KUALA LUMPUR, Sept 21 — Budget 2027 should keep expenditure policy growth-supportive while preserving gradual fiscal consolidation, said Kenanga Investment Bank Bhd (Kenanga IB).
Spending is likely to focus on household welfare, human capital and faster 13th Malaysian Plan (13MP) implementation.
“Development expenditure (DE) should increasingly target areas with stronger productivity and private investment multipliers, particularly the Johor-Singapore Special Economic Zone, connectivity, digitalisation and artificial intelligence (AI), energy transition, food security, healthcare, education, and affordable housing,” it said in an Economic Viewpoint note today.
Kenanga IB added that the DE’s allocations would likely track the ten priorities from the Pre-Budget 2027 consultation: raising incomes, managing cost-of-living pressure, improving healthcare and education, expanding affordable housing, strengthening connectivity, accelerating digitalisation, enhancing food security, promoting sustainable development, and strengthening governance.
Infrastructure development is expected to remain a major beneficiary given its economic multiplier effect and its role in drawing private investment.
In line with the 13MP and New Industrial Master Plan 2030, the DE should focus on strengthening Malaysia's industrial ecosystem and attracting higher-value investments, with digitalisation expected to take the spotlight in Budget 2027 as Malaysia builds on strong investments in data centres, cloud computing, and AI.
“We also expect further support for energy-efficiency initiatives, green financing, and renewable energy integration, which would help attract private investments.
“DE should focus on raising agricultural productivity and building resilience across the domestic food ecosystem. Potential initiatives include irrigation and drainage upgrades, as well as smart farming, AI and Internet of Things applications, mechanisation, precision agriculture, and agrofood supply-chain improvements,” it said.
Meanwhile, after the Sales and Services Tax coverage widened in 2025 and 2026, Budget 2027 is likely to focus on compliance, enforcement and collection efficiency rather than another major expansion.
The broader framework should keep supporting indirect tax revenue, in line with the government's stance against reintroducing Goods and Services Tax.
Kenanga IB noted that Budget 2027 should therefore focus on closing coverage gaps and building audit capability.
“Greater transaction visibility should reduce leakages over time and improve tax revenue collection, but we treat e-invoicing as a 2028 and beyond revenue story, not a 2027 one,” it said, as Budget 2027 is likely to give an early read on global minimum tax implementation.
Budget 2027, to be tabled on October 9 is the fifth MADANI Budget and the second year of the 13MP, with the main aim to ease cost-of-living pressure on households, especially the M40 group, amid global energy challenges.
