Development expenditure seen rising 3.8pct to RM83bil in 2027 -- CIMB Securities

KUALA LUMPUR: Development expenditure is projected to rise a modest 3.8 per cent year-on-year to RM83 billion under Malaysia's 2027 Budget, CIMB Securities said.

The government allocated RM80 billion for development expenditure in 2026 Budget.

An estimated RM9 billion decline in petrol and diesel subsidies to RM32 billion in 2027 could provide fiscal headroom to fund development projects, CIMB Securities analysts Kenny Mak Hoy Ken and Wei Yi Tan said in a report today.

In the first nine months of 2026, domestic project awards reached RM177 billion, equivalent to 76 per cent and 72 per cent of the total value of jobs awarded in 2024 (RM234 billion) and 2025 (RM244 billion), respectively.

"Public-funded projects, however, amounted to only RM37 billion, or 57 per cent and 63 per cent of the levels recorded in 2024 and 2025, respectively.

"Beyond the higher headline development expenditure projections for 2027, we prefer to focus on project awards and execution, as certain allocations may relate to the balance of ongoing jobs rather than new tenders," the analysts said.

The timing of project awards could also be brought forward ahead of the 16th general election, which must be called by February 2028, they said.

Targeted infrastructure spending

The report expects most infrastructure spending under 2027 Budget to be channelled towards small- to mid-sized projects, with a continued focus on narrowing development gaps by directing more allocations to East Malaysia, particularly Sabah and Sarawak, as well as other interior areas.

"Consequently, in our view, key areas of focus would include water infrastructure and pipe replacements, flood mitigation, rural infrastructure and grid investments," the analysts said.

Potential big-ticket infrastructure tenders under 2027 Budget include the second phases of the Rasau and Langat 2 water supply schemes, Civil Main Contract 3 (CMC 3) of the Penang Mutiara Line LRT, the Northern Perak Water Supply Scheme, and new road and utility projects in Sabah and Sarawak, the report said.