Budget 2026: Anwar unveils efficiency reforms and subsidy targeting, in pursuit of good governance

PRIME MINISTER and Finance Minister Datuk Seri Anwar Ibrahim has announced a sweeping suite of governance and public service reforms aimed at enhancing institutional integrity, service delivery and targeted spending, as part of the Fourth MADANI Budget.

Touting a more agile and digitally enabled government, Anwar pointed to the achievements of the in-house STAR (Special Taskforce on Agency Reform) team, which has coordinated over 1,000 projects without reliance on external consultants—saving RM1.1 billion in compliance costs. This efficiency gain, he said, was instrumental in Malaysia's 11-place jump in the World Competitiveness Index.

“The STAR team proves that reform does not require expensive foreign consultants,” said Anwar. “It shows how internal capacity can be mobilised to deliver measurable results.”

To accelerate digital access and modernise public services, STAR has been allocated RM25 million to drive innovation and infrastructure upgrades. MyDigital ID, the country’s national digital identity system, is expected to reach 15 million users by end-2025, with planned expansion into finance, telecommunications, e-commerce and healthcare.

The government’s in-house GovTech Malaysia unit will take the lead in developing digital government applications, while the new MADANI Kiosks—available outside regular hours—are being rolled out nationwide following a pilot in Klang Valley, with additional units slated for Penang and Johor.

Additionally, Malaysia’s 24th Urban Transformation Centre (UTC) will open in Seberang Perai in November, supported by RM76.6 million in funding to upgrade existing UTCs for better public access.

Recognising the diplomatic corps' vital role abroad, RM31.5 million has been allocated to repair and replace critical embassy assets, including offices in Wellington and Singapore.

Safeguarding the Three Pillars of Governance

Anwar stressed the importance of restoring the independence and dignity of Malaysia’s three institutional pillars—executive, legislative and judiciary—“free from narrow influence.”

Parliament will receive nearly RM220 million in 2026, including RM5 million to strengthen the functions of the Senate and Dewan Rakyat Special Select Committees.

The cross-party Malaysian Parliamentary Group on Sustainable Development Goals (APPGM-SDG) will also receive RM15 million to expand its outreach, having already impacted 143 parliamentary constituencies.

On legal reform, consultations are under way to separate the roles of the Attorney General and Public Prosecutor, while a dedicated Law Reform Taskforce is currently reviewing criminal law, contract law, and drafting new legislation, including Admiralty Jurisdiction and Coroner Bills.

Following the enactment of the Consumer Credit Act, the government will amend the Consumer Protection Act to introduce a "Lemon Law" provision to safeguard consumers from defective goods.

Redirecting Public Funds to the People through Targeted Subsidies

Reinforcing the principle that subsidies are the rightful entitlement of Malaysians—not foreign nationals or corporations—Anwar outlined how decisive action on subsidy targeting has yielded billions in national savings.

“Every previous government acknowledged the need to target subsidies. But none had the political will to do it,” he said.

Among the savings achieved:

The floating of chicken and egg prices has saved RM2 billion, while electricity tariff restructuring has saved RM6 billion without burdening 85 percent of users, many of whom have seen reductions in their bills.

Diesel subsidy rationalisation has saved RM5 billion, with public transport, fisherfolk and key logistics sectors still receiving subsidised rates. Eligible individuals, including smallholders, receive a monthly RM200 support.

The targeting of RON95 petrol subsidies has saved at least RM2.5 billion. Through the BUDI95 programme, over 10 million Malaysians are paying just RM1.99 per litre, with updated data for 16.5 million eligible citizens being refined to support 23,000 boat owners and 52,000 active e-hailing drivers.

In total, targeted subsidies are expected to save the government approximately RM15.5 billion annually—funds which will now be redirected to welfare programmes, living cost support and quality public infrastructure.

“Every ringgit saved means more for the rakyat,” Anwar affirmed. “More for welfare, more for services, more for the quality of life.” - October 10, 2025