Broker: CGS International
Date of Report: July 31, 2025

Malaysia’s 13th Malaysia Plan: Economic Ambitions, Sector Winners, and Stock Picks for 2025-2030

Overview: Ambitious Targets Set in 13th Malaysia Plan (13MP)

Malaysia’s 13th Malaysia Plan (13MP), tabled by Prime Minister Datuk Seri Anwar Ibrahim, charts the nation’s economic vision for 2026-2030. The plan sets a GDP growth target of 4.5-5.5% per annum and aims to reduce the fiscal deficit to below 3% of GDP by 2030. Development expenditure (DE) is allocated at RM430 billion, with an additional RM120 billion from government-linked entities and RM61 billion from public-private partnerships (PPP). While the long-term outlook is positive, near-term market excitement is muted, with the end-2025 KLCI target maintained at 1,670.

Key Macroeconomic Targets and Allocations

• Average annual GDP growth rate: 4.5% – 5.5% (2026-2030)
• Fiscal deficit target: Below 3% by 2030
• Development expenditure (DE): RM430 billion (2026-2030), up from RM415 billion in the previous plan
• Additional investments: RM120 billion via government-linked entities, RM61 billion through PPPs
• Average annual growth rate of real private investment: 6%
• Labour compensation share of GDP: 40% by 2030
• Gross National Income (GNI) per capita: RM77,200 by 2030 (from RM54,793 in 2024)
• Inflation rate: 2% – 3%
• Current account balance: 2.2% of GNI by 2030
• Growth in Malaysian Well-being Index: 1.6% annually

Fiscal Policy: Responsible Consolidation

The fiscal deficit reduction path is gradual, from -6.4% in 2021 to -4.1% in 2024, targeting -3% by 2030. The 2025 deficit target is reaffirmed at -3.8% despite a downward GDP revision. Expanded sales and service taxes and ongoing subsidy rationalizations (including diesel, and soon RON95) are expected to buffer government finances and underline the government’s reform agenda.

Sector-by-Sector Analysis

Banking & Finance: Overweight

• Growth in GNI per capita is set to drive demand for residential mortgages, auto loans, and personal loans, supporting loan growth of about 5% annually through 2030.
• Continued digitalization of the financial system, with a focus on asset tokenization and sandbox platforms.
• Banks are enhancing digital offerings, but the impact on earnings is expected to be minimal in the next 3-4 years.
• Expect potential catalysts from write-backs in management overlays and increased dividend payout ratios.
• Top Picks: CIMB Group Holdings, Hong Leong Bank

Construction: Overweight

• DE allocation for 13MP: RM430bn (average RM86bn/year), up from RM415bn in 12MP and RM249bn in 11MP.
• Key projects: Johor elevated Autonomous Rapid Transit (e-ART), Mutiara Line LRT in Penang (awarded to Gamuda).
• MRT 3 railway scheme approved; tenders may start late 2026.
• Focus areas: Flood mitigation (RM20bn, 103 projects), transit-oriented development (TOD) in multiple states, airport expansions, and public transport.
• Top Picks: Gamuda, IJM, Malayan Cement

Consumer Discretionary: Overweight

• Ongoing cash handout programs (SARA, STR) and improved targeting to boost net disposable income.
• Higher minimum wage and civil service salaries expected to stimulate overall wage growth.
• Extension of retirement age to increase labor market participation among older workers.
• Expansion of food production and development of high-value leisure and tourism initiatives, especially in rural areas.
• Reduction of foreign worker ratio to 10% by 2030 and 5% by 2035; retailers to have ample time to adjust.
• Beneficiaries: MRDIY, 99 SpeedMart, Mynews

Consumer Staples: Neutral

• Supportive measures include cash handouts, minimum wage increases, and incentives for domestic food production.
• Targets halal industry contribution to GDP to rise from 7.7% (2024) to 11% by 2030.
• Potential beneficiaries: QL Resources, F&N (dairy farm), Farm Fresh, Nestlé Malaysia (halal hub).

Healthcare: Overweight

• RM40bn allocated for healthcare development (2026-2030).
• New hospitals and clinics planned nationwide, including specialist centers in Negeri Sembilan, Johor, Sabah, Sarawak.
• Initiatives to train and retain healthcare professionals.
• Rollout of National Electronic Medical Records (EMR) for seamless access and analytics.
• Push to develop domestic pharmaceuticals and increase generics use.
• Top Picks: IHH, KPJ, Duopharma

Property: Neutral

• Goal: 1 million affordable homes over 10 years via housing reform initiatives.
• Expansion of Rent-to-Own (RTO) schemes for households with insufficient down payments.
• Proposal to mandate a build-then-sell risk-sharing model, which could constrain developer cash flows and impact earnings. Implementation would require legal amendments and may not be imminent.
• Companies with diversified operations like UOA Development would be less impacted if implemented.

Rubber Gloves: Underweight

• Reduction in foreign worker dependency (from 15% to 10% by 2030) and a multi-tiered levy system to increase local labor participation.
• Minimum wage expected to rise over time.
• These labor changes are negative for glove makers, which are already marginal cost producers globally.
• Initiatives to reduce non-communicable diseases (NCDs) could marginally boost glove demand, but impact is expected to be minimal.

Technology: Underweight

• Ambitious targets: RM157.2bn in E&E sector value-add and RM865.9bn in total export value by 2030 (+44% vs. 2024).
• Execution of the New Industrial Master Plan (NIMP) 2030 and National Semiconductor Strategy (NSS) to elevate Malaysia as a semiconductor hub.
• Encouragement of global-local collaboration, tech/IP-centric investments, and talent development.
• Progress: RM63bn in semiconductor investments since NSS launch, 13,000 high-skilled workers trained, US\$250m ARM deal signed.
• Short-term sector outlook remains weak due to margin pressures, customer capex deferrals, and tariff uncertainties.

Telecommunications: Neutral

• No direct impact from 13MP, but improved economic inclusion could increase data traffic and coverage needs.
• No significant shift in demand curve anticipated.

Utilities: Overweight

• RE (Renewable Energy) installed capacity target raised to 35% by 2030 (from 31%).
• Third regasification terminal (RGT) to be developed in Lumut, Perak.
• Nuclear energy to be added as a clean energy source by 2031, under international standards.
• Electricity grid connections planned between Sarawak and Peninsular Malaysia, and cross-border with ASEAN partners (Sarawak-Johor-Singapore, Vietnam-Kelantan-Singapore).
• New renewable energy mechanisms (CRESS, CREAM) and cost-reflective tariffs to promote green adoption.
• Top Picks: Tenaga Nasional, Malakoff, Petronas Gas (emerging angle)

High Conviction Stock List

Additional Sector Observations

• “Pro-health tax” on tobacco, e-cigarettes, vape, and alcoholic beverages is likely to be mildly negative for brewers, though the impact may be limited due to price inelasticity.
• Technology sector’s structural headwinds include margin pressures and global tariff uncertainties, keeping the short- to medium-term outlook subdued despite positive policy support.
• Utilities stand out with a new investment cycle emerging from aggressive renewable energy targets, grid expansion, and inclusion of nuclear power.

Conclusion: Balanced Optimism, Focus on Structural Reform

The 13th Malaysia Plan is a robust blueprint for sustained economic growth, fiscal responsibility, and sectoral transformation. While long-term prospects are promising, short-term excitement remains subdued. Investors may find the most compelling opportunities in sectors aligned with government priorities—namely construction, utilities, healthcare, and select financials and consumer plays—while exercising caution in labor-intensive and tech sectors facing near-term hurdles.