Eight takeaways from Budget 2027

BUDGET 2027 | This may be Prime Minister Anwar Ibrahim’s last chance to build goodwill on the ground before the next general election.

His government’s mandate ends in December 2027, so the effect of the tax breaks, aid and subsidies will be felt throughout next year.

With tensions in West Asia expected to keep fuel and goods prices high, the government is setting aside more than RM80 billion for subsidies, aid and incentives, up from RM49 billion in Budget 2026. Anwar framed the package as a “wa'ad nasional” (national pledge) to ensure no one is left behind.

Here are the key takeaways.

1. The middle class gets some attention

The government appears to have heard complaints that past budgets neglected M40 earners.

The individual tax relief ceiling, untouched since 2010, rises from RM9,000 to RM12,000.

Tax rates fall by one percentage point in two bands: from 19 percent to 18 percent for chargeable income of RM70,001 to RM100,000, and from 25 percent to 24 percent for RM100,001 to RM150,000.

Relief is also widened to cover all care expenses for parents and grandparents, postnatal care, sports shoes, AI software subscriptions and pet adoption and vaccination.

Together, the measures give about five million taxpayers up to RM1,600 in extra disposable income. High earners pay more, as the 30 percent rate now applies above RM1 million, down from RM2 million.

2. Cash aid is expanded

Rahmah Cash Aid (STR) recipients will get up to RM150 a month, or RM1,800 a year, in Rahmah Basic Necessities Aid (Sara). That is double the RM900 under Budget 2026.

Combined STR and Sara allocations rise to RM16 billion from RM15 billion.

Adults aged 18 and above who are not STR recipients will receive RM100 in Sara Madani aid twice next year, ahead of Hari Raya Aidilfitri and Merdeka Day.

Sara can now also be used for fresh produce at 216 farmers’ markets and tamu under the Federal Agricultural Marketing Authority nationwide.

3. The minimum wage goes up

The national minimum wage rises from RM1,700 to RM2,000 from June 2027, benefiting more than four million workers. Micro, small and medium enterprises (MSMEs) with annual revenue below RM50 million are exempt.

A RM2,500 monthly floor will begin for semi-skilled workers and graduates.

GLCs and GLICs have committed to lift their living wage benchmark from RM3,100 to RM3,400, benefiting 230,000 workers.

4. Civil servants and retirees are rewarded

More than 1.3 million civil servants in Premier Grade B and below, including contract staff, will receive RM1,500 in special assistance. More than one million retirees, including veterans, will get RM750.

Both are paid in two instalments, before Aidilfitri and ahead of Merdeka Day. The minimum monthly pension rises from RM1,000 to RM1,350, benefiting nearly 59,000 people.

5. Gig workers get a wider safety net

Putrajaya and Grab will share the cost of a RM160 million package for e-hailing and p-hailing workers, starting in 2027.

It includes higher minimum income rates, help with vehicle maintenance and insurance costs, and Social Security Organisation (Socso) contributions.

The median net monthly income of e-hailing drivers is expected to rise by up to RM227, and that of delivery workers by up to RM100.

6. Families, students and the vulnerable get more help

Schooling: The Early Schooling Aid rises from RM150 to RM200 per pupil, distributed at schools so parents can meet teachers. Form Six students get a RM2,500 living allowance, and the FlySiswa flight subsidy for public university students rises from RM400 to RM500.

Persons with disabilities: The allocation rises to RM1.5 billion, benefiting more than 300,000 people. Monthly assistance for bedridden and chronically ill patients goes from RM500 to RM600.

Healthcare: More than 9,000 contract doctors will be offered permanent posts, and future medical officers will be appointed permanently after housemanship. The post-basic allowance for 47,000 paramedics and nurses doubles to RM200.

7. Governance reforms target past scandals

A Government-Owned Entities Bill will be drafted to tighten oversight of government companies and statutory bodies, aiming to prevent repeats of the 1MDB, Tabung Haji and Felda scandals.

The Government Procurement Act, in force next year, will require disclosure of projects, contractors and contract values.

The MACC, police, customs and other enforcement agencies share RM1.1 billion to strengthen their operations.

8. Investment targets high-value sectors and the regions

Regions: Penang will be the Technology Finance centre, backed by a RM100 million Khazanah and InvestPenang fund for early-stage semiconductor and advanced manufacturing firms. Perak gets a maritime hub in Lumut and a bigger automotive hub in Tanjong Malim, and Terengganu’s eco-tourism sites will be upgraded. The federal government will also begin formal talks with Sarawak on the Sibu Special Economic Zone.

Capital: GLICs will mobilise RM25 billion in domestic investment, and Bank Pembangunan Malaysia will allocate RM7 billion across seven strategic sectors. Khazanah and Retirement Fund (Incorporated) (KWAP) will invest RM1.2 billion to move local semiconductor firms up the value chain, and KWAP’s Climate Fund will put RM1 billion into decarbonisation and renewable energy.

Incentives: Investment Tax Allowances of up to 100 percent are extended to 2030 for green technology projects, EV charging stations, and green assets bought for own use.

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