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UNDER Budget 2026, Malaysia is positioning itself to champion a high-value economy amid intensifying global competition, with Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announcing wide-ranging measures to attract strategic investment, enhance regional economic integration and strengthen key industrial ecosystems.
Tabling the 2026 Supply Bill in Parliament, Anwar declared that “Malaysia steps forward boldly to lead in a high-value economy,” citing critical growth areas such as semiconductors, clean energy transition and the digital sector as national priorities.
“Even with more challenging prospects next year, we remain committed to drawing high-quality investment through a strategic, facilitative approach,” he said.
Among new initiatives, the government will introduce an ASEAN Business Entity (ABE) status—coordinated by the Securities Commission—for eligible public-listed firms with broad ASEAN market presence and mid-sized Malaysian companies with expansion potential. ABE status is expected to ease talent mobility and support regional growth ambitions.
Investor facilitation measures are also being strengthened, including the Investor Pass—a multiple-entry visa spearheaded by MIDA—and the continuation of the fast-tracked Residence Pass–Talent scheme, now exempting the three-year employment pass requirement.
Anwar pointed to the early success of the Single Family Office tax incentive zone in Forest City, where six offices managing nearly RM400 million in assets were approved in less than a year. With 30 more expressing interest, Malaysia is targeting RM2 billion in assets under management by end-2026.
A new outcome-based incentive framework will come into full effect in early 2026 for the manufacturing sector, and later for services, aligning with the New Industrial Master Plan (NIMP) and focused on closing regional gaps and creating high-skilled jobs.
Backing Strategic Sectors and Startups
To deepen supply chains in priority sectors, RM200 million has been allocated for a Strategic Co-Investment Fund for SMEs and mid-tier firms through equity crowdfunding and peer-to-peer financing platforms. An additional RM180 million will fund industrial development programmes in high-impact areas such as pharmaceuticals, semiconductors, AI, digitalisation and sustainability.
Khazanah Nasional and KWAP will jointly invest RM550 million to strengthen the semiconductor ecosystem, while Bank Pembangunan Malaysia will offer RM500 million in loans to support advanced R&D and value-added activities under the National Semiconductor Strategy.
To help semiconductor startups overcome costly prototype barriers, the government will launch SemiconStart, an incubation programme by MTDC in partnership with global accelerators. This will provide early-stage companies with mentoring, global funding access, discounted prototyping and market linkages.
GLICs will increase domestic investments under the GEAR-UP initiative from RM25 billion this year to RM30 billion in 2026. KWAP will allocate RM1.2 billion to co-invest with private equity managers in emerging sectors such as energy transition, food security and the digital economy, while Khazanah’s Mid-Tier Companies Programme will provide RM250 million in support to scale promising businesses.
Startups currently contribute RM1 billion to GDP and 82,000 jobs. The government aims to expand this through a RM750 million combined investment from KWAP’s Pioneer Fund and Khazanah’s Jelawang Capital. Cradle Fund will channel RM55 million into equity investment programmes and extend GLC Innovation Labs to the private sector.
The existing venture capital tax incentives will be extended for another decade with special tax rates and dividend exemptions.
MyCIF, which has attracted over RM6 billion to local firms through equity crowdfunding and P2P financing, will receive RM30 million to expand into ASEAN markets and support high-impact sectors such as agritech, agetech and the care economy.
Strengthening Logistics and Rare Earth Supply Chains
To facilitate trade and cut logistics costs, the government will invest RM2.3 billion to expand airports in Penang, Kota Kinabalu, Tawau and Miri, with completion expected by 2028.
MAHB is also upgrading airports in Perak and Kelantan, with STOLports in Marudi and Redang to follow by 2027. A new inter-terminal transfer project will connect KLIA Terminals 1 and 2, and the 600-acre Selangor Aero Park in Sepang will serve as a regional logistics and cargo hub.
Anwar also allocated RM10 million for rare earth mapping and announced that downstream activities will be developed in partnership with international players, coordinated by Khazanah.
Cross-Border Growth and Infrastructure Connectivity
Anwar called for Malaysia to emerge as a “cross-border economic champion” through better connectivity and cooperation with neighbouring countries.
He highlighted the ASEAN Power Grid and a joint Vietnam–Malaysia–Singapore renewable energy initiative involving TNB and Petronas as key steps in regional energy integration.
In southern Malaysia, the Johor–Singapore Special Economic Zone (JS-SEZ) continues to gain momentum, attracting RM37.1 billion in approved investments in H1 2025—66 percent of Johor’s total—and securing RM29 billion in new commitments.
Investor facilitation in JS-SEZ is being enhanced through the Iskandar Malaysia Facilitation Centre and Johor Super Lane, while the Johor Talent Development Council will bridge universities and industries for premium-skills employment pathways.
In the north, RM2.7 billion has been invested in the Bukit Kayu Hitam Special Border Economic Zone, envisioned as a modern ASEAN supply chain and digital hub.
Border infrastructure upgrades include the 28-km Kalabakan–Simanggaris road linking Sabah and Indonesia, railway enhancements from Pasir Mas to Rantau Panjang, a new four-lane highway in Kelantan, and the RTS Link between Johor and Singapore—set to begin full operations by January 2027, with a peak capacity of 10,000 passengers per hour in each direction. - October 10, 2025
