RM100 Cash Aid To Have RM3 Bln Retail Injection, Boost Consumption - Kenanga IB

By Siti Radziah Hamzah

KUALA LUMPUR, July 24 (Bernama) -- The targeted fiscal measures announced by Prime Minister Datuk Seri Anwar Ibrahim on Wednesday are anticipated to enhance near-term consumption, especially for essential goods and household items, according to Kenanga Investment Bank Bhd (Kenanga IB).

In its research note, Kenanga IB said among the fiscal measures, the one-off RM100 cash aid to every Malaysian citizen aged 18 and above, which would be disbursed on an individual basis rather than per household, was widening the consumption impact. 

“We maintain a neutral stance on the consumer sector following the government’s surprise RM100 cash aid announcement under the  Basic Rahmah Contribution (SARA) programme, which marks the first cash aid for all adult citizens in Malaysia and could temporarily boost near-term spending ahead of the year-end festive season,” it added.

 While the scale is smaller than previous stimulus rounds, Kenanga IB noted that mass-market retailers such as MR DIY, AEON, and Padini might see a modest uplift, supported by seasonal momentum and improved sentiment. 

It added that additional cost-of-living measures, including a 3.0 per cent cut in the RON95 fuel price, toll hike suspension, and an expanded Jualan Rahmah MADANI programme, would further ease pressure on consumers. 

“All in, we estimate about RM3 billion retail injection, comprising RM2.2 billion from the new RM100 cash aid, RM300 million from Rahmah MADANI sales and RM500 million in toll savings,” Kenanga IB said. 

The investment bank noted that although the RM100 aid was restricted to essential items, the increase in disposable income might still lead to spillover spending and consumers were likely to reallocate some of their usual budget toward discretionary purchases.

“The impact is likely to be more meaningful for the B40 group, where RM100 represents about 4.0 per cent of monthly household disposable income, compared to 2.0 per cent for M40 and 1.0 per cent for T20,” it added. 

Meanwhile, SPI Asset Management managing partner Stephen Innes said a targeted RON95 mechanism could anchor inflation while trimming the fiscal burden if executed cleanly. Still, timing and transparency will be key to avoiding policy whiplash.

He added that the government’s intent to reform is evident, but balancing immediate relief measures with long-term fiscal goals may lead to uncertainty over its policy direction.

“The intent to reform is there, but the political balancing act weakens credibility. Unless concrete subsidy rationalisation and tax reforms materialise soon, markets may begin to discount the rhetoric,” Innes told Bernama. 

He said politically calibrated measures such as targeted fuel subsidies and toll deferrals may be compatible with rating agency expectations, but only under certain conditions.

“Only if they are transparently short-term and paired with a clear, enforceable roadmap for structural reforms. Otherwise, rating agencies may view them as red flags rather than safety valves,” he added. 

-- BERNAMA