☕️ Budget 2026 Highlights 3 Versions: The Coffee Break, Mr Money, and The Edge

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

The average disposable income of Malaysian households rose to RM7,584 in 2024, according to the latest Household Income and Expenditure Survey Report. This marked a 3.2% increase, attributed to a gradual improvement in income distribution. The 3.28 mil households in the B40 group had an income of up to RM5,858, pushing up the segment’s share of total national income up to 16.7% from 16.3% in 2022. However, the T20 households, which earned RM12,680 and above per month, saw their total national income share drop to 45.1% from 46.3%. A significant portion of the remaining income share is made up of the M40, earning between RM5,860 and RM12,679. This narrowing of income inequality is also shown in the Gini Coefficient, which improved to 0.39 in 2024 from 0.404 in 2022.

However, the same report also uncovered a growing trend of dining out among Malaysians, as the second and third largest shares of household expenditure are restaurants and accommodation services at 17%, and food and beverages at 15.7%. Correspondingly, at-home food expenditure saw a slight decline, with the report also noting that household consumption was increasingly supported by non-income sources, such as government assistance and self-produced goods. According to the report, Malaysians spent an average of RM5,566 a month in 2024, with the biggest share of household expenditure going towards housing, water, electricity, gas, and other fuels, making up 23.5% of monthly spending.

One more finding from the report that should be nice news on a Monday is that the hardcore poverty rate in Malaysia has dropped to 0.09%. This means Malaysia is one step closer to eradicating hardcore poverty, with less than 8,000 households around the country that can still be categorised as hardcore poor. According to Acting Economy Minister Amir Hamzah Azizan, this shows the effectiveness of government initiatives to increase household income and economically empower urban communities. He added that the absolute poverty rate had also dropped to 5.1% from 6.2% in 2022. Notably, the Food Poverty Line income, used to determine the hardcore poverty threshold, has now been pushed up to RM2,705 from last year’s RM1,236. The report also showed that the highest incidence of absolute poverty came from Sabah at 17.7% followed by Kelantan at 11.5% and Sarawak at 8.4%.

For the full datasets and visualisations, you can check out the Department of Statistics Malaysia’s website here.

3. IN MALAYSIA 🇲🇾

Spotlight on Budget 2026
Another year, another largest budget by the government of the day. A total budget of RM419 bil has been allocated by the federal government for the fiscal year 2026, comprising of RM338.2 bil in operating expenses and RM81 bil for development, plus additional support of RM50.8 bil from GLICs, public-private investments, and statutory bodies/GLCs.

Tbh, nothing majorly exciting in this year’s announcement. If you want a quick overview, we have 3 options for you: Mr Money’s Top 50 cheatsheet highlights and The Edge’s summary of the whole thing here.

And our version - we highlight the interesting ones (from our own perspective):

Pay raise for judges, pay cut for cabinet
PM Anwar Ibrahim announced 20% pay cut for cabinet ministers will remain in place, while judges will receive a salary increase of up to 30% starting Jan 1, 2026. The last judges’ salaries were increased was in 2015. He noted that judges have long been excluded from annual increments and are barred from holding other positions or businesses. The adjustment comes alongside Phase 2 of the Public Service Remuneration System (SSPA), which will also take effect in January 2026.

The health of Malaysia’s federal debt
Malaysia’s debt servicing (meaning paying the interest on the debt) is set to rise 7.6% to RM54.3 bil in 2025, or 16.3% of government revenue, as the government aims to reduce the fiscal deficit from 4.1% to 3.8% of GDP (in other words, the government is spending more than it brings in). Most payments (RM53.5 bil) will cover domestic interest, with only RM0.8 bil for foreign debt. Gross borrowings are expected to fall to RM184 bil, all from domestic sources, with RM106.8 bil for debt repayment and RM76.7 bil for deficit financing. Federal debt stands at RM1.304 tril (64.7% of GDP), mostly domestic, while total public sector debt rose 4.2% to RM1.73 tril.

Fun fact: Learn this today - Ferguson’s Law. This paper suggests that any great power that spends more on debt servicing than on defense risks ceasing to be a great power. The US has crossed this threshold. 

Not like Malaysia is a great power, but for the fun of it, the Defense Ministry is getting RM21.7 bil.

