Budget 2026: RM419.2b tabled with focus on infrastructure, civil servant housing and green transition

• Of the total, RM338.2 billion (80.7%) is allocated for operational spending, while RM81 billion is set aside for development projects.

PETALING JAYA (Oct 10): The Federal Government has tabled Budget 2026 worth RM419.2 billion, a RM2 billion decrease from last year’s allocation.

Prime Minister Datuk Seri Anwar Ibrahim, who also serves as Finance Minister, presented the “Fourth Madani Budget: The People’s Budget” in Parliament today.

Despite the slight reduction, he said the budget maintains its focus on economic stability, digitalisation, and infrastructure development, aimed at supporting long-term growth.

Of the total, RM338.2 billion (80.7%) is allocated for operational spending, while RM81 billion is set aside for development projects.

Homeownership schemes

Several housing-related incentives were rolled out under Budget 2026, focusing on easing homeownership for first-time buyers, encouraging adaptive reuse of commercial buildings, and ensuring inclusivity across communities.

• Full stamp duty exemption for first-time homebuyers on transfer and loan agreements for homes priced up to RM500,000, extended until Dec 31, 2027
• Flat stamp duty rate of 4% to 8% to be imposed on property transfers by non-citizens and foreign companies, excluding permanent residents
• The Housing Credit Guarantee Scheme (SJKP) is raised to RM20 billion for gig workers and the self-employed
• Financial institutions encouraged to support rent-to-own and build-then-sell schemes under the 13th Malaysia Plan (13MP)
• Special tax deduction of 10% of eligible expenses (capped at RM10 million) for commercial-to-residential building conversions

Civil servants

Civil servants remain key beneficiaries under Budget 2026, with RM2.2 billion allocated to build, maintain, and repair quarters for essential frontliners including doctors, nurses, teachers, police, and armed forces personnel.

Highlighted projects include the RM500 million Armed Forces Family Housing (RKAT) at Kuantan Air Base, Pahang, benefiting around 800 military personnel.

To improve homeownership, the government will also acquire houses to be used as quarters for Eastern Sabah Security Command (Esscom) and immigration officers in Lahad Datu, Lipis, and KL.

The SJKP now covers up to 120% of property value, with a RM1 billion allocation for contract staff, complemented by Bank Simpanan Nasional’s RM500 million fund for first-home loans.

The Public Sector Home Financing Board (LPPSA) Youth Housing Scheme is extended to December 2026, with the maximum financing limit raised to RM1 million and a simplified process for second-home financing expected by late 2026.

Infrastructure

The government is pushing ahead with major infrastructure and connectivity upgrades nationwide, with key priorities including flood mitigation, highway expansions, and aviation development.

• RM81 billion is allocated for federal development expenditure.
• Total development spending, including through government-linked investment companies (GLICs), statutory bodies, and the Ministry of Finance Incorporated, reaches RM470 billion.
• Focus remains on Pan Borneo Sabah and flood mitigation projects.
• The Special Task Force on Agency Reform (STAR) saved RM1.1 billion through improved project coordination.
• RM25 million is allocated to the STAR team for digitalising project management systems.
• GovTech Malaysia will streamline digital approval pipelines for infrastructure projects.
• Malaysia Airports Holdings Bhd will expand to Penang, Kota Kinabalu, Tawau, and Miri airports under a RM2.3 billion programme.
• The Short Take-off and Landing Ports (STOLports) in Marudi and Redang are also being upgraded, with completion expected by 2027.

Bumiputera empowerment in real estate 

• Pelaburan Hartanah Bhd (PHB) will strengthen Bumiputera strategic ownership in real estate and key businesses.
• Malay Reserve Land will be increased by 50 acres in Bandar Malaysia. Petronas, as the landowner, is currently preparing the development plan, with the first phase slated to begin by end-2026.
• The Subang Airport and its surrounding areas will be developed by the Government and government-linked companies (GLCs), ensuring national interests and Bumiputera participation remain prioritised.
• The Construction Industry Development Board (CIDB) will provide RM10 million to boost the competitiveness of young contractors in the construction industry.

