Latest news with #MadaniEconomicFramework
Free Malaysia Today
2 days ago
- Business
- Free Malaysia Today
Broader SST to fund essential support for B40 and M40, says Treasury sec-gen
Treasury secretary-general Johan Mahmood Merican said the SST expansion is part of a long-term fiscal reform plan under the Madani economic framework aimed at restructuring the national economy. (Bernama pic) KUALA LUMPUR : Treasury secretary-general Johan Mahmood Merican says 5.4 million Malaysians in lower- and middle-income households stand to benefit from an expansion to the sales and service tax (SST) regime, set to kick in on July 1. In an exclusive interview with FMT, Johan said the expected boost in revenue will allow the government to scale up its financial assistance to members of the B40 and M40 income groups, such as the monthly Sumbangan Asas Rahmah (Sara). The number of recipients for the Sara programme has expanded significantly to 5.4 million since April, compared to just 700,000 previously. 'As the prime minister highlighted in his 2025 budget speech, increasing government revenue is essential to enhancing services for the rakyat. 'This expansion of the SST is driven by three primary objectives: improvement of services to the people, responsible fiscal management and making fiscal space to face global uncertainty,' Johan said. He also said that the government has taken various measures to safeguard the B40 and M40 groups from the adverse effects of the SST adjustments. Crucially, he said, the finance ministry has ensured that the SST expansion targets only non-essential goods and services, ensuring that daily expenditure for families in the B40 and M40 groups remain largely unaffected. This fiscal management is part of the Madani economic reform agenda, with a focus on reducing the deficit from 5.5% in 2020 to a targeted 3.8% in 2025. Putrajaya is also directing additional spending towards healthcare—allocating over RM1 billion for permanent contracts and RM400 million to upgrade dilapidated clinics, as well as making further investments to improve schools and rural infrastructure. 'The ministry focuses on daily necessities—there is also an element of evaluation,' said Johan. Essential items like unprocessed foods (chicken, meat, local vegetables, rice), basic processed foods (flour, sardines, sugar, bread, milk, palm cooking oil), medicines and books will continue to be exempt from SST (0%). Elaborating on the classification, Johan explained that the government differentiates between daily necessities and optional goods. While basic items like sardines, tongkol, and kembung remain at 0% SST, premium items such as imported fruits and premium seafood like salmon, cod, and king crab will be subject to a 5% SST. 'Optional goods with alternatives are subject to 5% SST, such as electrical appliances and processed foods like jam,' he added. Local fruits are not subjected to sales tax, with only imported fruits incurring a 5% tax. Johan expressed hope that the exemptions given would encourage the consumption of local produce. The domestic trade and cost of living ministry also actively monitors prices to prevent profiteering, with increased enforcement activities and the provision of affordable alternatives through Jualan Rahmah and Agro Madani. Addressing concerns about potential inflation due to profiteering, Johan assured that the ministry will intensify its monitoring of prices at retail outlets and supermarkets. The government has clarified that the current SST adjustment will not see any increase in the SST rate, currently set at 0%, 5%, and 10%. Instead, it seeks to expand the scope of the tax, shifting certain optional goods from 0% to 5%. Unlike the Goods and Services Tax (GST), the SST remains more targeted, minimising the burden on lower-income individuals. For instance, service tax on work and education is primarily levied on non-citizens, with the tax imposed on private schools fees which exceed a set threshold. Johan described the SST expansion as part of a broader, long-term fiscal reform plan under the Madani economic framework aimed at restructuring the national economy and improving the welfare of Malaysians.
