PUTRAJAYA, 04 November 2025: Malaysia must pivot away from high-cost “mega projects” to ensure sustainable national growth, instead prioritizing people-centric initiatives, robust fiscal reform, and stronger governance, according to Finance Ministry Secretary-General Johan Mahmood Merican.
Speaking in an exclusive interview, Merican characterized the upcoming Budget 2026 as part of a longer-term strategy to reset the economy, warning that ambitions for high-income status must be tempered with the reality of current foundational challenges.
Prioritizing Basics Over Flashy Spending
Putrajaya has opted to direct resources toward tangible projects that immediately benefit citizens and create a broader economic multiplier effect across rural areas. “How can we talk about trying to become a high income developed nation when we don’t even get the basics right,” Merican questioned.
This new focus includes increased allocations for essential services like road maintenance (fixing potholes), repairing markets, and low-cost housing. These initiatives typically engage local contractors, spreading economic spillover effects that were previously confined to large cities through mega projects.
Committing to Unpopular Fiscal Reforms
Merican stressed that the national coffers remain resilient due to aggressive fiscal reforms designed to reduce bloat in government spending. He cited the controversial but necessary removal of blanket subsidies, including those for electricity, diesel, and RON95 fuel, alongside the introduction of new measures like capital gains and dividend taxes.
“I can’t think of any administration that has reviewed so many subsidies,” he stated. “If that’s not a commitment to fiscal reform, I don’t know what is.”
Strengthening Governance and Enforcement
In tandem with financial restructuring, the government is implementing key governance reforms to ensure better use of national resources:
- Procurement Act: This legislation was recently passed to tighten spending and reduce opportunities for misappropriation.
- Parliamentary Reform: Measures like the introduction of the Prime Minister’s Question Time and more select committees enhance accountability.
- Enhanced Oversight: Powers of the Malaysian Anti-Corruption Commission (MACC) and the Auditor-General have been enhanced to track public funds end-to-end.
Furthermore, the government is shifting revenue focus toward compliance rather than new taxes on citizens. The mandatory use of e-invoicing is expected to bring more taxpayers, particularly those currently operating in the grey economy, into the tax net.
Merican concluded that this strategic push for reform is encapsulated in the three core pillars of the Madani Economy framework: strengthening governance and fiscal sustainability, enabling higher growth through transformation, and ensuring shared living standards.
