KUALA LUMPUR, 9 October 2026 — Malaysia’s Budget 2027 presents an important opportunity for the Government to translate progress in fiscal consolidation into meaningful improvements in household financial security. As the fifth Budget under the MADANI administration, it targets a fiscal deficit of 3.3% of gross domestic product (GDP) in 2027, continuing efforts to strengthen the country’s public finances while addressing the economic pressures faced by Malaysians.

The Institute of Chartered Accountants in England and Wales (ICAEW) has brought together perspectives from industry leaders on how Budget 2027 can balance fiscal resilience with household needs. Datuk Peter Lim, Group Managing Partner of Folks DFK Group, alongside David Lai, Executive Director and Head of Tax Advisory at BDO Malaysia, and Jen Shaun Wong, Director of Tax Advisory at BDO Malaysia, highlighted key priorities involving subsidy reform, taxation, housing affordability, healthcare and retirement security.

Subsidy Reform and Cost-of-Living Pressures

Malaysia’s subsidy rationalisation measures have generated RM15.5 billion in annual savings from fuel and electricity reforms, while assistance programmes such as Sumbangan Tunai Rahmah (STR), Sumbangan Asas Rahmah (SARA) and BUDI MADANI continue to provide financial relief to eligible households. However, industry leaders believe these initiatives should be complemented by longer-term measures that address the underlying causes of rising living costs.

Datuk Peter Lim emphasised that while subsidies and cash assistance help ease immediate financial pressures, sustainable solutions are needed to improve affordability. He identified housing and childcare as two significant household expenses, recommending the expansion of affordable housing near employment centres and public transport, incentives for build-to-rent developments and targeted rental assistance for vulnerable working families.

He also proposed treating childcare as essential economic infrastructure, supported by enhanced employer tax incentives and targeted childcare vouchers for lower- and middle-income families. Such measures could help reduce financial burdens while encouraging greater female participation in the workforce.

On personal taxation, Lim suggested increasing the annual baseline personal tax relief from RM9,000 to at least RM12,000 to better reflect current living costs. He also highlighted the importance of employment incentives for the B40 community, greater fiscal support for micro, small and medium enterprises (MSMEs) outside the Klang Valley and Penang, and upskilling opportunities through HRDC and higher education institutions.

Tax Policy and Household Financial Resilience

Household debt and rising expenditure continue to place pressure on Malaysian families, even as overall debt-servicing capacity remains generally healthy. Slower private consumption growth further highlights the need for policies that help household incomes keep pace with everyday expenses.

David Lai of BDO Malaysia said Budget 2027 should refine subsidy targeting by considering household size, dependants, disability status and regional differences in living costs, rather than relying solely on fixed income thresholds. He also proposed introducing a transitional support tier for vulnerable M40 households to prevent families from losing assistance entirely following small increases in income.

Lai further recommended expanding SARA to cover essential expenses such as childcare, eldercare, education and basic healthcare, allowing assistance to better reflect the changing needs of Malaysian households.

Healthcare affordability should also receive greater attention. Citing the National Health and Morbidity Survey (NHMS) 2023, which found that 15.6% of Malaysian adults were living with diabetes, Lai called for targeted incentives to encourage healthier food choices, regular health screenings and preventive healthcare. Such initiatives could help reduce the long-term financial burden associated with non-communicable diseases while supporting a healthier population.

Housing Affordability and Skills Development

Housing remains another critical concern, particularly for first-time homebuyers seeking to enter the property market without taking on excessive debt. Jen Shaun Wong of BDO Malaysia proposed targeted housing incentives, including stamp duty exemptions and savings-based pathways to homeownership, to improve affordability.

Drawing inspiration from Singapore’s Central Provident Fund housing framework and Canada’s First Home Savings Account, Wong suggested introducing tax incentives for dedicated housing savings accounts. This approach could complement existing Employees Provident Fund (EPF) housing withdrawals by helping prospective buyers accumulate down payments while reducing their reliance on borrowing.

Beyond housing, Wong highlighted the importance of strengthening household earning potential through upskilling and reskilling incentives in high-value sectors such as artificial intelligence, cybersecurity and renewable energy. Equipping Malaysians with relevant skills could improve access to better-paying jobs and help workers adapt to evolving industry demands.

Strengthening Retirement Security and Intergenerational Wealth

Retirement adequacy remains a significant challenge, with many Malaysians still working towards basic retirement savings targets. As living costs rise and life expectancy increases, Budget 2027 could play a greater role in encouraging consistent long-term savings and improving financial preparedness for later life.

Wong proposed increasing the Private Retirement Scheme (PRS) annual tax relief limit beyond RM3,000, arguing that the existing threshold may no longer adequately reflect current economic realities. He also recommended additional tax relief for individuals who contribute consistently over five consecutive years, double tax deductions to encourage greater employer participation in retirement schemes, and incentives for contributions to a spouse’s or parents’ retirement accounts.

Estate planning was another priority raised by Lai, who suggested introducing tax incentives for arrangements such as hibah, wasiat, wills and trusts. Encouraging more Malaysians to incorporate estate planning into their retirement strategies could facilitate smoother wealth transfers between generations and help families preserve their financial security.

Lai also highlighted the potential of strengthening Malaysia’s Single Family Office framework to support orderly wealth transfers, reduce future reliance on government assistance and develop the country’s private wealth management ecosystem. These measures would become increasingly relevant as Malaysia’s population continues to age.

Meanwhile, EPF’s i-Legasi programme, which has transferred RM46.3 million to 86 beneficiaries, reflects growing recognition of the importance of intergenerational wealth planning.

Budget 2027 Must Deliver Tangible Benefits for Malaysians

ICAEW members and industry leaders agree that strengthening Malaysia’s fiscal position must go hand in hand with improving household resilience. While fiscal consolidation remains essential to maintaining economic stability, its benefits should also be reflected in more affordable living costs, accessible healthcare, sustainable homeownership and greater retirement security.

Budget 2027 offers an opportunity to move beyond short-term financial assistance by introducing structural reforms that address the underlying challenges faced by households. Better-targeted subsidies, more responsive tax policies, investment in skills development and stronger retirement incentives could help Malaysians build greater financial resilience over the long term.

Ultimately, the success of Budget 2027 should not be measured by deficit reduction alone, but by whether households experience meaningful improvements in their financial wellbeing. A resilient economy depends not only on sound public finances, but also on families who are better equipped to manage rising costs, access essential services and secure their future.

*The views expressed in this article are solely those of the authors and do not represent the views of the firm or any organisation to which they belong or are affiliated.