The Sun
05-05-2025
- Business
- The Sun
M'sia's strong fundamentals will weather global shocks: PM
PETALING JAYA: Prime Minister Datuk Seri Anwar Ibrahim has assured Parliament that Malaysia remains resilient in the face of global economic uncertainties, including the recent announcement of retaliatory tariffs by the US. He said Malaysia's solid economic fundamentals, strengthened by ongoing reforms under the Madani Economic Framework, has positioned the country to navigate both current and future challenges. 'With a resilient domestic economy and strong confidence, we are not easily swayed by external pressures or overwhelmed by global challenges. 'We have the figures and data, which can be managed and used wisely.' Anwar highlighted Malaysia's strong macroeconomic performance in 2024, with GDP growth at 5.1%, surpassing the Budget 2024 forecast of 4.0–5.0%. This, he said marks a significant improvement from the 3.6% recorded in 2023. 'We are confident in our trajectory. The macroeconomic data, including the projected reduction of the fiscal deficit from 5.5% in 2022 to 3.8% in 2025, shows that our strategies are working.' Anwar also noted that approved investments hit a record RM378.5 billion in 2023, the highest in Malaysia's history and a 14.9% increase compared with the previous year. He said this underscores strong investor confidence in the country's direction. He acknowledged the seriousness of the imposed tariffs but stressed that the government would manage the situation pragmatically and in Malaysia's national interest, while preserving positive ties with all trade partners. 'The US is a key export destination and our largest source of foreign investments. We are addressing these challenges based on pragmatism and diplomacy.' Anwar said Malaysia is not overly dependent on any single market. He cited growing exports to non-traditional markets such as Egypt, Pakistan and Cambodia, and reiterated that trade ties with Asean, China, Japan and regional partners remain strong. The US tariff issue is expected to feature prominently at the upcoming Asean–Gulf Cooperation Council (GCC) Summit and Asean–China talks later this month. Despite external pressures, Anwar said Malaysia's export performance remains solid, particularly in the electrical and electronics sector. 'We are seeing encouraging growth, and with the postponement of the tariff implementation, the short-term impact is expected to be manageable.' Looking ahead, Anwar said the government remains committed to structural economic reforms under the Madani framework to ensure Malaysia builds a robust and diversified economy. 'We've developed a strong supply chain ecosystem and are actively diversifying our export products and destinations to avoid over-reliance on vulnerable sectors.' He urged Malaysians to remain optimistic and united in the face of global uncertainties. 'We have faced greater challenges in our history, and we've always emerged stronger. This government will continue to lead with clarity, courage and compassion,' Anwar added.
Malaysiakini
05-05-2025
- Business
- Malaysiakini
Confident to weather US tariffs with strong economic fundamentals: PM
Prime Minister Anwar Ibrahim is confident Malaysia's strong economic fundamentals will enable the country to navigate global uncertainties following the retaliatory tariffs by the United States. He stressed that reforms under the Madani Economic Framework will strengthen the country's ability to withstand global economic challenges and stay prepared for future uncertainties. 'With a...
Yahoo
19-02-2025
- Business
- Yahoo
Progressive wage policy able to drive Malaysia's economic growth, labour productivity
The Progressive Wage Policy (PWP) and the increase in the minimum wage to RM1,700 per month represent a crucial step in enhancing labour productivity in Malaysia in 2025. This initiative is part of the Madani Economic Framework, which aims to achieve a more equitable income distribution and ensure that workers receive a dignified wage. Raising the minimum wage to RM1,700 per month is a significant measure to ensure that workers are paid fairly in line with their efforts and productivity. This move is expected to boost worker motivation, which in turn will enhance labour productivity. When employees feel valued and receive a fair wage, they are more likely to work harder and more efficiently. Additionally, the increase in the minimum wage is expected to help reduce poverty among workers. With higher wages, employees will have more financial capacity to meet their basic needs, such as food, housing, and education. This will improve their quality of life and alleviate financial stress. When workers no longer have to worry about their basic needs, they can fully focus on their jobs, ultimately contributing to higher productivity. The PWP also aims to narrow the income gap between low- and high-income workers. By ensuring that all employees receive fair compensation for their work, the policy seeks to create a more just and balanced labour market. This will foster healthy competition among workers and employers, further driving labour productivity. The implementation of the PWP and the increase in the minimum wage are also expected to attract more foreign investment to Malaysia. By ensuring that workers in Malaysia receive fair wages, the country will be viewed as an attractive destination for foreign investors. These investments will bring in new technology and knowledge, which will further enhance labour productivity in Malaysia. However, the implementation of the PWP and the minimum wage increase also comes with challenges. One major concern is that higher wages may raise operational costs for employers. This could lead to some businesses to reduce their workforce or relocate operations to countries with lower labour costs. To address this challenge, the government should provide incentives and support to help employers adapt to the wage increase. Moreover, the government must ensure that the implementation of the PWP and the wage hike is carried out in a transparent and fair manner. This includes ensuring that all employers comply with the established regulations and do not exploit the situation by cutting other employee benefits. The government should also provide channels for workers to report any injustices they face. The minimum wage increase is also expected to boost workers' savings rates. With higher wages, employees will have more disposable income to save, leading to greater financial stability and more financial choices. Higher savings rates will also benefit the national economy as they will increase the amount of money available for investments and expenditures. Furthermore, raising the minimum wage will encourage competition among workers. With better salaries, employees will be more motivated to enhance their skills and productivity to remain relevant and competitive in the job market. This will encourage continuous learning and skill development, ultimately improving overall labour productivity. The PWP and the increase in the minimum wage to RM1,700 per month are essential and necessary steps in boosting labour productivity in Malaysia. This initiative is expected to enhance worker motivation, reduce poverty levels, narrow income disparities, and attract more foreign investment. The wage increase is also anticipated to improve workers' savings rates, which will, in turn, benefit the national economy as a whole. Dr Cheah Chan Fatt is a Research Fellow at the Ungku Aziz Centre for Development Studies (UAC), Universiti Malaya. The views expressed here are the personal opinion of the writer and do not necessarily represent that of Twentytwo13.
