Budget 2027 should place greater emphasis on revitalising under-utilised secondary cities by coordinating industrial, infrastructure, education and social development around their existing economic strengths, according to the Research for Social Advancement (REFSA).
In a policy brief titled “Budget 2027: Unlocking The Potential Of Malaysia’s Forgotten Cities Through Total Development”, REFSA identified Muar, Kluang, Segamat, Batu Pahat, Ipoh and Taiping-Kamunting as examples of cities with existing industrial and institutional foundations that could play a larger role in Malaysia’s next phase of growth.
Author Thenesh Anbalagan argued that the government should adopt a more selective, place-based industrial policy rather than create entirely new economic centres, building instead on existing factories, SMEs, universities, hospitals, transport links, industrial land and technical capabilities.
The proposal builds on the government’s Pre-Budget Statement 2027, which says resources should be directed according to needs on the ground and asks which sectors and local advantages should be strengthened to spur development in individual states and regions. Budget 2027 is scheduled to be tabled in Parliament on Oct 9.
REFSA described its approach as “total development”, spanning three levels: national economic linkages, city-level industrial ecosystems and improvements to jobs, wages, housing, transport, education and healthcare for local communities.
For Johor, the think tank proposed different development roles for individual cities. It said Muar could deepen its existing furniture, semiconductor, engineering and agro-industrial base through stronger technological and knowledge capabilities, while Kluang could use improved rail connectivity to develop logistics, warehousing, cold-chain and manufacturing activities.
Segamat, meanwhile, could expand downstream from agriculture into food processing, logistics and agri-technology, while Batu Pahat could strengthen its manufacturing and SME ecosystem through closer links with educational institutions, applied research and automation.
REFSA said the same framework could be applied to Ipoh and Taiping-Kamunting, where older industrial assets and established institutions could be repurposed or connected to new economic activities.
Rather than creating a large dedicated fund for each city, the think tank proposed coordinating existing federal, state, government-linked investment company and private-sector resources around selected locations, while directing public spending towards specific infrastructure, skills or institutional constraints.
REFSA said such an approach could help spread investment and economic opportunity beyond Malaysia’s dominant growth centres while strengthening supply chains and regional economic resilience.
