Subsidy Rationalisation Safeguards Rakyat From Cost-of-living Pressures, Strengthens Fiscal Position - Economic Outlook

KUALA LUMPUR, Oct 9 (Bernama) -- More than 14.8 billion litres of RON95 were purchased at subsidised prices, amounting to RM18 billion in subsidy disbursements as of the end of August 2026, reflecting the government's efforts to ensure subsidies continue to benefit eligible groups while strengthening the country's fiscal position.

According to the  Economic Outlook 2027 report released by the Finance Ministry today, over 130 million litres of diesel were also consumed under the targeted subsidy mechanism during the same period, involving approximately RM295 million in subsidies.

The report said subsidy rationalisation through the BUDI MADANI programme is necessary to build a stronger fiscal foundation and ensure continuity of economic activities, while safeguarding vulnerable households from the rising cost of living.

“Building on the successful rollout of BUDI MADANI RON95 (BUDI95) in Peninsular Malaysia, the programme was further expanded nationwide with the integration of BUDI95 and BUDI MADANI Diesel (BUDI Diesel) from July 1, enabling eligible MyKad holders to purchase RON95 and diesel at subsidised prices,” according to the report.

In expanding community-based initiatives, the government continued the Ikhtiar MADANI Untuk Rakyat programme, encompassing Sejahtera Komuniti MADANI (SejaTi MADANI), Kampung Angkat MADANI, Sekolah Angkat MADANI and Solar MADANI to improve socioeconomic outcomes at the grassroots level.

Under SejaTi MADANI, RM8.5 million in grants were approved for 89 communities to undertake income-generating activities, including agriculture and small-scale enterprises, with the initiative expanded to youth.

According to the report, about 145 Kampung Angkat MADANI projects and 151 Sekolah Angkat MADANI initiatives were also approved alongside the nationwide expansion of Solar MADANI and the introduction of free Tuisyen MADANI.

These initiative are complemented by Sejahtera MADANI, which mobilises private sector contributions through the Tabung Kesejahteraan Rakyat to support community development which nearly RM78 million was raised from local corporations as at end-August.

“To improve access to services in rural and remote areas, RM11 million was channelled to the Mobile Banking Initiative, involving 36 units across eight states, including 23 in Sabah and Sarawak, while RM2.6 million was allocated to expand the National Registration Department's Perkhidmatan Menyemai Kasih Rakyat (MEKAR) programme.

“Another RM27 million was allocated for community outreach programmes encompassing mobile clinics, community rehabilitation services and lifelong learning, with 49 mobile clinics benefitting more than 5,700 recipients as of July, while 197 lifelong learning courses recorded over 18,000 participants,” according to the report.

Mobile Labour Courts and Mobile Children's Courts are also being deployed nationwide to facilitate the resolution of workplace disputes and safeguard the privacy and emotional well-being of child victims and witnesses.n

Meanwhile, the development of major infrastructure in Sabah and Sarawak continued to advance, with the RM24.9 billion Pan Borneo Highway Sabah recording 89 per cent completion for Phase 1A and 37.6 per cent for Phase 1B as at end-August.

Phase 1A, valued at RM10.9 billion, is targeted for completion in 2028, while the RM14 billion Phase 1B is targeted for completion in 2030. The 740-kilometre Pan Borneo Highway Sarawak segment, meanwhile, has achieved 99.9 per cent completion.

“The RM8.8 billion Sarawak-Sabah Link Road (SSLR), which links both states without crossing international borders, is also progressing in phases, with Phase 1 targeted for completion in 2027 and Phase 2 in 2030, while RM1.9 billion was allocated for 18 projects to enhance the capacity and reliability of electricity transmission and distribution systems in Sabah and Labuan,” the report said.

In cushioning Malaysian households against cost-of-living pressures, the government allocated RM15 billion under Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) in 2026, including RM1.9 billion under the Penghargaan SARA initiative for 20.2 million Malaysian citizens aged 18 and above through a one-off RM100 cashless financial credit channelled via MyKad.

More than RM600 million was also disbursed for the Jualan Rahmah MADANI initiative across 23,040 locations, offering discounts of up to 30 per cent on daily essential goods, while over RM250 million was utilised for the transportation of basic goods to inland areas in Sabah, Sarawak and Peninsular Malaysia.

In addition, social protection for self-employed workers, including gig workers, was expanded through EPF contribution matching schemes such as i-Saraan, i-Saraan Plus and i-Suri, as well as PERKESO's Skim Keselamatan Sosial Pekerjaan Sendiri (SKSPS), which subsidised up to 70 per cent of contributions for eligible self-employed workers. As of August, SKSPS recorded over 59,000 registrations, with about RM7.8 million channelled by the government.

The government also allocated RM100 million under Budget 2026 to encourage government-linked investment companies (GLICs) and government-linked companies (GLCs), through their philanthropic arms, to collaborate on social impact initiatives under a 1:1 matching arrangement. As of September, 37 high-impact projects had been awarded grants, while an additional RM20 million was provided for the GDRN BANTU Matching Grant to strengthen disaster resilience.

In preparation for an ageing population and to strengthen standards within the care economy, the government is developing the National Care Sector Standards to improve care standards, workforce capabilities and community-based support.

As of August, 745 participants had completed care training modules under the National Technical and Vocational Education and Training (TVET) Council. 

-- BERNAMA