Month: October 2025

What’s just happened
On October 10, 2025, Prime Minister Anwar Ibrahim (also Finance Minister) presented Malaysia’s Budget 2026 in Parliament. The budget is framed as the Fourth Madani Budget: People’s Budget (Belanjawan Madani Keempat: Belanjawan Rakyat).

The big picture

• Total allocation: RM 470 billion (up ~11.6 % from Budget 2025) 
• Operating outlays and development spending both expanded, with emphasis on social aids, infrastructure, and growth sectors. 
• But some analysts note a tighter underlying envelope: core budget estimates suggest RM 419.2 billion, excluding contingency funds — marking a slight contraction vs. previous. 

What’s in It for the People (and the Economy)

1. Cash handouts & social assistance

• RM 100 one-off aid for all Malaysians aged 18+ (22 million people) 
• The Sara / Sumbangan Asas Rahmah (STR) payout will be advanced to Oct 18, with RM 100 credit via MyKad.
• Childcare tax reliefs expanded: up to RM 3,000 relief now extended to children up to age 12. 
• Legal aid for 5,000 poor single mothers; expanded income tax relief for admission fees to local tourism and cultural sites (up to RM 1,000)

2. Infrastructure & development push

• Sabah, Sarawak receives higher development allocations; RM 48 billion for highway & transport works.
• Flood mitigation: RM 2.2 billion for 43 high-priority projects, plus slope, drainage, and preventive maintenance.
• “Cash-for-clunkers” scheme: matching grant up to RM 4,000 for owners scrapping > 20-year-old vehicles and purchasing new local models.

3. Business, tech, and sector support

• GLIC / GLCs mobilize RM 16.5 billion in investment; GEAR-UP to raise domestic investment from RM 25 → RM 30 billion.
• SME & Bumiputera aid: RM 50 billion in loan guarantees; special allocations for Bumiputera contractors (G1–G4), startups, and equity programmes.
• Sovereign AI Cloud: RM 2 billion via MCMC; digital accelerator grants and Green Asset Incentives.

4. Tax, subsidy & regulatory tweaks

• Excise duty on alcoholic beverages raised 10% (effective Nov 1, 2025)
• Carbon tax introduced in 2026, initially targeting iron, steel, energy sectors.
• Vehicle tax exemptions in Langkawi / Labuan now capped to vehicles valued under RM 300,000 from Jan 1, 2026.
• Stamp duty relief for first-time homes (≤ RM 500,000) extended to 2027; non-citizen residential property transfer duty raised from 4 % → 8 %.
• “Lemon Law” elements will be added to Consumer Protection Act to protect buyers.

Fiscal Discipline & Risks

Deficit & revenue

• The government aims to narrow the fiscal deficit to ~3.4–3.6 % of GDP, from ~3.8 % this year. 
• Revenue target: RM 343.1 billion, up from RM 334.1 billion. 
• The state oil & gas giant Petronas is expected to contribute only RM 20–25 billion in dividends — a decline from RM 32 billion this year — amid weak oil prices. 

Caution over big moves

• Analysts say the budget reflects a cautious, disciplined approach, balancing between pro-people measures and fiscal reform.
• Some observers note that despite the headline RM 470 billion, the “real” core allocations present a leaner stance.
• Anwar has also paused major new taxes or sweeping subsidy cuts for now, likely to avoid public backlash.

External and structural risks

• Global oil price volatility could pressure Petronas revenues and ripple into federal coffers.
• Trade tensions and tariffs, especially U.S. 19 % tariffs on many Malaysian exports, pose external demand risks.
• Efficient implementation, leakages, and coordination among federal, state entities remain perennial challenges.

Why It Matters (and What to Watch)

• Signal of continuity + prudence: Budget 2026 suggests the Anwar government intends to maintain a pro-growth, pro-rakyat posture while avoiding aggressive fiscal pivots.
• Welfare support under strain: As cost of living pressures remain high, handouts and subsidies are critical for public confidence.
• Investment pivot: Big bets on digital, AI, green transition, SME growth, and GLIC/GLC leverage could reshape Malaysia’s economic trajectory.
• Test ahead: The next test will be tax collection, public debt sustainability, and whether promised reforms translate into real-world impact.

