PETALING JAYA: With private consumption remaining modest amid rising cost-of-living pressures and narrowing real wage growth, Budget 2027 is expected to prioritise measures to support domestic spending and alleviate household financial pressures.
CGS International (CGSI) Research anticipates that Prime Minister Datuk Seri Anwar Ibrahim’s upcoming Budget 2027 speech on Oct 9, 2026, will be “people-centric”, with support targeted across a wide range of segments across society.
The Finance Ministry’s pre-budget statement released in August provided a preview of its 10 focus areas, including protecting people against rising living cost challenges and defending the purchasing power of vulnerable groups through improved targeted subsidies and social assistance.
“The Prime Minister has indicated the potential for an expanded Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah (Sara) payouts for Budget 2027,” CGSI Research said.
It noted that the budget could further include a wider range of support measures for the general public.
“We view the increase in the Budi95 and Budi Diesel allocation in August 2026 as a reflection of the government’s cognisance of households’ pain points,” it said.
“Measures to this end in the budget could include larger bonus payouts for civil servants, as well as another round of the one-off RM100 Sara payouts, considering the positive public response to past disbursements.”
Meanwhile, the research house said that the government could double down and expand on its policy framework to address the low wage issue.
“So far, the existing multifaceted approach that includes minimum wage increases, the progressive wage policy, skills development, and efforts to reduce dependence on foreign workers has seen gradual impact,” it noted.
With the current RM1,700 minimum wage, in force since August 2025, legally due for review, it said it sees scope for a hike of RM200 to RM300, particularly given the government’s target for a RM3,000 minimum wage by 2030.
However, it pointed out that lasting higher wages would arguably only come from increasing workers’ efficiency and thus also expects stronger emphasis on productivity-linked wage growth, with extensive efforts to enhance workforce transformation through upskilling and automation, along with an improved productivity-related compensation system.
On the tax administration front, CGSI Research said it sees a low likelihood of sweeping changes to consumption tax or income tax beyond targeted refinements, given the ongoing need to protect vulnerable segments of the population.
“In our view, the combination of still-moderate consumer spending growth and the government’s focus on raising household incomes makes any tax reform that increases cost pressures on consumers, particularly lower-income households, politically and economically challenging.”
This comes amid growing discussions around potential amendments to the sales and service tax and the possibility of incorporating certain features of the goods and services tax (GST).
Significant shifts towards a GST-like framework are not likely in the near term, it said, as a GST system would transfer the full tax incidence to consumers, even if the headline tax rate stays broadly revenue neutral.
