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BUDGET 2026 sets forth a comprehensive RM2.4 billion commitment to support smallholders in the plantation and commodity sectors, while significantly expanding efforts in green energy transition, national food security, and rural development.
Announcing the budget in Parliament today, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim stressed that agri-commodities, which contributed nearly RM90 billion to GDP and over 12 percent of exports last year, must not rest on past laurels.
“This success must be multiplied by increasing automation and exploring new markets,” he said.
Palm oil remains a flagship commodity, accounting for a quarter of global production. In response to ongoing Western campaigns against palm oil, RM63 million will be spent to strengthen Malaysia’s palm oil diplomacy and sustainability certification, particularly for independent smallholders.
Anwar added that “scientific findings have helped dispel Western allegations,” noting increased exports to China and India.
He confirmed the government's unwavering support for FELDA, RISDA and FELCRA, safeguarding the livelihoods of over 720,000 settlers and smallholders.
He also hailed the reacquisition of FGV as a landmark decision, saying it reflects “the MADANI administration’s resolve to elevate FELDA to new heights.”
To reduce reliance on foreign labour, RM20 million will go towards supporting start-ups producing mechanisation and automation tools, in partnership with the Malaysian Palm Oil Board (MPOB).
An additional RM120 million is allocated for replanting efforts, rubber reactivation, cocoa and pepper cultivation, and kenaf production. RM50 million will be used to maintain and develop plantation roads across the country.
The Malaysian Rubber Board (LGM) will establish a RM600 million Centre of Research Excellence, while rolling out latex production incentives and activating idle rubber plantations.
Accelerating the Energy Transition
The National Energy Transition Roadmap (NETR) targets 70 percent renewable energy (RE) generation capacity by 2050. Budget 2026 earmarks RM150 million for the National Energy Transition Fund, alongside a 2GW rollout under the LSS6 large-scale solar programme with RM6 billion in private investment.
Government-linked corporations will also invest RM16.5 billion in RE initiatives. For instance, UEM Lestra is developing solar farms in Segamat, Melaka and Selangor, while collaborating with PLUS to expand EV charging infrastructure.
Other energy transition measures include a 300MW Feed-in Tariff quota for small hydro, biomass and biogas plants, a RM3.5 billion Corporate Renewable Energy Scheme (CRESS), and broader deployment of solar photovoltaics across government buildings, including Parliament.
Solar ATAP, allowing consumers to generate and sell excess solar power, is expected to reach 500MW capacity. Meanwhile, the Green Technology Financing Scheme (GTFS 5.0) has been extended to 2026 with RM1 billion in loans and government guarantees of up to 80 percent.
Carbon Tax
A Carbon Tax will be introduced in 2026, beginning with the steel and energy sectors, and will align with the forthcoming National Carbon Market Policy and the Climate Change Act.
Strengthening Food Security and Local Agriculture
Malaysia is also investing in food resilience amid global supply chain disruptions. A major infrastructure push includes the RM1.28 billion Jeniang Water Transfer Project and the expansion of the Five-Season Paddy Planting Programme in Kedah and Perlis.
To improve yields, 6,400 paddy farmers will receive fertiliser and soil nutrient assistance under a RM20 million initiative. Anwar also announced RM100 million to modernise problematic rice fields using new technology and infrastructure upgrades.
State-level agricultural cooperation has led to over 360 ongoing projects, from onions in Perak and Kelantan to rock melon and freshwater prawns in Melaka, and livestock in Johor and Pahang. This collaboration will be expanded next year with a RM300 million allocation to support grain corn, aquaculture and rice farming in Sabah and Sarawak.
Agrobank will offer RM1.1 billion in financing for farm automation and mechanisation, and RM20 million will fund the NextGen Agropreneur programme. Tax holidays will be extended to 2030 for companies investing in new or expanded food production projects.
Automation tax incentives will also be expanded to cover closed-house systems for selected livestock farming.
Safeguarding Farmers and Fishermen
“In scorching fields and rolling waves, the toil of our farmers and fishermen ensures our plates are never empty,” Anwar said. Budget 2026 offers the largest-ever agricultural subsidy package, totalling RM2.62 billion for paddy support, including fertiliser, seeds, and price subsidies.
A new Paddy Harvesting Incentive of RM50 per hectare will offset diesel usage for combine harvesters, while ploughing and pesticide subsidies rise to RM160 and RM300 per hectare, respectively. Each paddy farmer is expected to receive approximately RM4,300 per hectare per season—up from RM3,790 previously.
Fisherfolk will continue to benefit from a RM1.65 per litre diesel subsidy and monthly cost-of-living allowances of up to RM300, with RM160 million allocated for the sector. RM20 million will also support the upgrade of fishing vessels and replacement of unsustainable nets.
Local fruit producers will receive RM55 million in support, including for pineapple cultivation in Sarawak and other tropical fruit varieties such as soursop, rose apple and pomelo.
Budget 2026, Anwar said, is a clear signal of Malaysia’s readiness to modernise its traditional economic base, enhance food sovereignty, and lead in clean energy—while protecting the people who sustain its rural economy. - October 10, 2025
