SHAH ALAM, Oct 11 — Selangor’s economic growth will remain closely linked to national economic performance, with Budget 2027’s focus on technology, industrial investment and infrastructure potentially creating new opportunities for the state, an economist said.
According to Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid, Selangor’s strategic economic position meant that national economic developments would also have an impact on the state.
When asked which Budget 2027 initiatives Selangor could adopt, Afzanizam said the state already has numerous development projects underway, including Shah Alam Sentral (SA Sentral), and initiatives related to integrated circuit (IC) design park development, as well as its ongoing urbanisation efforts.
“Another important infrastructure development is the ECRL (East Coast Rail Link), which is expected to begin operations next year. It could become a key catalyst for Selangor’s economy.
“Selangor’s economy is a mirror image of Malaysia’s economy, so developments at the national level will be reflected in the state, given Selangor’s strategic economic position,” he told Media Selangor via phone interview.
Among the key takeaways in the Budget 2027 tabled by Prime Minister Datuk Seri Anwar Ibrahim are measures to ease the cost of living, strengthen workers’ welfare and the economy.
Budget 2027 introduces measures to ease the cost of living, strengthen workers’ welfare and expand tax relief from RM9,000 to RM12,000, reducing income tax rates by one percentage point for those earning RM70,000 to RM150,000 annually, and increasing the minimum wage from RM1,700 to RM2,000 a month from June 2027.
Additionally more than 9,000 contract doctors will be offered permanent positions, while post-basic incentives for nurses and paramedics will double to RM200 monthly.
The budget also raises combined allocations for Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) to RM16 billion, with SARA assistance reaching up to RM150 monthly.
Other measures include expanded tax relief for pet adoption and vaccinations, a RM160 million support package for gig workers, a RM1,500 special payment for eligible civil servants, and RM750 for government retirees.
Balancing the economic needs
Commenting on the broader economic outlook, Afzanizam said the budget’s measures reflected the government’s efforts to balance economic needs with the financial pressures faced by Malaysians.
He said the risk of higher inflation warranted government intervention to protect household purchasing power, stressing that rising business costs could eventually be passed on to consumers.
“If you look at the government's projections for the inflation next year, they are projecting the inflation rate to be around 1.8 per cent to 2.8 per cent—That's high.
“It makes sense because you can see that the latest producer price index now is hovering at 10.7 per cent as of August, which means that from business side they have been experiencing a higher cost of doing which I think at some point in the future they might want to pass on this additional cost to the consumers,” he said.
Afzanizam also said the increase in the minimum wage was necessary to address low wages and inefficiencies in the labour market, but improving starting salaries for graduates would require greater participation from private sector employers.
While the government could encourage government linked companies (GLC) and government linked investment companies (GLIC) to offer better starting salaries, he said private companies ultimately had the authority to determine their own wage levels.
Meanwhile, Prof Emeritus Dr Barjoyai Bardai from Malaysia University of Science and technology (MUST) said long-term economic transformation required 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.
“The most important thing is how to encourage investment in technology, improve productivity, and develop an entrepreneurial and innovative society.
“These are all long-term measures and bold steps to transform Malaysia’s economic structure, and they can be implemented,” he said.
Barjoyai said such efforts would be important in supporting the country’s broader economic development beyond immediate policy measures.
However, he said more concrete initiatives were needed to address medium and long-term economic priorities, while addressing immediate household needs.
He added such efforts would be important in supporting the country’s broader economic expansion, with RM80 billion allocated for development expenditure, reflecting the government’s continued focus on economic growth.
On Friday, during the Budget 2027 tabling, the federal budget estimated RM460 billion in expenditure next year is the largest budget to date, representing an increase of about 3.6 per cent over the revised estimates for 2026.
