Targeting the Subsidy System to Empower the Economy
The annual savings of RM15.5 billion resulting from the targeted subsidy measures announced under the Budget 2026 clearly reflect the government’s strong commitment to realizing the nation’s economic empowerment agenda, aligning directly with the long-term goals outlined in the 13th Malaysia Plan (13MP).
Professor Dr. Ahmed Razman Abdul Latiff, the MBA programme director at Universiti Putra Malaysia (UPM) Putra Business School (PBS), emphasized that this strategic initiative is designed to benefit the entire Malaysian population, extending its positive impact far beyond the B40 group to also encompass the M40 and even the higher-income groups through various restructured forms of targeted subsidy assistance.
He believes that this focused approach will allow the government to conserve crucial public funds and ensure that “every ringgit of revenue is channelled directly to the people,” maximizing the efficacy of public spending.
Dr. Razman highlighted a significant historical issue that the new policy aims to correct: in the past, a portion of the country’s increased revenue was “lost into the wrong hands” due to pervasive leakages, wastage, and corruption within the broader subsidy system.
By tightly targeting subsidies, the government is not only reclaiming these lost funds but also proactively avoiding the necessity of increasing existing tax rates or introducing new taxes to boost national revenue.
This is viewed as a profoundly positive move, as it prevents the public from being burdened with additional fiscal demands while simultaneously allowing them to benefit directly from the substantial savings generated through the rationalization of the subsidy mechanism.
Reallocating Savings for Welfare and Growth
Prime Minister Datuk Seri Anwar Ibrahim, when tabling the Budget 2026, themed Belanjawan MADANI Keempat: Belanjawan Rakyat (Fourth MADANI Budget: A Budget for the People), stated unequivocally that the comprehensive subsidy targeting is expected to result in an annual saving for the country of approximately RM15.5 billion.
The Prime Minister, who also serves as the Finance Minister, assured the Dewan Rakyat that these significant savings will not merely remain on the balance sheet but will be strategically reallocated to enhance public welfare and stimulate economic growth.
The freed-up funds will enable the government to allocate substantially more towards critical welfare programmes, bolster support for addressing the rising cost of living, and make quality infrastructure investments, all of which are designed to directly benefit the people across all income strata.
This shift represents a fundamental philosophical change in governance, moving away from a broad-based, inefficient subsidy system that often benefited the wealthy and non-citizens more than intended, toward a precise, needs-based allocation that maximizes socio-economic return.
The ability to secure such massive savings without resorting to new taxation is a testament to the effectiveness of the subsidy rationalization process and its adherence to the principles of fiscal prudence and targeted intervention.
The government is effectively turning inefficiency into investment capital, creating a virtuous cycle where better financial management directly translates into improved public services and support, thereby enhancing the economic resilience and security of Malaysian families.
Boosting Agriculture for National Food Security
In parallel with the broad economic measures, Budget 2026 has earmarked a substantial allocation for the vital agriculture sector, a key pillar of the nation’s food security and economic stability.
Agrobank group president and chief executive officer Datuk Tengku Ahmad Badli Shah Raja Hussin highlighted the allocation of RM1.1 billion to Agrobank, which is specifically intended to support agropreneurs in significantly expanding their operations.
Crucially, a major focus of this funding is to actively promote automation and mechanization throughout the agriculture sector, a necessary step to boost productivity, reduce reliance on manual labor, and modernize farming practices to meet contemporary demands.
Datuk Tengku Ahmad Badli Shah emphasized that this substantial funding allocation will achieve more than just empowering industry players; it will act as a major catalyst for boosting productivity and fundamentally strengthening the agricultural sector as a whole, securing its role as a key pillar of national food security.
He affirmed Agrobank’s unwavering commitment to working in partnership with the government to advance this critical sector, stressing that the institution’s mission extends beyond merely providing financing.
Agrobank is dedicated to supporting livelihoods and building sustainable futures for farming communities.
He concluded that Budget 2026 represents more than a collection of financial figures; it embodies genuine hope and tangible opportunity for farming communities throughout the entire agro-food sector, proving that the savings achieved through subsidy reform are being wisely invested in foundational economic strengths.
