SHAH ALAM, Oct 11 — Budget 2027, announced by Prime Minister Datuk Seri Anwar Ibrahim on Friday, reflects a long-term outlook that balances immediate needs with efforts to lay the groundwork for medium- and long-term economic goals, said an economist.
Prof Emeritus Dr Barjoyai Bardai from Malaysia University of Science and Technology (MUST) said the budget appears to signal that the current government will continue leading the country’s economic development for another decade or more.
“I am actually impressed that the budget does not give the impression that this government is coming to an end.
“It is as though the government will continue leading the country’s economic development for perhaps another decade or more,” he told Media Selangor in a phone interview.
Barjoyai described Budget 2027 as concrete, noting that it took into account the needs of households and measures to improve their well-being, including through income growth, cost reductions, subsidies, and financial assistance.
However, he said more specific initiatives are needed to ensure the government’s medium and long-term ambitions can be achieved.
“Most importantly, the budget shows that the government is making a serious effort, but in the long term, it may require a more concrete initiative.”
When asked what needs improvement, he suggested establishing a national endowment fund to provide a sustainable source of funding for public welfare, citing Norway’s sovereign wealth fund as an example.
Elaborating, Barjoyai suggested that the fund could receive contributions from companies, including through taxes on excess profits generated from the use of artificial intelligence (AI), as businesses increasingly benefit from the technology.
He said companies could be offered tax deductions as an incentive to contribute, with the money channelled directly into the fund rather than the government’s general revenue.
“The fund should be financed through tax contributions from companies, which are benefiting significantly from the application of AI and generating excessive profits. They should contribute to ensuring the well-being of the people,” he said.
Barjoyai said this when asked whether the financial assistance and incentives announced in Budget 2027 are sufficient to ease the cost of living and improve household incomes.
He explained the aid might not fully meet households’ needs but showed the government’s commitment to public welfare.
Barjoyai also said long-term economic transformation requires greater investment in technology, improved productivity, and a stronger culture of entrepreneurship and innovation.
He said these priorities could also be pursued in Selangor to strengthen its economic development.
Pragmatic budget approach
Anwar tabled Budget 2027 on Friday, with proposed expenditure of RM460 billion for next year, the largest allocation to date and an increase of about 3.6 per cent from the revised 2026 estimates.
Of this total, RM83 billion is allocated for development expenditure, while RM377 billion goes towards operating expenses.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid described Budget 2027 as pragmatic, balancing public assistance with the government’s commitment to fiscal discipline.
He said that the fiscal deficit is projected to narrow to 3.3 per cent of gross domestic product (GDP) in 2027, from an estimated 3.6 per cent in 2026, reflecting continued efforts to manage public finances.
Afzanizam said the budget showed that the government is balancing its financial constraints with the needs of businesses and the public.
“Revenue collection is also expected to exceed RM70 billion next year, showing that tax-related measures introduced over the past few years, particularly involving the Sales and Service Tax (SST), have started to bear fruit.
“Recall that the service tax rate was raised from 6 per cent to 8 per cent in 2024, while the SST scope was expanded in July last year. These measures have significantly increased SST collections.
“The combination of fiscal discipline and the government's efforts to provide appropriate assistance to Malaysians is clearly reflected in the budget. So, I do not think it is excessively populist. I think it is a pragmatic budget approach,” he said.
