Accra:According to BERNAMA News Agency, Budget 2027 introduces personal income tax relief measures that could save approximately five million taxpayers up to RM1,600 annually, aimed at supporting middle-income consumption. The budget has increased the basic individual tax relief from RM9,000 to RM12,000, and reduced tax rates by one percentage point for chargeable income between RM70,001 and RM150,000.
Businesses are also set to benefit from reduced corporate tax rates for micro, small, and medium enterprises (MSMEs), as well as expanded sales tax recovery on qualifying machinery and production inputs. Manufacturers will be allowed to reclaim sales tax on machinery, spare parts, and equipment purchased from local traders or distributors. This facility will extend to raw materials used in the production of pharmaceuticals, animal feed, fertilizers, and pesticides.
The budget supports household incomes and investments while maintaining fiscal discipline, despite potential margin risks for labor-intensive businesses due to higher wages. The government's fiscal deficit target for 2027 is set at 3.3% of GDP, slightly better than the 3.4% forecast, even with an upward revision of the 2026 deficit to 3.6%.
CIMB Securities views Budget 2027 as positive for the consumer sector in the long term, supported by targeted cash assistance, tax relief, and measures to ease living costs, boost disposable income, and sustain domestic consumption. Incremental spending is expected to favor essentials, affordable food and beverages, and value-focused retail, benefiting retailers such as 99 Speed Mart, Eco-Shop, AEON, and MR D.I.Y. Consumer staples producers like Nestlé Malaysia, QL Resources, and Life Water are also expected to see benefits.
The budget includes a 17.6% increase in the minimum monthly wage to RM2,000 from June 2027, which will impact more than four million workers, although MSMEs with annual sales below RM50 million are exempted. While this increase may raise labor costs for retailers and food and beverage operators, higher wages are expected to support household purchasing power and consumption in the long term.
Higher minimum wages will likely increase costs for labor-intensive plantation, glove, and other manufacturing and services companies, though implementation from June 2027 limits the near-term impact. Companies that enhance labor productivity through efficiency and automation will be better positioned to offset rising labor costs.
On the investment front, the RM83 billion development expenditure allocation and continued infrastructure investment are expected to benefit construction companies, while housing incentives and Johor connectivity improvements should favor property companies. Renewable energy and technology companies are also poised to gain from extended green investment incentives and semiconductor funding.
Overall, Budget 2027 is seen as neutral to mildly positive for Malaysian equities, with a limited direct impact on aggregate FTSE Bursa Malaysia KLCI earnings in 2027.