National Energy Transition Roadmap (NETR)

Malaysia’s energy transition takes centre stage, with a goal to reach 70% renewable generation capacity by 2050.

• National Energy Transition Fund: RM150 million
• Large-Scale Solar (LSS 6): 2GW capacity, RM6 billion private investment
• GLICs/GLCs: RM16.5 billion renewable investments (UEM Lestra solar farms, PLUS EV charging)
• Feed-In Tariff (FiT): Additional 300MW quota by 2028
• Corporate Renewable Energy Scheme (CRESS): RM3.5 billion for 500MW projects
• Solar ATAP: Allows consumers to sell surplus power to utilities (500MW capacity)
• Green Technology Financing Scheme (GTFS) 5.0: RM1 billion, up to 80% government guarantee
• Carbon tax: Launching in 2026, starting with iron, steel, and energy sectors
• RM20 million rebates for energy-efficient equipment purchases
• Tax relief (RM2,500) extended to food waste shredder purchases

Urban development

Urban rejuvenation efforts will focus on upgrading public amenities, hawker markets and heritage landmarks, particularly in Kuala Lumpur and other heritage zones.

• KL City Hall (DBKL): RM500 million internal fund for housing and hawker infrastructure, RM200 million to upgrade old markets and food courts, RM300 million for People’s Housing Project (PPR) flat maintenance (including wiring and lift replacement)
• RM60 million in federal grants for hawker market upgrades under local councils
• RM95 million to upgrade public parks and toilets
• RM90 million to improve infrastructure in Chinese and Indian villages
• RM600 million by Khazanah Nasional Bhd for Carcosa Seri Negara restoration: This is part of the Warisan KL Initiative which includes the restoration of KL Station, Dayabumi Complex, and the upcoming Merdeka 118 Museum.
• RM250 million UDA Holdings: Developing wakaf lands, including Taman Seetee Aisah and Taman Sultan Sallehuddin

Kota Madani

The government has unveiled Kota Madani Precinct 19, Malaysia’s first AI-driven green city, offering 10,000 homes, of which 80% are reserved for civil servants.

Vertical School Concept 

Pilot projects at:

• Kota Madani Precinct 19, Putrajaya
• Madani SkyWorld Pearlmont, Seberang Perai, Penang
• Residensi Aman Madani, Bandar Sri Permaisuri, KL

Affordable housing

1. Residensi Rakyat & Rumah Mesra Rakyat: RM672 million (benefiting 33,000 residents)
2. RM500 million to rebuild and repair 3,300 dilapidated homes (including 380 fishermen’s houses)
3. RM143 million to maintain medium-cost strata housing (lift replacement)

Construction

Budget 2026 reinforces the government’s state-level infrastructure pipeline under the 13MP, continuing road, water, and health facility upgrades across key states.

State-level projects:

1. Penang

Key infrastructure works to enhance connectivity, utilities, and public amenities.

• Juru–Sungai Dua PLUS traffic dispersal project
• Kubang Semang Health Clinic and Seberang Perai Tengah Integrated Health Complex
• Titi Kerawang and Teluk Awak water intake upgrades, with new raw water pipeline to Teluk Bahang Dam
• Bertam Sports Complex upgrade, Kepala Batas
• Mount Erskine–Burma Road underpass construction

2. Johor

Major upgrades to support the Johor–Singapore Special Economic Zone (JS-SEZ).

• Senai–Desaru Expressway (Phase 2A): Cahaya Baru to Sungai Johor section
• New link road connecting Jalan Kluang–Renggam–Layang-Layang (J25) to Jalan Kota Tinggi–Kluang
• Intersection upgrade at Section 16, Jalan Johor Bahru–Kulai and Jalan Gelang Patah
• Replacement of lifts and escalators at Sultan Iskandar Building and JB Sentral
• Road upgrade from Pt. Panjang (Ayer Baloi) to Sedenak Toll interchange

3. Perak

Road, interchange, and industrial infrastructure projects to strengthen logistics and healthcare access.

• Federal Road upgrade in Pengkalan Hulu
• New PLUS interchange in Kerian
• Type 2 Klinik Kesihatan in Tanjung Rambutan
• Basic infrastructure for Perak Halal Industrial Park, Manjung
• FT100–FT3145 Lumut Port route upgrade (Phase 5: Tanjung Malim–Lumut Port)

4. Kedah

Focus on water security, flood control, and healthcare access.