Petronas’ dividend lowest in 9 years
Petronas set to deliver its lowest dividend to the government in nine years, at RM20 bil in 2026, down from RM32 bil last year. However national revenue remains strong enough to fund the RM470 bil Budget 2026. The government would not pressure Petronas to pay more amid weaker global oil prices, noting that the company must retain sufficient funds to reinvest in the petroleum sector domestically and abroad for long-term returns. Despite lower profits in the first half of 2025, Malaysia’s reliance on Petronas for revenue has eased to around 19–20%, supported by broader income sources.

Reusing for the nth time our all-time favourite image:

Game over for luxury car tax exemption in Langkawi, Labuan
The government will cap vehicle tax exemptions in Langkawi and Labuan to cars priced at RM300,000 and below starting Jan 1, 2026. Locals said the move would prevent misuse of existing exemptions by wealthy buyers seeking to dodge taxes on luxury vehicles. Kedah Consumers Association president said the measure could reduce revenue leakages and strengthen government income, while also helping Langkawi’s tourism operators, who typically use more affordable vehicles for rental services.

Free uni education, PTPTN loan waiver for low, middle-income households
A major relief for students from low-income families, due to the announcement of free education for 5,800 public university students through an RM120 mil annual allocation under PTPTN. A PTPTN loan repayment exemption for graduates who earn First-Class Honours degrees and come from low- or middle-income households, a move expected to benefit around 6,000 students each year, supported by an additional RM90 mil fund.

Deepavali Bonus: Toll Discount
A 50% toll discount for Deepavali on 18-19 Oct was confirmed during the announcement . The reduction applies to Class 1 private vehicles and Class 2 vehicles crossing the Penang Bridge, but excludes border tolls. The move will cost the government around RM19.86 mil to compensate highway concessionaires. Technically, we rakyat still forked out the toll. but indirectly. 

Budget Kopi: Our turn - mind contributing to our budget? Visit here.

ASEAN Matters

KLCC & City road closures for ASEAN Summit
President Trump and President Xi will be making an appearance in KL. Roads around KLCC and key city routes will see diversions and closures from Oct 23-28 as KL gears up for the 47th ASEAN Summit. Dry runs from KLIA to hotels in the city are set for Oct 23-24, with full road restrictions coming into effect from Oct 25-28. A detailed schedule of affected roads will be released closer to the summit. Plan your journey - you might bump into Trump. 

Timor-Leste ASEAN membership
Timor-Leste will officially become a full ASEAN and its 11th member on Oct 26. The announcement came ahead of the 47th ASEAN Summit from Oct 26-28 in Kuala Lumpur, which will host world leaders including US President Donald Trump and Chinese President Xi Jinping. Malaysia has contributed USD 200k to the ASEAN Secretariat’s Timor-Leste Unit while training 319 officials through the Malaysia Technical Cooperation Programme.

Shorts

1. New race unlocked: Baba Nyonya
   The Baba and Nyonya community can now amend their race on birth certificates to “Baba Nyonya,” reflecting their unique Peranakan identity. The change, available in Melaka from Oct until the end of the year and nationwide from Jan 2026, requires approval from the Baba and Nyonya Association and an NRD interview to verify authenticity. Baba Nyonya will be considered a sub-ethnic group among the local Chinese population.

2. Melaka school gang rape incident

   A Form Three schoolgirl is traumatised and refuses to attend school after allegedly being gang-raped by two senior students on Oct 2 in her classroom, an incident recorded and witnessed by two others. The case came to light when the video circulated among students and was reported to her mother on Oct 10, who lodged a police report. All four suspects were detained the same day and are remanded until Oct 16 as investigations under Section 375B of the Penal Code continue. It’s shocking that a school,a place meant to be safe has become the scene of such violence.

4. AROUND THE WORLD 🌎

Trump’s antics

Trump’s latest 100% tariff on China triggered steep stock fall
Trump took a hit back at Beijing’s move this week to tighten its rules for exports of rare earths, saying that he would impose an additional 100% tariff on imports from China beginning next month. In the wake of the remarks, financial markets dropped, with the S&P 500 closing down 2.7%, its steepest fall since April. Nvidia, Tesla, Amazon and Advanced Micro Devices all fell more than 2% after the bell. The crypto market took a brutal hit too, with USD19 bil in liquidations - the largest on record. In addition to tightening rules for rare earth exports, China has opened a monopoly investigation into the US tech firm Qualcomm that could stall its acquisition of another chipmaker. It also said it will charge new port fees to ships with ties to the US, including those owned or operated by US firms. China produces over 90% of the world’s processed rare earths and rare earth magnets, which are critical for products ranging from electric vehicles and aircraft engines to military radars. An escalating trade war between these two largest global economies could trigger major supply chain disruptions, particularly for the technology, electric vehicle and defence industries. Trump said on Truth Social that China is “becoming very hostile” and “trying to hold the world captive”.
Learn: What is liquidation?