Yahoo
05-02-2025
- Business
- Yahoo
Malaysia's latest income inequality trends explained, according to the World Bank
KUALA LUMPUR, Feb 5 — Malaysia has the highest rate of income inequality among peers nearing high-income status, with intra-ethnic disparity being the biggest contributor despite the widely-held belief that wage gaps between races are bigger, according to the World Bank's latest report released this morning. So what explains Malaysia's income inequality patterns? The Bank said despite pro-poor growth, income is still highly concentrated at the top. While income has grown more rapidly for the poor and for people in the middle of the income distribution, but because they started from a low base, absolute gaps remain. As of 2022, the bottom 20 per cent of people in Malaysia held less than 6 per cent of income, up from just 4.6 per cent in 2004. The share of income held by the Top 20 per cent of the distribution fell from 46 per cent in 2004 to 41 per cent in 2022. 'The labour income share of gross domestic product in Malaysia grew over the last two decades but may have fallen after the pandemic. While sources differ as to the exact share of national income going to labour in the last two decades, data indicated similar trends,' the Bank said. Between 2004 and 2014, it grew rapidly when income inequality was falling. It then slowed down between 2014 and 2019 when income inequality flattened out. The trend eventually reversed during and after the Covid pandemic, driven by lower incomes in the service sectors. By 2022, labour share of income was likely below the 45 per cent target set by the government as part of the Madani Economic Framework. Employment imbalance Employment remains the main source of income for Malaysian households. Salaries and wages represent 50–60 per cent of household income, and self-employment income accounts for almost 40 per cent, the Bank noted. The rich, on the other hand, derive additional income from capital, which is not taxed. Capital ownership is highly concentrated among top income earners, with the richest 10 per cent of Malaysian households holding 70 per cent of total wealth, meaning that this outsized income share benefits the richer few. This concentration of wealth and income is reinforced by the differences in skills premium across income distribution. The premium to higher education, be it vocational or university, typically results in an upward slope, which means that for the same level of education, richer workers in Malaysia receive a larger return than poorer workers do Several factors explain the lower return for poor workers. One of them is that poorer children learn less at school than richer children and tend not to pursue fields that yield high salaries. Many also do not graduate with the skills that are in demand and are usually forced to take up the same types of jobs. 'Workers from poorer households earn less in the labour market because they are also more likely to be own account workers (28 per cent in the bottom decile versus 15 per cent in the top decile), work in informal employment (over 80 per cent in the bottom decile versus less than 20 per cent in the top decile), and work in lower-skilled occupations,' the bank said. Smaller family unit Decline in household size among the poor is also likely a factor. The Bank noted fertility rates, and consequently household size, have plummeted in Malaysia, especially among the poor. This trend contributed to the decline in inequality in 2004–14, when average household size fell 5.3 per cent. The decline was much greater for households in the poorest 40 per cent of the distribution, particularly households in the poorest 10 per cent, among which average household size fell almost 10 per cent. All this is happening even as Malaysia is expected to become a high-income nation in three years time. The report said the current inequality level means that the high-income prosperity is not yet within the reach of many people in the country. At 39, Malaysia's Gini index, a measure of the distribution of income across a population, is higher than that of both economies that recently achieved high-income status (mean of 31) and established high-income countries (mean of 30). Among regional peers, Malaysia has the third-highest Gini after the Philippines and Thailand.
