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AS the nation prepares to unveil Budget 2026, the fourth under the Ekonomi Madani framework, attention turns to the government’s progress so far and the critical reforms ahead.
The Finance Ministry’s pre-budget statement issued on 8 August 2025 sets out a roadmap that builds on previous efforts to enhance fiscal resilience, competitiveness, and social equity.
Since the start of the year, key economic indicators have demonstrated encouraging momentum.
Malaysia secured RM384.4 billion in approved investments in 2024, continuing a record-breaking trend and reflecting sustained investor confidence.
The national unemployment rate fell to 3 per cent in May 2025 — the lowest since 2015 — signalling robust job creation and recovery.
Inflation moderated to 1.1 per cent in June despite recent expansions in the Sales and Service Tax (SST) and subsidy rationalisation.
Meanwhile, the ringgit appreciated by about 5.8 per cent against the US dollar, emerging as one of Asia’s best-performing currencies.
These results affirm the Ekonomi Madani approach’s balance between immediate economic pressures and longer-term structural reforms.
Despite no announcement of new taxes in the pre-budget statement, there is widespread expectation that Budget 2026 will address complex and burdensome tax regulations.
Experts say, areas of concern include the opaque stamp duty regime, which may pose challenges under the new self-assessment system effective 1 January 2026.
“Implementing a clearer framework, possibly with tiered rates based on transaction value and streamlined exemption criteria, would reduce compliance costs and improve transparency,” observers suggest.
Proposals include rationalising stamp duty on property transfers and loan agreements and introducing a de minimis threshold to ease burdens on individuals and SMEs.
The expansion of SST to five new service categories in 2025 — including rental, construction, finance, private healthcare and education — has generated calls for clearer definitions, harmonised treatment, and simplified filing procedures.
A consolidated SST guidebook and digital filing improvements could reduce ambiguity and bolster compliance, while alignment with international standards would enhance Malaysia’s competitiveness in global trade.
Family enterprises, often described as the quiet giants of Malaysia’s economy, face a generational crossroads amid ageing founders and succession planning.
Without clear and supportive tax policies, wealth fragmentation and disputes risk undermining these multi-generational businesses. Uncertainties around real property gains tax (RPGT), capital gains tax (CGT), stamp duties and regulatory requirements may delay reinvestment, fragment assets or push wealth offshore.
There is hope the government will introduce a forward-looking fiscal framework to ease succession with minimal tax friction while encouraging reinvestment into national priorities.
“The introduction of succession relief mechanisms could translate this vision into an actionable framework,” experts say, highlighting the opportunity to strengthen public-private partnerships and harness family wealth as a driver of domestic investment and economic resilience.
Meanwhile, ordinary Malaysians continue to feel the pressure of rising household costs.
Sinar Harian cited Rohani Jusoh, a 45-year-old resident of Jelawat, Bachok, described how government aid such as the Sumbangan Tunai Rahmah (STR) and subsidy Rahmah provide only temporary relief.
“The money helps a little with essential groceries, but monthly food expenses can reach RM1,000, and that excludes other costs,” she explained. Rohani’s husband, Abdullah Ariff, 56, relies on seasonal paddy farming, with income affected by weather conditions such as droughts or floods, forcing the family to dip into savings and rely on government aid during difficult periods.
As Budget 2026 approaches, the government faces the challenge of maintaining economic momentum while delivering practical reforms that support businesses, families and vulnerable households alike. - September 30, 2025