House of Representatives passes Budget 2027 at policy stage, debate process continues

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House of Representatives passes Budget 2027

Highlights

The House of Representatives passed the Supply Bill 2027, allocating RM459.8 billion, and it now enters the committee stage from 2–26 November.
The government projects federal revenue of RM380.8 billion in 2027, PETRONAS dividends of RM32 billion, and aims to reduce the fiscal deficit to 3.3% of GDP.
Budget 2027 sets a monthly minimum wage of RM2,000 from June 2027, raises individual tax relief to RM12,000, and increases the tax rate for income above RM1 million to 30%.

This article was translated from the original. Read the original version by our correspondent here.

Approval details and the bill’s next steps

The Edge Malaysia reported that the House of Representatives passed the Supply Bill 2027 by voice vote after Second Finance Minister Datuk Seri Amir Hamzah Azizan concluded his winding-up speech, before Speaker Tan Sri Johari Abdul announced the decision.

The bill now moves to the committee stage for detailed debate, scheduled to begin on 2 November and run until 26 November. If passed, it will go through its third reading before being tabled in the Senate, after which it will be submitted to the Yang di-Pertuan Agong for royal assent.

Prime Minister Datuk Seri Anwar Ibrahim tabled Budget 2027 on 9 October, his fifth budget since the unity government was formed in 2022. The budget, themed “Reaching for the Skies, While Anchored on Our Values”, provides for total federal spending of RM459.8 billion, comprising RM376.8 billion in operating expenditure and RM83 billion in development expenditure.

Fiscal implications and key economic measures

Federal revenue for 2027 is projected to reach RM380.8 billion, with PETRONAS dividends expected to contribute RM32 billion. The government also aims to reduce the fiscal deficit to 3.3% of gross domestic product in 2027, compared with a target of 3.6% for 2026.

Under the budget, government-linked investment companies are expected to invest RM25 billion, while public-private investment is projected at RM11 billion. Federal statutory bodies and companies owned by Minister of Finance Incorporated are expected to invest an additional RM14.2 billion.

Key measures announced include raising the minimum wage to RM2,000 per month from RM1,700, effective June 2027, with micro, small and medium-sized enterprises recording annual sales below RM50 million exempt from the new rate. The government will also introduce a minimum monthly salary of RM2,500 for semi-skilled workers and graduates as an initial step in reforming the wage framework.

To provide relief for middle-income earners, the individual income tax relief limit will be raised from RM9,000 to RM12,000, the first revision since 2010. Resident individual income tax rates will also be reduced by one percentage point for chargeable income between RM70,001 and RM100,000, to 18%, and for income between RM100,001 and RM150,000, to 24%. Meanwhile, the rate for individuals earning more than RM1 million will be raised to 30% to broaden the government’s tax base.

In our earlier coverage of Malaysia’s efforts to bring the fiscal deficit below 3% of GDP, we outlined a fiscal consolidation plan supported by targeted subsidy reforms and digitalisation to improve public spending efficiency. We also highlighted that achieving this target depends on revenue collection, more precise subsidy mechanisms, and external factors such as oil prices and social spending pressures that could affect the government’s debt trajectory.

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