Tariffs, taxes, and talent: why Malaysia needs education-led reform

Focus Malaysia

5 hours ago

LET'S be honest—Malaysians are going through challenging times. From July 1, the expanded Sales and Service Tax (SST) will come into effect.
Electricity tariffs have been adjusted, and although RON95 subsidy restructuring has been put on hold for now, public anxiety remains.
As an elected representative, I understand the government's aim of rebuilding the economy and making it more sustainable. Measures such as subsidy rationalisation and broader tax reforms are necessary in the long run.
But reforms must be phased carefully, with clear communication and support for those affected. Sudden or poorly timed moves risk unsettling ordinary families and businesses. More importantly, reform should ultimately benefit the people.
Education: the foundation of lasting reform
So far, much of the public's attention on reforms by the unity government is on fiscal adjustments: taxes, subsidies, revenue. But economic strength comes not only from budgets, but from the skills, knowledge, and resilience of the people.
Recently, I read Principles for Dealing with the Changing World Order by Ray Dalio. It reinforced a key principle: education must lead national progress. Only when people are well equipped can innovation, productivity, and growth follow.
In Malaysia's current path, I do see much room for improvements in this regard.
The weight of rising costs
First of all, let's address the elephant in the room: public concern is growing over the impact of some of the initiatives the Madani administration has or will put in place.
For example, while the government has assured the public that 85% of Tenaga Nasional Bhd users will not see higher electricity bills, many are still anxious about potential knock-on effects on businesses, services, and ultimately, prices.
In my constituency in Jementah, many businesses are taking a cautious, look-and-see attitude as they brace for rising costs.
Some shop owners have told me they are delaying expansion or hiring plans until they better understand how new taxes and higher operating expenses will affect demand.
The 6% SST expansion will affect many educational services. For families balancing rising living costs, this may mean cutting back on tuition, enrichment activities, or delaying plans for higher education or opting for cheaper, but not necessarily better, alternatives.
Meanwhile, Malaysia already faces shortages in key skilled sectors—healthcare, for example. Without stronger education pathways and support, we risk falling further behind.
Families choosing quality—but at a cost
More and more young parents, across all communities, are deeply focused on giving their children a strong education.
Many now choose to have fewer children in order to invest more in each child's future and to manage rising living costs. This trend is happening across all ethnic groups.
At the higher end, elite families can still afford the best private options, widening the education gap. For the average household, choices are harder.
I also hear concerns from the M40, many of whom have traditionally supported Pakatan Harapan.
They now feel caught in the middle: ineligible for many forms of government aid, yet facing real financial pressures. Their voice must not be overlooked in the reform process.
A better way forward
If new tax revenue is to be channelled back to the people, education must be a clear priority. We should:
Ringfence part of the SST revenue or savings from subsidies rationalisation, for education;
Incentivise investment in STEM, healthcare, and vocational education;
Develop a clear, phased education reform roadmap tied to national economic goals; and
Ensure support schemes also reach the M40, not just the B40.
Real reform begins with people. If Malaysia is to rise in this changing world, we must first strengthen our education system.
If we neglect this, we risk falling into the cycle of decline that Ray Dalio warns about. But if we place education at the heart of our national strategy, we can build a stronger, more competitive future for all Malaysians. ‒ June 25, 2025
Ng Kor Sim is the State Assemblywoman for Jementah, Johor.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.