Trump and Sisi to chair Gaza peace summit
Today, leaders from more than 20 countries will convene in Egypt’s Red Sea resort city of Sharm el-Sheikh as Trump and Egyptian president, Abdel Fatah al-Sisi chair the Gaza peace summit. Their aim is said “to end the war in the Gaza Strip, enhance efforts to achieve peace and stability in the Middle East, and usher in a new era of regional security and stability”. Hamas will not be taking part and there is no confirmation of participation from Israel. The summit was arranged after Israel and Hamas agreed on a ceasefire and prisoner-swap deal after intense indirect negotiations in Sharm el-Sheikh in recent days. On Saturday, Reuters reported three Qatari diplomats were killed in a car crash at the same Red Sea resort, with two other diplomats wounded.

US buys Argentinian pesos amid government shutdown
Trump’s administration has purchased Argentinian pesos and finalised a USD20 bil currency swap framework with Argentina’s central bank in a deal aimed at shoring up the country’s faltering finances. The support comes as Argentina’s right-wing President Javier Milei, a close ally of Trump, has been struggling with financial market turbulence. While Trump’s administration has insisted this programme is not a bailout, US farmers and Democratic lawmakers have criticised the deal, with a group of Democratic senators introducing the No Argentina Bailout Act that would stop the Treasury Department from using its Exchange Stabilization Fund to assist Argentina. Milei is quite the Trump bestie – he has previously described Milei as his “favourite president”. Argentina is scheduled to hold midterm elections on Oct 26, and the US is still in shutdown.
Learn: What is currency swap?

Shorts

1. China’s EV giant BYD hits a wall of problems

   Tough days are in store for the Chinese auto giant BYD Co. , who is now facing a significant reality check as its sales momentum stalls and regulatory pressures mount, despite surpassing Tesla Inc. as the world’s top electric vehicle seller. In the third quarter of 2025, the company experienced its first year-on-year drop in total sales since 2020, forcing it to scale back its annual sales target from 5.5 mil to 4.6 mil vehicles. In August, BYD reported a 30% slump in net income as it struggled to deepen discounts at home while rivals like Geely, Leapmotor, and Xiaomi gained market share. The stock also took a significant hit in September after news broke that Warren Buffett’s Berkshire Hathaway had sold its entire holding in the company — a stake once worth about USD 9 bil.

2. 92-year-old Paul Biya might continue to head Cameroon

   Cameroonians are set to vote in an election that could see the return of the world’s oldest serving head of state, Paul Biya, who is 92 and has been in power for 43 years. If he wins, he will continue as Cameroon’s (view map here) president for an 8th term in a nation of 30 mil people. Analysts predict that he will win given his firm grip on state machinery and a divided opposition, but voters are also looking forward to change. While the country’s GDP had been growing since 2023, unemployment, falling commodity prices and rising poverty amid a cost of living crisis were impacting ordinary Cameroonians, while new infrastructure investment was also sorely needed.

3. Key to longevity could be in a naked mole rats’ DNA

   A new study published in the journal Science has discovered that the key to long life could be in the DNA of a naked mole rat - a burrow-dwelling rat that has a maximum life span of nearly 40 years, making them the world’s longest-lived rodent. These rats are resistant to a wide range of age-related diseases such as cancer, deterioration of the brain and spinal cord and arthritis. Scientists believe that it is due to a protein called c-GAS that is involved in damage sensing and repair - in humans, the protein could promote cancer and shorten our lifespan, but in the naked rat’s, the researchers found that the exact same protein does the opposite. It helps the body mend strands of DNA and keeps the genetic code in each cell intact. Haven’t seen a naked mole rat before? Here you go. 

5. FOR YOUR EYES 📺

1. Spotted somewhere. Nothing is more haram than babi, it seems.

2. Some adrenaline rush to start the week - man vs avalanche.

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3. Watch a pupper show - the reverse perspective. Didn’t know it could be that interesting. Watch here (embedded version not loading).