Budget 2027's RM80bil in aid, subsidies to help cushion living costs, say experts

 

KUALA LUMPUR: Budget 2027's allocation of more than RM80bil for subsidies, assistance and incentives is expected to help protect Malaysians' purchasing power as they face rising living costs and potential inflationary pressures, says Dr Mohd Afzanizam Abdul Rashid.

The Bank Muamalat Malaysia Bhd chief economist said the measures were important as inflation in 2027 was projected at between 1.8% and 2.8%, while fuel prices were expected to remain high due to the ongoing war in the Middle East, which has no clear end in sight.

"The increase in allocations for the Rahmah Cash Aid (STR) and Rahmah Basic Aid (SARA) to RM16bil would provide additional financial support, particularly for middle and lower-income households," he told Bernama.

On Friday (Oct 9), Prime Minister Datuk Seri Anwar Ibrahim, when tabling Budget 2027 in the Dewan Rakyat, said STR recipients would receive SARA of up to RM150 a month, or RM1,800 a year, while Malaysians aged 18 and above who are not STR recipients would receive two RM100 payments under SARA Madani.

Meanwhile, Universiti Kebangsaan Malaysia (UKM) Economics and Management faculty senior lecturer Assoc Prof Dr Mustazar Mansur said the allocations, including RM40bil for fuel subsidies and nearly RM3.3bil for assistance through the Social Welfare Department (JKM), would help ease the cost-of-living burden.

However, he stressed that cash aid and subsidies should be complemented by long-term measures to improve skills, productivity and incomes, enabling recipients to become financially independent.

Higher wages and a stronger economic and business environment were also essential to reducing reliance on government assistance.

"In the long term, education, training and productivity improvements should help recipients move out of the assistance group," he said.

Federation of Malaysian Consumers Associations (Fomca) chief executive officer Dr Saravanan Thambirajah said Budget 2027 had also addressed key concerns involving living costs, income growth and essential services, including healthcare, education and public transport.

He noted that financial pressures affected not only the B40 group but also M40 households, which often had to meet substantial monthly commitments, including housing and vehicle instalments, schooling, childcare, medical insurance and the needs of ageing parents.

A stable income did not necessarily reflect a household's actual financial capacity, as disposable income could be limited after these expenses were paid, he said.

"For example, an M40 family earning more than RM7,000 a month while supporting three children and elderly parents may face greater financial pressure than a lower-income household with fewer dependants.

"Household affordability should therefore be assessed based on disposable income and actual financial commitments, rather than income alone," he said. - Bernama