8 Budget 2026 Scenarios Malaysian Retailers Should Prepare For
Budget 2026 to focus on targeted subsidies, reforms, high-value investments, says MOFBudget 2026, to be tabled on Oct 10.
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Malaysia’s Budget 2026 will be tabled on 10 October 2025. As the first budget under the 13th Malaysia Plan, it carries big expectations: keeping the economy on track, driving productivity, and managing the cost of living — all while narrowing the fiscal deficit.
For retailers and trading businesses, the stakes are especially high. Government policies on subsidies, taxation, labour, and digitalisation will directly shape cost structures, consumer spending, and competitiveness in the year ahead.
While the details are not yet confirmed, industry signals and policy discussions already highlight areas that deserve close attention. Rather than waiting passively, businesses can prepare by stress-testing possible outcomes.
Here are eight scenarios worth considering — and what they could mean for your retail operations.
Fuel Subsidy Restructuring and Its New Realities
Malaysia is rolling out a revised RON95 subsidy scheme effective 30 September 2025, under which Malaysians with valid MyKad and driver’s licenses will pay a subsidised rate of RM 1.99 per litre, capped at 300 litres per month. Non-citizens and foreign-registered vehicles are excluded from this subsidy and will be charged a higher market rate (about RM 2.60 per litre).
For retailers—particularly those managing their own delivery or distribution fleets—this change introduces a mixed impact. On one hand, the capped subsidy gives some predictability for up to 300 litres, but usage above that limit or operations involving non-eligible vehicles will face full market rates, increasing cost exposure. On the upside, the government expects to redirect the savings (estimated between RM 2.5 billion and RM 4 billion annually) toward consumer aid, infrastructure, and support for lower-income groups.
More Cash Aid & Support for B40 Households
Budget 2026 is also expected to strengthen cash assistance and household subsidies. These measures are designed to ease cost-of-living pressures for Malaysian families.
For retailers, this is good news — it helps sustain spending power, particularly at the lower end of the income spectrum. However, the demand will likely concentrate on essential goods and mid-market categories.
Discretionary and luxury items may see slower growth as consumers prioritise necessities. Retailers should respond by sharpening loyalty programs, crafting promotions for value-driven shoppers, and adjusting product assortments to strike a balance between sales volume and profitability.
SST Expansion & Higher Utilities
The expansion of the Sales & Service Tax (SST) and higher electricity tariffs have been flagged by retailers and mall operators as top concerns. These changes could significantly add to operational costs.
The pressure may come in multiple forms: higher rents due to increased costs for mall owners, larger utility bills, and more complex compliance requirements. Businesses that rely heavily on physical stores in prime locations are the most exposed.
To prepare, retailers should run cost-impact scenarios to understand potential outcomes. Streamlining operations and investing in digital tools like order and inventory management systems can help reduce waste and improve efficiency — crucial steps when margins are under pressure.
Tourism-Driven Retail Boost (VM2026)
Not all scenarios point to challenges. Visit Malaysia Year 2026 (VM2026) is expected to bring a significant boost in international arrivals.
Tourism will directly benefit retail, especially in hotspots such as Kuala Lumpur, Penang, and Langkawi. Premium malls, duty-free outlets, and lifestyle retailers are likely to see increased traffic and higher international spending.
Retailers can prepare by expanding tourist-friendly product ranges, enabling global payment solutions, and creating in-store experiences that showcase Malaysian culture. Those who align with the tourism surge will be well-placed to capture new demand.
SME Digitalisation Incentives
Digitalisation is expected to remain a top government priority. Budget 2026 will likely expand incentives for SMEs to adopt e-commerce, automation, and AI-powered solutions.
For retailers, this presents a valuable opportunity to modernise operations. The right investment can reduce manual workload, improve accuracy, and make scaling more efficient.
The key is to act early. Businesses should assess their current technology stack, identify gaps in areas such as inventory control and fulfillment, and prepare to apply quickly once new digitalisation schemes are launched.
Labour & Wage Policies
Changes to minimum wages, foreign labour rules, or upskilling initiatives are often announced in national budgets. Retailers should anticipate similar updates in 2026.
Labour costs are a significant portion of retail operations, and any increase could weigh heavily on payroll budgets. Foreign labour policy shifts may also impact staffing flexibility for retail and logistics players.
To prepare, retailers should explore workforce planning tools, automation, and training programs that boost productivity. Building resilience in manpower management will help absorb higher costs while maintaining service quality.
ESG & Green Economy Push
Sustainability is expected to feature prominently in Budget 2026. Funding for green initiatives and ESG adoption will likely be made available to businesses that commit to sustainable practices.
This may raise compliance requirements, such as adopting eco-friendly packaging or meeting energy efficiency standards. However, it also creates opportunities for retailers who move early, both in terms of incentives and brand reputation.
Consumers are increasingly attentive to sustainability. Retailers should begin reviewing their supply chains, packaging, and in-store operations to identify areas where green practices can be implemented. These changes can generate both long-term savings and customer trust.
Digital Taxation on Platforms
Finally, there is growing discussion around expanding the digital service tax (DST) to cover more global platforms and SaaS subscriptions. This would directly affect retailers who rely on online advertising, marketplace platforms, and cloud-based business tools.
Rising platform fees and advertising costs can quickly erode margins if not tracked closely. The best defence is visibility and control.
With Sellercraft’s dashboard and finance reports, retailers can see the true impact of rising platform costs, monitor trends, and plan budgets with greater accuracy. This financial clarity makes it easier to decide whether to absorb costs, pass them on, or diversify sales channels.
The Bottom Line
Budget 2026 will likely be a balancing act. On one side, retailers may face cost pressures from SST expansion, rising utilities, wage policies, and digital taxes. On the other, they could benefit from subsidies that sustain consumer demand, digitalisation incentives that fund transformation, and a tourism wave that lifts retail sales.
The businesses that thrive will be those that plan ahead. By reviewing costs, adopting digital tools, and aligning with government priorities, retailers can turn potential risks into opportunities.
At Sellercraft, we help retailers simplify operations and gain clarity across orders, inventory, and finances. As Budget 2026 unfolds, having this visibility will be the key to navigating change with confidence.