He said Budget 2026 is part of this longer-term reset to help Malaysia achieve its growth ambitions, adding that enthusiasm around the ambition to become a high-income nation must also be tempered with the reality of the challenges of getting there.
“How can we talk about trying to become a high income developed nation when we don’t even get the basics right,” he told FMT in an exclusive interview.
Rather than directing resources to costly mega projects, Johan said, Putrajaya had opted to focus on initiatives that are more beneficial to the people, such as repairing roads, markets and schools.
This, he added, has not only made life easier for Malaysians but also created jobs for small contractors.
“You can see the continuing focus on basics, like allocation increases for road maintenance in terms of fixing potholes. Our focus on low-cost housing is yet another effort to fulfil the needs of the everyday man,” Johan said.
“Given that these initiatives typically involve local contractors, they also create multiplier effects in the local economy,” he added.
In previous administrations, mega-projects have been a preferred method to stimulate the economy. But these have typically been concentrated in big cities, leading to limited economic spillover across Malaysia’s rural areas.
With the global economy expected to soften in 2026, the government must also allocate money prudently to get more bang for the buck and sustain growth for all Malaysians.
Johan stressed, however, that Malaysia’s outlook remains solid despite projected headwinds. He added that the national coffers remain resilient, thanks to timely fiscal reforms to reduce bloat in government spending and stronger enforcement to boost revenue.
“I can’t think of any administration that has reviewed so many subsidies,” he said, citing the removal of blanket subsidies for electricity, diesel, and RON95, and the introduction of capital gains and dividend taxes.
“If that’s not a commitment to fiscal reform, I don’t know what is.”
On the matter of governance, Johan pointed out that the Procurement Act had recently been passed to tighten spending, and parliamentary reforms such as the Prime Minister’s Question Time and more select committees, have been introduced.
Alongside these, he added, powers of the Malaysian Anti-Corruption Commission and the Auditor-General to track public funds end-to-end have also been enhanced.
“It’s about reforming governance to produce better outcomes and better utilisation of national resources for development,” Johan said.
Enforcement is also moving centrestage. Rather than introduce major new taxes that burden Malaysians, the government is shifting its focus to compliance through measures such as mandating the use of transaction data to reach more taxpayers, including those in the grey economy.
“With e-invoicing, we’re trying to make sure that those who are not paying taxes (now) will start paying. It’s not just pure fiscal reform, but also governance reform,” he said.
Johan said the push for reforms is already encapsulated in the three pillars of the Madani Economy framework, namely strengthening governance and fiscal sustainability, enabling higher growth through transformation, and raising living standards so gains are shared.