Budget 2026 is more than financial planning; it is a national statement that education drives social mobility and competitiveness.
With RM84.8bil allocated to education, the government reinforces its reform agenda under the 13th Malaysia Plan, aligning with priority sectors such as artificial intelligence (AI), energy transition and cybersecurity.
Graduate employability, however, must be embedded from the start through curriculum design, pedagogy and learner experience.
TVET makeover
The outdated perception of technical and vocational education and training (TVET) as a “last resort” must end. The RM7.9bil (including RM1.3bil for TVET institutions under the Education Ministry) targets skills in AI, EVs, semiconductors and green energy, aligned with the New Industrial Master Plan. An additional RM3bil for the Human Resources Development Corp aims to create three million training opportunities in these sectors.
Higher education institutions (HEIs) must co-curate curricula with industry, scale apprenticeships, and embed industry assessments in both TVET and academic programmes. The National TVET Council plays a pivotal role.
Integrating tech-vocational competencies into degree and postgraduate programmes, especially in cybersecurity, AI and IoT, is essential, as graduate employability correlates strongly with hands-on experience.
Allocations must prioritise producing graduates ready for growth sectors. Success requires government funding and regulation, institutional recruitment and training, and industry-provided work-based learning (WBL) and apprenticeships. Industry players should be incentivised to offer these opportunities, in line with global best practices.
The government’s role is to provide funding support and regulatory frameworks, while institutions focus on attracting, recruiting and delivering quality education and training.
However, the most critical component lies with industry, which must offer substantially expanded opportunities for WBL and apprenticeships within its operations. To achieve this, industry players should be incentivised to invest in WBL and apprenticeship programmes.
National AI agenda
Budget 2026 emphasises Malaysia’s AI agenda to accelerate digital transformation. Key allocations include:
> RM53mil for the Malaysia Digital Acceleration Grant to drive adoption of AI, blockchain and quantum technologies.
> RM18.1mil for the National AI Office to coordinate policy and governance.
> RM30mil to strengthen national cybersecurity, focusing on digital trust for data, identity and critical infrastructure.
Aspiration, however, must meet access. AI readiness must extend beyond urban tech hubs to rural communities through connectivity, devices and AI literacy.
Curriculum must embed machine learning, agentic AI, applied AI ethics and practical applications. As AI evolves rapidly, job displacement risks grow. Thus, both future and current workforces need skills to analyse real-world problems and critically evaluate technologies.
Scholarships, social mobility
Education must remain affordable. Budget 2026 introduces:
> Free PTPTN education for 5,800 low-income students, backed by RM120mil annually.
> PTPTN repayment exemptions for about 6,000 first-class graduates from B40 and M40 families.
> Plans to use the e-Kasih database to convert loans into scholarships, reducing financial anxiety for vulnerable families.
While commendable, implementation must be fair, transparent and scalable. Living costs and access to learning materials remain challenges even when tuition is covered.
The private sector can complement national aspirations. Budget 2026 extends double tax deductions on scholarship expenditures to include professional qualifications like engineering and finance. Beyond monetary incentives, private firms should mentor scholarship recipients, host students on-site, volunteer for WBL schemes, and participate in career events.
Partner, not competitor
Private HEIs can significantly impact higher education in several ways. Outcome-based incentives – such as linking research grants, innovation vouchers or matching funds to strong graduate outcomes like employment within six months, salary bands, industry certifications – are one example.
Tax incentives under the RM5.9bil research, development, commercialisation and innovation pool for institutions investing in priority tech infrastructure, such as AI compute, cyber ranges, IoT labs, and startup centres, are also crucial.
Formalised co-delivery frameworks, enabling companies to deliver credit-bearing modules with universities, accelerating time-to-skills in frontier domains, can further enhance private sector contribution towards higher education in Malaysia.
Budget 2026 has set the right tone for bridging education and employability. Success now depends on institutional readiness, industry engagement and systematic execution.
Datuk Parmjit Singh has been involved in the private education and technology sectors for over 43 years. He is the co-founder and chief executive officer of the APIIT Education Group, which comprises the Asia Pacific University of Technology & Innovation (APU) and the Asia Pacific Institute of Information Technology (APIIT). Parmjit currently serves as the president of the Malaysian Association of Private Colleges and Universities (MAPCU). He continues to serve the higher education sector in various capacities as adviser, board member and council member on several key national bodies and government agencies related to higher education, TVET, talent development, digital economy, R&D, and lifelong learning.'
The views expressed here arethe writer’s own.
