7th August 2026 - 3 min read
The economy may be growing, but for middle-income Malaysians, it might not t feel like it. Wages haven’t kept up with rising living costs, leaving many households with less room to get ahead.
That’s why the Socio-Economic Research Centre (SERC) wants Budget 2027 to give middle-income households more breathing room through higher tax reliefs, while helping local businesses invest and grow.
Executive director Lee Heng Guie said some parts of the economy are doing much better than others. Industries such as technology, artificial intelligence (AI) and semiconductors continue to perform well, while businesses in retail, hospitality and manufacturing are still taking longer to recover.
Nearly four in 10 degree holders aged 25 to 34 are working in jobs below their qualifications, making it harder for many young Malaysians to earn the kind of salaries their education would normally lead to.
One of its biggest recommendations is updating personal tax reliefs, many of which have remained unchanged for more than 15 years. Raising those limits could mean paying less tax if you qualify.
Among the proposals are increasing the individual tax relief from RM9,000 to between RM10,000 and RM12,000, raising the tax relief for Employees Provident Fund (EPF) contributions and insurance premiums to RM5,000 each, and increasing reliefs for spouses and dependants.
Lee also proposed adjusting the tax brackets for those earning between RM70,000 and RM200,000 a year, so a pay rise doesn’t push them into a much higher tax rate too quickly.
Instead of expanding broad cash handouts, he suggested strengthening targeted aid through the Sumbangan Tunai Rahmah (STR) programme and making it easier to use that assistance for essentials such as groceries, fuel and utility bills.
SERC also wants Budget 2027 to make it easier for Malaysian businesses to invest and grow.
Although foreign investment remains strong, investment by local manufacturers fell last year, with many small and medium-sized enterprises (SMEs) finding it harder to expand.
To encourage more businesses to reinvest, Lee proposed extending tax incentives for companies that invest in new equipment and expansion. He also wants Malaysia’s SME definition updated so growing businesses don’t lose access to grants and tax incentives too early.
Lee also wants Malaysia to invest more in growing its own food, saying the country’s reliance on imports leaves it more exposed when supply is disrupted overseas.
He proposed setting aside between 100,000 and 200,000 hectares of land each year for farming, while investing in better seeds, cold chain facilities and technology to help local farms produce more food.
Lee added that global uncertainty, trade tensions and unpredictable weather remain risks to Malaysia’s economy, making targeted measures in Budget 2027 even more important.
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Christina writes about personal finance with an eye for making the complicated feel straightforward. She is drawn to the everyday money decisions people face and genuinely enjoys finding the clearest way to explain them. Between articles, she is probably napping, on a hiking trail, or terrorising her sister’s cats.
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