PETALING JAYA: Prime Minister Datuk Seri Anwar Ibrahim today tabled Budget 2026, pledging to maintain fiscal discipline while ensuring that support measures do not impose additional burdens on the public.
The overall allocation stands at RM470 billion, with operating and development expenditure set at RM419.2 billion. Anwar, who is also the finance minister, said the government is committed to reducing the fiscal deficit from an estimated 3.8% of gross domestic product this year to 3.5% in 2026, with the goal of reaching 3% in the medium term.
“Ordinarily, when additional expenditure is needed for infrastructure and aid for the people, additional taxes would be imposed. But the government has chosen to improve governance, including targeting subsidies, without adding to the burden of the people,” Anwar said in Parliament.
The Budget includes the largest-ever allocations for Sabah and Sarawak, RM6.9 billion and RM6 billion respectively, as part of Putrajaya’s efforts to close development gaps under the Malaysia Agreement 1963 (MA63). The special grant for both states will be doubled to RM600 million, while RM1.2 billion will be channelled to support Sabah’s electricity supply despite regulatory decentralisation.
Civil servants will see a boost under Budget 2026, with an additional RM18 billion set aside for wage increases next year and a one-off RM500 aid payment. Anwar also confirmed that the 20% salary cut for Cabinet ministers will remain in place.
On the business front, the government will expand credit guarantees under Syarikat Jaminan Pembiayaan Perniagaan (SJPP) to RM30 billion, up from RM20 billion previously, as part of a RM50 billion total financing commitment to SMEs. Measures to strengthen digitalisation, AI adoption, automation and export capacity were also outlined.
In response to the announcement, the Small and Medium Enterprises Association of Malaysia (Samenta) described Budget 2026 as “positive and pragmatic,” noting that it reflects many of the priorities raised by the association.
“We are pleased to see the government expand credit guarantees via SJPP and commit to RM50 billion in total SME financing support. This directly addresses one of the top concerns among SMEs, which is limited access to affordable credit,” said its national president, Datuk William Ng.
He added that the government’s emphasis on digitalisation and productivity upgrades was in line with Samenta’s calls for practical support.
“The allocations under SME Bank, Mara, BSN and AIM demonstrate that the government recognises entrepreneurship as the foundation of inclusive growth. However, we must ensure that these initiatives reach micro and small businesses outside the Klang Valley, including the East Coast, Sabah and Sarawak,” Ng said.
On exports, Ng welcomed the RM5 billion SJPP export guarantee, RM60 million in Matrade market grants and the expansion of the MyCIF framework to Asean markets.
“Despite being our nearest neighbours, intra-Asean trade remains at a low 21%. We are hopeful that these initiatives under Budget 2026 will drive greater trade among member states as a hedge against global geoeconomic risks,” he said.
Ng concluded that the Budget was one of “direction and delivery”, with meaningful steps towards SME resilience and regional competitiveness.
“If implemented effectively, this budget can help our SMEs move from survival to regional leadership. What matters now is execution, and in making sure these initiatives reach every SME, not just those who already have access.”
Business
