the motor tax on fully electric cars by a full 50 %, reducing the annual levy from RM200 to RM100 for most models. In addition, the government has introduced a one‑time rebate of up to RM10,000 for the purchase of new EVs, payable through the Vehicle Registration Office. This rebate is available for models priced under RM200,000 and is backed by the recently published “EV Incentives for 2026” policy brief, which details eligibility criteria and the administrative process for claiming the rebate.

The budget also earmarks RM5 billion for a national charging‑infrastructure programme. The plan includes 5,000 new fast‑charge stations across Peninsular Malaysia and 1,000 in East Malaysia, with priority given to urban corridors and industrial hubs. An online portal, detailed in the “Charging Infrastructure Development Roadmap” link within the budget release, will allow private developers to apply for grants and partnership agreements.

2. Revamping Import Duties and Supporting Local Production

Malaysia’s 2026 Budget acknowledges the need to make locally manufactured cars more competitive against imports. Import duties on new vehicles will be reduced from 12 % to 8 % for models built in Malaysia, while used‑car duties will be cut by 3 %. These measures are designed to lower the total cost of ownership for consumers and boost the local automotive industry.

At the same time, the budget increases the allocation to the National Automotive Manufacturing Development Fund by 30 %, providing capital grants and tax incentives for firms that invest in new production lines, especially those focused on EV components. A new “Local Manufacturing Support Package” link within the budget explains the eligibility thresholds, the grant application workflow, and the expected timeline for disbursement.

3. Fuel Tax Adjustments and Road Maintenance

To balance environmental goals with the needs of everyday drivers, the 2026 Budget introduces a 2 cent per litre adjustment to the excise duty on petrol and diesel. The new rates, announced via the “Fuel Tax Reform Summary” page, aim to encourage cleaner fuels without imposing a steep burden on motorists. The government is also earmarking RM3 billion for the Road Maintenance Improvement Programme, targeting the repair of major highways and the expansion of toll lanes on the North‑South Expressway.

4. Investment in Public Transport and Mobility Services

The budget allocates RM7 billion to the National Public Transport Enhancement Initiative. This funding will support the expansion of Malaysia’s rapid transit networks, the introduction of bus rapid transit (BRT) corridors in Kuala Lumpur, Johor Bahru, and Penang, and the upgrade of existing rail lines. The initiative also includes subsidies for the procurement of low‑emission buses and the development of integrated ticketing solutions.

Additionally, a new “Shared Mobility and Smart City Funding” link in the budget points to a RM4 billion investment in ride‑hailing platforms, autonomous vehicle trials, and the construction of smart parking hubs. These hubs will leverage real‑time data to optimise vehicle flow and reduce congestion in city centres.

5. Skills Development and Industry Training

Recognising that technology is a core driver of the automotive future, the 2026 Budget introduces a RM1 billion Automotive Skills Development Programme. This initiative will fund vocational training centres that specialise in EV battery assembly, software diagnostics, and autonomous driving systems. Partnerships between the Ministry of Education, industry leaders, and research institutions will ensure that graduates possess the skills required for a high‑tech automotive sector.

6. Anticipated Impact and Challenges

While the budget presents an ambitious roadmap, experts caution that several challenges must be addressed. The rollout of EV incentives will depend on the availability of models in the market, which has historically been limited by supply chain constraints. The success of the charging infrastructure plan hinges on private sector investment and the swift approval of permits. Moreover, the reduction in import duties could expose local manufacturers to increased competition from foreign brands unless matched with quality improvements and brand differentiation.

Nonetheless, industry analysts predict a substantial uptick in EV sales—potentially doubling by 2028—once the new incentives take effect. Local automakers such as Perodua and Proton are already preparing to introduce hybrid and electric variants, leveraging the budget’s support to accelerate product development cycles.

7. Conclusion

The 2026 Malaysian Budget is a milestone for the country’s automotive sector, signalling a decisive shift towards electrification, localisation, and integrated mobility solutions. By combining tax incentives, infrastructure investment, and workforce development, the government is laying the groundwork for a more sustainable, efficient, and resilient transportation ecosystem. As the implementation of these measures unfolds, the automotive community and consumers alike will be watching closely to gauge the real‑world impact on driving habits, market dynamics, and the broader economy.