PETALING JAYA: The projected increase in development expenditure under Budget 2026 underscores the government’s commitment to sustaining infrastructure momentum while maintaining its fiscal consolidation targets, according to CIMB Research.
The research house said this was supported by an estimated RM15bil per annum in savings from targeted subsidy reforms, part of which could be seed funding for priority infrastructure projects.
Budget 2026 had allocated RM81bil for development expenditure, a slight increase of 1.3% year-on-year (y-o-y) from the revised RM80bil in 2025.
For government-funded projects, the research house expected a pick-up in new infrastructure awards including airport upgrades in Penang, Tawau, and Miri, the Juru–Sungai Dua Elevated Expressway, phase 2A, and the Pan Borneo Highway, Sarawak–Sabah Link Road and Tamparuli Bypass Highway.
“For private-funded projects, we anticipate a reacceleration of large-scale infrastructure investments spanning highways, renewable energy, and data centres (DCs).
“This trend has begun with the imminent rollout of two urban highways that recently received federal approval,” the research house said.
The two highways are the RM1.4bil extension of the New Pantai Expressway under IJM Corp Bhd
, and Laluan Istana–Kiara Expressway and Kampung Baru Link Expressway under Ekovest Bhd.
“The two projects, together with the proposed Kapar Expressway, carry a combined estimated cost of RM6.3bil,” the research house said.
“In addition, we expect five to six hyperscale DC projects, mostly valued at RM1bil to RM2bil each, to be awarded by end-2025,” the research house added.
In the renewable energy space, the it expected stronger job flows from the National Energy Transition Roadmap and large-scale solar schemes, which would be partly privately funded.
“We believe Gamuda Bhd will be an early beneficiary of the green transition, having formed partnerships with SD Guthrie Bhd and Gentari Sdn Bhd to develop solar farms with a total potential output of up to 2,200MW, including battery energy storage systems,” CIMB Research pointed out.
On the other hand, it said the proposed carbon tax targeted for implementation in 2026 could introduce uncertainty for local iron and steel players.
Further details on the tax mechanism are expected once it is aligned with the national carbon market policy and the upcoming climate change bill.
The research house is maintaining its “overweight” rating on the construction sector.
