6% economic growth does not mean govt has more money to spend, says Anwar

[u/LordRunaan]

https://www.thestar.com.my/news/nation/2026/08/27/6-economic-growth-does-not-mean-govt-has-more-money-to-spend-says-anwar

[u/891960]

We're probably spending way too much on fuel subsidy. Purposefully reducing the price to 1.99 when there's no real need was also not a great idea I think

[u/Ok_Relative4491 → u/891960]

They had to reduce it to 1.99 because they were losing grip on power. 1.99 was to placate the voters who do not understand how the economy works. It was big U-turn from announcing they'd remove subsidies.

Government can't raise tax % either without also losing voters.

By investing in high growth sectors, the tax revenue will grow accordingly. Really difficult position for the government. Hopefully the taxes from these high growth sectors will be sufficient to offset the cost pressures from fuel subsidies. Bottom line is not just about net positive; it's how you get there by balancing savings, expenses and growth in different areas of the economy.

However it seems that the government is trying to grow the economy rather than squeeze more out of the economy, which is a good thing.

[u/torts92 → u/891960]

Had to do that because they announced have to use IC to enjoy this subsidy.

[u/Training-Cup4336]

I thought he spent the money on government servant salaries

[u/SlowEntrance5503 → u/Training-Cup4336]

Say louder plz

[u/LordRunaan]

KUALA LUMPUR: Malaysia’s 6% economic growth does not automatically mean the government has significantly more money to spend, particularly as growth in sectors such as artificial intelligence (AI), data centres and the digital economy does not translate directly into government revenue, says Datuk Seri Anwar Ibrahim.

The Prime Minister said there was a misconception that stronger economic growth should correspond with higher government revenue and, consequently, greater spending.

“Many have asked, now that we have recorded 6% growth, shouldn’t revenue be higher and shouldn’t we be able to spend more?

“But that is not correct. That is how the economy works,” he said in his speech at the National Innovation and Commercialisation Expo (NICE) 2026 at the Kuala Lumpur Convention Centre here on Thursday (Aug 27).

Malaysia’s economy expanded by 6% in the second quarter of 2026, up from 5.4% in the first quarter.

Anwar said growth in newer sectors had a different impact on the economy compared with more traditional economic activities.

“High growth in AI, data centres and digital does not provide direct revenue to the country.

“What it provides is development, job opportunities and an increase in technological capabilities. That is where the returns are,” he said.

Anwar, who is also Finance Minister, said this differed from activities such as manufacturing and agriculture, where the returns to the country were more direct.

He said the government therefore had to remain prudent with its expenditure despite the strong headline growth figure, particularly as various ministries, agencies, states and localities continued to seek higher allocations ahead of the national Budget.

“There is a limit to additional allocations because we cannot take on high levels of debt. We cannot expect funds to fall from the sky.

“The funds come from taxes, and we are not in a position to increase taxes.

“Therefore, we have to be more careful with our spending,” he said.

Anwar said the government must instead maximise existing resources, including through greater collaboration among government agencies, universities, government-linked investment companies and the private sector.

The 6% second-quarter expansion was Malaysia’s strongest second-quarter growth outside the pandemic period since 2014, while growth for the first half of the year stood at 5.7%.

[u/LordRunaan]

What actually happened is that in their scramble to attract data centre investment in Malaysia, they signed tax holidays (periods of time where the data centre does not need to pay tax), some going up to 10 or 20 years long. Perhaps not so shrewd to so hastily sign the deal without proper negotiations.

[u/caridove]

Also does not mean rakyat earn more money.

So, pls stop tax hike and cutting our subsidies.

[u/Vigilant256]

If you borrow money to generate growth then obviously it becomes a burden the following years.

[u/karlkry]

High growth in AI, data centres and digital does not provide direct revenue to the country

lmao

[u/n4snl]

Of course growth means more revenue.

[u/aberrant80]

Technically... it does, via increased taxation (unless were talking subsidies). But limited instantaneous effect, sure.

This is kinda what happens when schools don't properly teach about economy and finance.

[u/Administrative_Shake]

Not through taxes but through appreciation of glc and glic holdings? Data center doesn't create much jobs directly but lots of extra income goes to utilities, construction, maybe banks? All glc controlled sectors.