Watch for

• How carbon tax is rolled out and which sectors are impacted
• Whether proposed excise & duty increases spark inflationary pressure
• Execution of infrastructure / climate adaptation schemes
• Petronas dividend trajectory in a low-oil price era

What’s happening

• Sabah is headed for its 17th state election (PRN17). The current Sabah State Legislative Assembly must be dissolved and new polls held by 7 December 2025. 
• Recently, Chief Minister Hajiji Noor confirmed an electoral pact with Pakatan Harapan (PH), meaning GRS and PH will coordinate in the upcoming races.
• The date is not fixed yet, but Chief Minister Hajiji Noor has announced the dissolution of the Sabah State Assembly on 6 October, paving way for an election within 60 days.

Why it matters

• Autonomy, identity, and “Sabah for Sabahans.” Many analysts see this election as a referendum on Sabah’s autonomy within the Malaysian federation, particularly how strongly local parties can push for rights enshrined in the Malaysia Agreement 1963 (MA63). 
• Test of federal–state relations. The election offers a window into how federal-level parties and coalitions — especially the unity government led by Prime Minister Anwar Ibrahim — will navigate the delicate balance of supporting state actors without undermining them. 
• Political fluidity and volatility. Sabah’s politics are known for defections, shifting coalitions, and “frog-hopping” of assembly members. Any government formed will need to manage internal cohesion. 
• Service delivery is under scrutiny. Voters in rural and semi-urban Sabah often cite basic issues — unreliable water and power supply, poor roads, infrastructure backlogs — as chronic grievances.

The big picture: Context & backdrop

Historical volatility

Sabah’s electoral history is rife with party switching, abrupt coalitional shifts, and short-lived governments.

In the last election (2020), Gabungan Rakyat Sabah (GRS) secured 38 of 73 seats — a slim majority — while the Warisan Plus coalition won 32, and independents took the remainder.

Because of the tight margin, internal disagreements and shifts in allegiance have always been a risk to governance stability. 

Coalitions and key players

• GRS (Gabungan Rakyat Sabah). The incumbent coalition, constituted mainly of Sabah-based parties like Gagasan Rakyat Sabah (PGRS), Parti Bersatu Sabah (PBS), SAPP, and others.
• PH (Pakatan Harapan). Though more influential in Peninsular Malaysia, PH (through PKR, DAP, Amanah) has been aligned with GRS at the state level in recent years; the new pact formalizes that cooperation.
• WARISAN. The party founded by Mohd. Shafie Apdal remains a strong local opposition voice. Its narrative often centers on Sabah’s rights and state-centric governance.
• UMNO / BN, PN and others. Traditional national parties want footholds in Sabah. BN (via UMNO Sabah) still holds influence; Perikatan Nasional (PN) may seek contesting opportunities.
• Smaller / local parties. Many small Sabah-based parties may play kingmaker roles, particularly in close contests. 

Key issues shaping voter sentiment

1. Infrastructure and utilities. Problems like erratic electricity, piped water shortages, and poor road maintenance are perennial.
2. Development and inequality. Sabah is among Malaysia’s less developed states, and voters want to see progress in education, healthcare, rural connectivity, and economic opportunities. 
3. Autonomy, MA63, resource rights. Sabahans often demand stronger enforcement of the Malaysia Agreement, local rights over natural resources and fiscal leeway. 
4. Political integrity & governance. Scandals, patronage, and shifting allegiances erode trust. Voters may reward parties seen as more consistent or principled.
5. Electoral pacts versus competition. The new GRS–PH pact may reduce vote splitting but creates tension between cooperation and identity politics.
6. Undecided voters. Recent polls show a large share of the electorate remains undecided — indicating that campaigns, ground work, and last-minute swings could matter. 

What to watch

Bottom line

The upcoming Sabah state election is more than a routine poll. It’s a crucible for Sabah’s identity, autonomy, and relationship with federal Malaysia. The coalitions that emerge, their stability, and how they execute governance afterward may reshape Sabah’s political trajectory.

Check out the stakes, players and the battle for the 73 seats.