Financial Aid Programmes To Support B40, SST To Drive Economic Stability -- Economists
By Harizah Hanim Mohamed
KUALA LUMPUR, July 9 (Bernama) -- Salary increases, along with the expansion of recipients and higher allocations under the public assistance programme, are expected to cushion the short-term impact of rising prices following the expansion of the Sales and Service Tax (SST).
This is particularly relevant as the government undertakes aggressive efforts to raise the country’s economic ceiling.
Director of the Master of Business Administration Programme at Putra Business School, Associate Professor Dr Ahmed Razman Abdul Latiff, said the exemption of SST on essential goods helps ensure that the bottom 40 per cent (B40) income group is not significantly affected by the higher cost of living, as price increases primarily affect premium and imported goods rarely consumed by this group.
“Basic necessities are under price control, and government assistance programmes, including the Sumbangan Asas Rahmah (SARA) and Sumbangan Tunai Rahmah (STR), continue to provide fiscal support for the B40 group,” he said.
He also stressed that consumers must play a proactive role by reporting traders who exploit the tax changes to impose excessive price hikes, in line with the Price Control and Anti-Profiteering Act.
Meanwhile, Universiti Utara Malaysia’s School of Economics, Finance and Banking senior lecturer Muhammad Ridhuan Bos Abdullah said that from an economic theory perspective, any new tax will inevitably impact both producers and end consumers.
“Although the MADANI government may have conducted a cost-benefit analysis, the short-term impacts may not be fully mitigated, particularly in terms of the magnitude and impact of the tax. These can only be accurately assessed after one to three years of implementation,” he told Bernama.
He noted that the economy can be strengthened through either tax cuts or the provision of subsidies and more efficient tax policies, which could boost public spending and enhance allocation efficiency.
He further emphasised that economic stability is vital for sustained development, and that efficient tax collection allows the government to stabilise the economy.
Malaysia’s ongoing economic reform involves structural adjustments, and fiscal tools such as the SST are essential to achieving national income redistribution objectives, he said, adding that allocative efficiency should also remain a key government priority.
The government has decided to raise the minimum wage to RM1,700, effective Feb 1, 2025, a move expected to benefit 4.37 million workers.
In addition, the civil servant salary increase in 2025 and 2026 is part of the Public Service Remuneration System (SSPA), to be implemented in two phases, with the second phase beginning in January 2026.
For 2025, the government has allocated RM13 billion under SARA and STR, the highest amount ever distributed for cash assistance, compared to RM10 billion last year. The number of recipients has also increased significantly, from 700,000 to 5.4 million individuals.
Other forms of assistance disbursed include the 2025 Student Education Assistance, Federal Territory General Assistance, MADANI e-Wallet and e-Belia Rahmah programmes, 2025 Hari Raya Aid, and the 2025 Civil Servants Raya Bonus.
-- BERNAMA
