KOTA KINABALU: Sarawak’s controlled Affin Bank Group which has set up more branches in Sabah recently said the economy is projected to grow from 4.2 per cent to 5.2 per cent in 2027.
It believes the country’s transition towards higher-value industries, technological innovation and deeper regional integration presents opportunities to enhance productivity and competitiveness.
Its CEO Datuk Wan Razly Abdullah bin Wan Ali said: “The continued focus on Sabah and Sarawak, with Federal allocations of RM18.7 billion and RM16.2 billion, respectively, in 2027, is particularly encouraging.
“Micro, small and medium enterprises (MSMEs) remain pivotal to Malaysia’s economic transformation, contributing 39.7 per cent of Malaysia’s GDP in 2025 and accounting for 48.7 per cent of total employment.
“The sustained investment in infrastructure, connectivity and regional development is expected to unlock new economic opportunities while supporting more balanced growth across the country.
“The Government’s decision to reduce MSME income tax rates by one percentage point, is a positive step benefiting an estimated 300,000 businesses, alongside the expansion of loan and financing guarantee facilities to RM57 billion in 2027, and the RM3.5 billion allocation for trade and industry, including SME programmes.
“For Affin, this aligns well with our strong franchise in East Malaysia, where projects such as the Pan Borneo Highway Sabah, the Sarawak - Sabah Link Road and new gas developments are expected to generate financing opportunities across the infrastructure value chain.
“These measures are expected to provide businesses with greater financial flexibility while supporting investment, productivity and long-term competitiveness.
“Beyond conventional financing, we believe a more diversified capital ecosystem, including private equity and other forms of growth capital, can complement traditional banking solutions, particularly for enterprises seeking to scale, innovate and pursue regional opportunities,” he said.
Affin’s recent US$400 million financing collaboration with the International Finance Corporation (IFC) reflects its focus on broadening access to financing for eligible MSMEs, including women-owned enterprises and businesses in underserved regions.
Budget 2027’s total expenditure is set to rise to RM459.8 billion from the revised spending of RM444.1 billion under Budget 2026.
Maybank President and Group CEO Datuk Seri Khairussaleh Ramli said Budget 2027 strongly emphasizes equitable state development, which directly underpins the historic federal allocations designated for Sabah. “The budget’s emphasis on equitable state development, affordable homeownership, small and medium enterprises, entrepreneurs and underserved communities will also help broaden economic participation. Investments in productivity, technical and vocational education and training, youth development, skills and innovation will further equip Malaysians to benefit from emerging opportunities,” he said.
“The banking industry plays a key role in supporting these priorities by strengthening investor confidence, mobilising capital and facilitating economic activity,” said Khairussaleh who is also the Association of Banks in Malaysia chairman.
“Greater Budget 2027 support access to financing, including microfinancing for SMEs and entrepreneurs, would help businesses expand and contribute more meaningfully to the economy.
“This disciplined approach, coupled with measures to strengthen economic resilience, support households and businesses, and accelerate high-value industries and energy transition, will reinforce long-term competitiveness,” he said.
Budget 2027 provides a supportive environment for the construction industry, with sustained infrastructure allocations, water projects and East Malaysia road developments helping maintain industry activity.
RHB Banking Group CEO Datuk Mohd Rashid Mohamad noted: “Sabah receives a record-high RM18.7 billion in federal allocations under Budget 2027, up from RM17.6 billion in 2026, balancing targeted household relief with structural economic resilience with a focus on growing and strengthening MSMEs and energy security.”Infrastructure development in East Malaysia remains a key priority, with RM3.3 billion allocated for road projects in Sabah and Sarawak.
Hong Leong Bank Group CEO Kevin Lam has expressed a positive stance on Budget 2027, highlighting its potential to strengthen enterprises and improve household wellbeing across Malaysia with a continued focus on critical regional infrastructure, including road developments, water infrastructure upgrades, and flood mitigation projects in Sabah and Sarawak.
“We view Budget 2027 as decent, supported by the continued rollout of smaller-scale flood mitigation works, road infrastructure projects in East Malaysia.”According to Lam, expansionary cash assistance programs (such as STR and Sara) combined with structural minimum wage changes will help protect household purchasing power and build long-term financial resilience.
RM2.5 billion has been earmarked for the National Non-Revenue Water (NRW) Programme, involving the replacement of approximately 1,900 kilometres of ageing water pipelines nationwide.
Alliance Bank Group CEO Kellee Kam sees Budget 2027 boosting loan growth from MSMEs. The bank’s research and strategic planning emphasize extending robust financial liquidity to micro, small, and medium enterprises (MSMEs) through expanded Credit Guarantee Corporation (CGC) allocations, mitigating the cost impacts of the newly mandated minimum wage.
“The growth will be driven by the tourism, services, manufacturing, as well as oil and gas sectors, with early economic indicators showing that performance remains strong. We also expect OPR to remain at 2.75 per cent throughout the year,” he said.
RM1.3 billion has been allocated to upgrade 682 dilapidated schools, particularly in Sabah and Sarawak. These smaller-scale public infrastructure projects are expected to sustain construction activity and provide contract opportunities across various segments of the industry.
Public Bank Berhad CEO Tan Sri Tan Sri Tay Ah Lek lauded the federal spending plan for its highly balanced, inclusive, and fiscally responsible approach. He noted that Budget 2027 provides an incredible framework to close Sabah’s development gap with other states.
“Sabah continues to receive the highest federal development allocation across all states, securing RM18.7 billion for 2027. This represents a 6.25 per cent growth jump from the RM17.6 billion allocated in 2026. “The Federal Government has dramatically increased the interim Special Grants for Sabah and Sarawak threefold, ensuring an immediate RM1.5 billion interim payment will be disbursed before the end of 2026 while long-term formula agreements are finalised.”It was noted that Budget 2027 prioritizes continuing vital road projects in Sabah and Sarawak with a dedicated RM3.3 billion allocation, covering crucial work across the Pan Borneo Highway Sabah and the Trans Borneo Highway networks.
The sustained focus on Sabah’s basic infrastructure and upcoming gas developments will generate strong financing opportunities across the entire infrastructure value chain, expanding local economic growth. The Budget reflects the Government’s commitment to supporting economic growth, addressing cost-of-living pressures and maintaining fiscal discipline.
Budget 2027 comes at a pivotal juncture as Malaysia navigates shifting geopolitical dynamics, evolving global trade patterns and continued cost pressures. Equally encouraging are measures to improve access to homeownership, including the RM20 billion housing financing guarantee under Syarikat Jaminan Kredit Perumahan (SJKP), which is expected to benefit 80,000 first-time homebuyers.
Bankers remain supportive of initiatives that broaden financing accessibility and are dedicated to helping more Malaysians realise their homeownership aspirations through accessible and tailored financing solutions that cater to diverse income profiles and evolving customer needs. Malaysia’s tourism sector remains resilient, supported by strong regional demand, particularly from Asean and China.
The extension of Visit Malaysia to 2027, alongside the RM935 million allocation for tourism and culture, major events such as the SEA Games and LIMA, and improved connectivity is expected to stimulate tourism and local economic activity.
Supported by access to financing and digital payment solutions, these developments will create opportunities for businesses in hospitality, retail and tourism-related services, especially in Sabah and Sarawak.
Budget 2027 presents a meaningful economic outcome, from improving household financial well-being and supporting homeownership to enabling businesses to grow and participate in emerging economic opportunities.
Banks are focussed on delivering relevant financial solutions, supporting businesses and helping more Malaysians participate in the country’s economic progress.
