Budget 2027 Urged To Boost Under-Utilised Secondary Cities For Economic Growth

Research for Social Advancement (REFSA) has urged the government to prioritise the revitalisation of under-utilised secondary cities in the upcoming Budget 2027 by synchronising industrial, infrastructure, education, and social development policies.

In a newly released policy brief titled “Budget 2027: Unlocking The Potential Of Malaysia’s Forgotten Cities Through Total Development,” the think tank argues that Malaysia’s economic growth is currently too concentrated in major metropolitan hubs. According to the original publisher, REFSA identified Muar, Kluang, Segamat, and Batu Pahat as key examples of regional centres that possess existing economic strengths which remain significantly under-leveraged.

The proposal calls for a departure from fragmented regional planning. Instead, REFSA advocates for a "total development" approach that aligns federal spending with the specific industrial specialisations of these secondary towns. By coordinating infrastructure improvements with targeted educational programmes, the goal is to create self-sustaining ecosystems that can retain local talent rather than losing human capital to major cities like Kuala Lumpur or Johor Bahru.

This strategic shift is framed as a necessity for long-term economic resilience. Rather than treating these regions as secondary, the brief suggests that integrating them more deeply into the national supply chain will unlock latent productivity. This could involve upgrading logistics networks and digital connectivity—crucial for SMEs—alongside initiatives to boost local vocational training that matches the industrial needs of each specific town.

For the average Malaysian worker, this policy shift could signify a move away from the necessity of urban migration to find high-value employment. If industrial sectors are successfully decentralised, residents in areas like Segamat or Kluang might see a rise in local demand for skilled labour, potentially reducing the cost of living pressures associated with metropolitan life. Investors and SMEs in these towns could also benefit from infrastructure improvements that lower transport costs and improve supply chain reliability.

For the Malaysian consumer, however, the impact will likely depend on the government’s ability to balance this regional development with inflationary pressures. With headline inflation currently sitting at 1.9 per cent as of August 2026, any major infrastructure spending must be executed efficiently to avoid stoking costs. Furthermore, for commuters and businesses, managing the interplay between regional growth and fuel costs—such as the current RM4.52 unsubsidised price for RON95—will remain a significant factor in how effectively these "forgotten cities" can compete with established urban hubs.

This proposal arrives against a backdrop of steady national economic performance, with the latest real GDP growth recorded at 6.0 per cent year-on-year. While the national unemployment rate remains relatively low at 3.0 per cent as of July 2026, the figure still represents 520,300 unemployed individuals. REFSA’s call to action suggests that revitalising secondary cities could provide a structural solution to absorbing some of this labour pool, particularly those currently residing outside the Klang Valley.

As the government prepares the final drafts for Budget 2027, the focus remains on whether these regional development strategies will be allocated specific funding. Previous budgets have touched upon rural development, but a dedicated, coordinated framework for these specific secondary cities would represent a significant policy evolution. Whether this will lead to a shift in federal resource allocation or remain a long-term goal for the administration is yet to be confirmed.

Details regarding the specific quantum of funding, the implementation timeline, and the legislative mechanisms required to ensure such development remains sustainable are not yet disclosed.