Budget 2027 Strengthens Sustainability, Climate Resilience Agenda - Kenanga IB
KUALA LUMPUR, Oct 13 (Bernama) -- Budget 2027 reinforces Malaysia’s sustainability policy direction across decarbonisation, climate resilience and social inclusion, said Kenanga Investment Bank Bhd (Kenanga IB).
In a research note, the investment bank said it is particularly encouraged to see conservation funding increases that strengthen the backdrop for nature-positive activities.
It highlighted measures announced under Budget 2027, which include increasing the Ecological Fiscal Transfer (EFT) allocation to RM270 million (2026: RM250 million) for state-level conservation, while RM65 million would support community biodiversity rangers.
Almost RM320 million would fund nationwide slope, drainage and ditch upgrades, while RM260 million is allocated to the National Disaster Management Agency (NADMA).
The RM2.5 billion Non-Revenue Water programme targets the replacement of 1,900 km of ageing pipes, while RM100 million would fund retention ponds and river maintenance to reduce flood risks in the Klang Valley.
Another RM15 million from palm oil industry cess collections would support conservation, particularly in habitats of endangered species.
“On the other hand, we observe that policy sequencing remains a key consideration.
“The absence of a new carbon-tax announcement in Budget 2027 may reflect ongoing implementation complexities, including the interaction with fossil-fuel subsidy rationalisation and the need to balance decarbonisation objectives with industrial competitiveness,” it said.
It noted that potential beneficiaries include renewable energy and clean technology firms, power and grid infrastructure providers, engineering and construction contractors, water infrastructure companies, rail and public transport operators, and environmental service providers.
Consumer goods and value-oriented retailers may also benefit from improved purchasing power following wage increases, while automation and industrial technology providers could gain as businesses seek to manage higher labour costs and improve productivity, said Kenanga IB.
However, labour-intensive sectors, including manufacturing, plantations, food services, retail, hospitality, cleaning and security services, could face higher payroll costs following the minimum wage increase, putting pressure on profit margins.
Businesses unable to offset these costs through price adjustments, productivity gains or automation may face further margin pressure, while price increases could temper the positive effects of higher wages on consumer spending, it said.
At the same time, Kenanga IB said that the identified sector opportunities do not guarantee higher earnings, as revenue growth will depend on tender awards, project implementation, financing and private-sector participation.
It also noted that the impact of the minimum wage increase is expected to vary across sectors and individual business models.
-- BERNAMA