What's next after one-off cash aid?

The Star

6 days ago

Groups: Stronger economic model needed
PETALING JAYA: The special targeted relief announced by Prime Minis­ter Datuk Seri Anwar Ibrahim must be complemented by long-term strategies to support those in need, says the Federation of Malaysian Consumers Asso­cia­tions (Fomca).
Its vice-president Datuk Indrani Thuraisingham said while Fomca welcomes the measures, including the one-off RM100 cash assistance for eligible individuals and the adjustment of RON95 ceiling price, the impact of such initiatives remains limited due to its one-time nature and the escalating cost of basic goods and services.
'In the long term, Malay­sia needs a more resilient and inclusive economic model that puts the welfare of ordinary consumers at the centre of policy­-making.
'While short-term aid is necessary during times of economic uncertainty, it must be complemented by structural reforms that reduce cost burdens, protect vulnerable groups including the lower middle class segments, and ensure a fairer distribution of national wealth,' she said when contacted yesterday.
Yesterday, Anwar announced several key initiatives as part of the Madani government's appreciation for the people, including a one-off RM100 Sara aid via MyKad for all Malaysian adults, postponement of toll rate hikes for 10 highways, and a lower subsidised RON95 petrol price of RM1.99 per litre.
Kathleen Chem, an associate director in Fitch Ratings' Sove­reigns team, said: 'Fitch estimates the total cost of these measures at RM2.3bil, or about 0.1% of GDP, which we believe can be accommodated within the Budget 2025 target of 3.8% of GDP.
'Eligible Malaysians will also benefit from a lower RON95 petrol price of RM1.99 per litre, below the current subsidised rate, when the targeted subsidy for RON95 petroleum is implemented,' added Chem.
However, she said rationalisation of RON95 subsidies appeared to be further delayed as details would be announced only by the end of September.
'Further delays or insufficient progress on subsidy rationalisation could undermine consolidation efforts and jeopardise the government's goal to reduce the deficit to 3% by 2028.
'Fitch expects Malaysia's general government debt to remain high, at around 76.5% of GDP in 2025, with only a gradual decline in the medium term based on the current fiscal consolidation plan,' she added.
Small Medium Enterprise Asso­ciation of Malaysia president Dr Chin Chee Seong said the measures announced were more for the people and not for businesses.
The RM100 cash incentive and the reduction in the electricity bill was meant to help the people cope with inflation, he said, but the cost of doing business, too, had been on the rise.
The public holiday announced, too, would result in production loss, especially for the manufacturing sector.
'No concrete measures to ease the burden of SMEs (were announced), especially on the issue of increasing cost of doing business.
'We are to face additional cost when RON95 rationalisation is implemented,' he said.
Welcoming the announcement, the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) said the measures would help ease the cost of living and spur household consumption expenditure.
'Pending the detailed announce­ment of the fuel subsidy rationalisation mechanism in terms of eligible criteria, a reduction of RM0.06 in RON95 price to RM1.99 per litre would benefit around 18 million car and motorcycle users,' it said in a statement.
While the special holiday on Sept 15 – set in appreciation of the Malaysia Day celebrations on Sept 16 – would encourage more 'cuti-cuti Malaysia' over a long weekend, ACCCIM said this could also lead to additional labour costs.
Saying that it is looking forward to the tabling of the 13th Malaysia Plan (13MP) on July 31 and Budget 2026, the group added that the government's five-year blueprint and spending plan would ensure the continuity of national development, as well as prioritising sustaining economic resilience and high-­quality investment.
It hopes no new tax measures or policies would be introduced under Budget 2026 as this would further burden businesses that are already reeling from cost increases.
'Malaysia must continue to maintain pro-investment and business-friendly policies to attract and retain both domestic and foreign investments, fostering economic growth,' said ACCCIM in the statement.
Malay Businessmen and Indus­trialists Association of Malaysia (Perdasama) president Mohd Azamanizam Baharon said the measures announced were seen as proactive and people-friendly steps that would have a direct positive impact on the domestic economy.
'The drop in fuel prices, for example, will help reduce business, logistics and transportation costs, allowing traders to remain competitive.
'At the same time, the additional holiday (on Sept 15) is expected to boost local tourism and the hospitality sector.
'Perdasama members involved in this industry, including hotel operators, homestay owners, restaurants, hawkers and small traders, will certainly welcome this move, which is likely to increase bookings, tourist visits and sales during the long holiday,' he said.