Uplifting Living Standards in Malaysia: A Multifaceted Approach Under Anwar Ibrahim's Government

New Straits Times

16-05-2025

IN Malaysia today, under Prime Minister Datuk Seri Anwar Ibrahim's leadership, something intriguing is unfolding.
The government is attempting a high-wire act: balancing the urgent need to lift living standards amid rising costs and global economic turbulence, while laying down the scaffolding for a more resilient, inclusive economy.
And it's doing this not with flashy stimulus checks or slogans, but through a blend of fiscal realism and strategic reform.
If you zoom in on the 2025 Budget, you'll notice a quiet but significant pivot in how Malaysia supports its people.
The government has allocated RM13 billion - the largest direct cash aid allocation in national history - to programmes like Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA).
These are not mere handouts; they're micro-targeted relief channels reaching nine million citizens, or about 60 per cent of the adult population. The idea is simple: soften the blows of inflation, especially on food and fuel, and inject purchasing power into the base of the economy.
At the same time, the minimum wage has been raised to RM1,700 per month (effective February 2025), signaling that labor dignity still matters in this algorithmic age.
But Anwar's team knows that Band-Aids won't fix structural wounds. Rather than launching a headline-grabbing stimulus package, the administration is pushing forward with what could be described as an "invisible stimulus" - a layered reform agenda that targets fuel subsidies, tax structures, and long-term investments.
Malaysia is now rolling back blanketsubsidies for RON95 petrol and diesel, replacing them with targeted assistance.
It's politically risky - no one likes to pay more at the pump - but it's the kind of reform that says: the days of fiscal leakage are over.
Meanwhile, high- income earners are now subject to a two per cent tax on dividend income above RM100,000, and the Sales and Services Tax has been expanded to new sectors.
These are moves aimed at rebuilding state revenue without triggering austerity.
The government is also playing the long game. Billions are being committed to infrastructure, education, and health, not just as social investments, but as tools for growth.
A prime example is the Johor-Singapore Special Economic Zone, engineered to attract foreign investors and create a new class of skilled jobs.
Meanwhile, RM40 billion in credit facilities and loan guarantees are being mobilised to support SMEs, a critical step to ensure the middle class and entrepreneurial base aren't left behind in a two-speed economy.
Global institutions are taking note.
In its April 2025 Malaysia Economic Monitor, the World Bank projects GDP growth at 3.9 per cent for 2025, slightly lower than earlier estimates due to global economic headwinds.
But more importantly, it urges Malaysia to focus on inclusive growth through higher social spending, education, and place-sensitive policies that address regional inequality.
Similarly, the IMF's 2025 Article IV Consultation Report pegs growth at 4.1 per cent and calls for Malaysia to take advantage of improved macroeconomic conditions to rebuild buffers, enhance policy credibility, and accelerate structural reforms.
Both institutions commend Malaysia's fiscal strategy while sounding a common theme: now is not the time to blink.
Of course, none of this will be easy. Anwar's coalition government walks a political tightrope, and subsidy rationalisation is a dangerous game in a populist age. The cost of miscommunication or delay could be steep.
But if Malaysia can hold this course if it canmanage the optics while maintaining the discipline - it could emerge not just as a recovering economy, but as a case study in how a middle-income country transitions through turbulence with its dignity, cohesion, and competitiveness intact.
In a world addicted to short-term fixes, Malaysia is attempting something harder: think long-term, act incrementally, and bet on its own maturity. In this era of geopolitical fragmentation and economic anxiety, that's not just commendable—it's strategic.
*The writer is an international relations analyst and economic commentator. A former senior researcher at the Malaysian Institute of Economic Research, he has written extensively for numerous regional outlets. Currently he is a senior consultant with Global Asia Consulting and an adjunct lecturer at Universiti Teknologi Petronas.