• Sungai Karangan riverbank water reservoir, Kulim
• Sik Health Clinic
• Eco-friendly drainage project in Taman Selasih, Kulim
• Kuala Kedah Waterfront tourism facilities
• Coastal erosion control at Pantai Leman, Kota Setar

5. Kelantan

Urban drainage and road upgrades to support flood mitigation.

• Drainage system at Bandar Baru Tunjong, Kota Bharu
• Upgrades to Jalan Kubang Kerian–Bachok and Jalan Pasir Mas–Salor
• Regional sewerage treatment plant and network expansion at Tunjong
• Rural water supply system, Pasir Mas

6. Melaka

Road and education infrastructure to boost connectivity and public services

• New road: Jalan Masjid Tanah–Kuala Linggi to Telok Gong, Alor Gajah
• Road upgrade: Sungai Udang to Masjid Tanah
• Reconstruction of SMK Ghafar Baba and SMK Tinggi Perempuan dormitory
• Maritime Museum upgrade (Phase 1), Jalan Quayside

7. Sabah

Large-scale sewerage, water, and road projects to expand infrastructure coverage.

• Inanam oxidation pond upgraded to regional sewage treatment plant
• New Kalabakan–Simanggaris (Malaysia–Indonesia border) road
• Sungai Moyog integrated river basin project (flood mitigation)
• Main transmission pipeline installation and replacement in Tawau, Kota Kinabalu, Penampang, and Putatan

8. Sarawak

Transportation, health, and agricultural infrastructure upgrades.

• Main road construction in Kapit Division (Nanga Serau–Nanga Seranau)
• Mukah Health Clinic with quarters and integrated health complex
• Cattle production and rice industry enhancement programs
• Samariang People’s Housing (PRR), Kuching

9. Negeri Sembilan

Strategic infrastructure to support industrial and tourism growth.

• PLUS interchange for Malaysia Vision Valley
• Sungai Pedas barrage and riverbank reservoir, Rembau
• Main road and intersection upgrades in Palong, Jempol
• Teluk Kemang coastal conservation and new road from Kampung Barisan to Kampung Tampin Linggi

10. Pahang

Transportation and healthcare improvements in key rural districts.

• Kuantan–Segamat Highway upgrade, Rompin
• Concrete bridge (Jalan Serengkam–Jalan Kuala Wau, Maran)
• Road upgrades in Sungai Lembing, Kuantan
• Pos Lenjang Health Clinic with staff quarters, Lipis

11. Perlis 

Flood mitigation and transport enhancement works.

• Jalan Kampung Batu Dua–Beseri road upgrade
• Chuping flood retention pond upgrade
• New staff quarters for Hospital Tuanku Fauziah
• Full reconstruction of SK Chuping

12. Terengganu 

Coastal protection and road connectivity projects.

• Pantai Rusila coastal erosion control, Marang
• Federal Road upgrades in Setiu
• Drainage improvements in Kampung Mak Chili Paya, Kemaman
• New road from Kuala Terengganu Bypass (Kg Bukit Bayas) to Kg Kubang Tangga
• Kuala Terengganu Hockey Stadium infrastructure upgrades

13. Selangor 

Flood control, road, and health infrastructure projects.

• Sungai Buloh Flood Mitigation (Phase 2)
• Hospital Banting additional block
• Statewide mechanical and electrical flood control infrastructure
• Federal Road upgrade (Batu 9–Dato Alias intersection) including flyover, Cheras
• Type 2 Kinrara Health Clinic, Petaling

14. Federal Territories 

Urban flood mitigation and waterfront redevelopment.

• Gombak River conservation (Kampung Sungai Mulia to Puah Flood Detention Pond)
• River rehabilitation in KL and Labuan
• Labuan Waterfront redevelopment (Phase 1)
• Redevelopment of KL Swimming Complex

As Penang girds itself towards the last lap of its Penang2030 vision, check out how the residential segment is keeping pace in EdgeProp’s special report: PENANG Investing Towards 2030.