LETTER: The total of RM510 billion allocated for 2027 budget shows the government is really listening to the concerns of the people while also confronting great external challenges in the form of uncertain global economic outlook as well as the on-going Middle East crisis.
The minimum wage raise to RM2,000 from RM1,700 is significant. Even workers pay in the middle of the range distribution has been push upward, where the starting wage benchmark for graduates and semi-skilled workers is set at RM2,500 a month.
The move to exclude the Micro, Small, and Medium Enterprises (MSMEs), those with annual sales below RM50 million, from the increase in minimum wage, proved that the government also take cognizance of the challenges face by MSMEs in the backdrop of the energy crisis due to the continuing conflict in Iran.
Meanwhile, taxpayers, especially from the middle-income (M40) households, will benefit greatly from the increase in individual tax relief to RM12,000 from RM9,000, what is more with the one-percentage-point reductions in selected resident income-tax rates.
This time, the scope and coverage have been widened, covering postnatal care, care-giving for parents, purchase of sport shoes, tuition fees, artificial intelligence subscriptions, and even selected pet-related expenses.
These will help middle-income earners which currently facing a relentless financial squeeze as their wages lag behind the rising cost of living.
These are crucial measures for the majority of Malaysians to reduce out-of-pocket expenses.
Under the 2027 Budget, the total allocation for subsidies and assistance is about RM80 billion. Again, this is consequential especially from the perspective of cushioning households against the impact of higher oil prices and elevated living costs.
Through the basic monthly quota under the Budi Madani RON95 (BUDI95), the retail oil price is stabilised with the 300 litres quota per month was reinstated.
The Budi Diesel, with up to 400 litres a month, is also significant in terms of neutralising the effect of high global crude oil price to the economy and Malaysians at large.
The STR and SARA schemes have been expanded, another crucial tools to ease the burden of the people. STR recipients will receive up to RM150 monthly, or RM1,800 a year. Even those outside the STR programme will not be left out.
Essentially, Malaysians aged 18 and above who are not STR recipients will also receive RM200 in Sara Madani assistance.
Allocation for Jualan Rahmah and Jualan Agro Madani will increase in the budget to RM750 million, another important measures to ease the cost of living pressure especially for essential and necessity goods.
For first-time homebuyers, particularly those who are self-employed, up to RM20 billion in housing financing guarantees were allocated, helping to boost their financial strength moving forward.
Service tax on elderly care to be reduced from eight per cent to six per cent.
In addition to that, elderly care fees of up to RM96,000 a year to be fully exempt from service tax.
Even minimum pension will be raised to RM1,350. Eventually, all these will ease many issues among Malaysians, especially the sandwich generation who lives in the urban areas.
The government could have done more, but fiscal prudence remains its compass along the way.
Indeed, the fiscal deficit target of below three per cent by the year 2028 remains intact and the government, based on this budget, appears to be on the right track.
ASSOC. PROF. DR. IRWAN SHAH ZAINAL ABIDIN
Senior Associate Fellow
Economic and Financial Policy Institute (ECOFI)
Universiti Utara Malaysia
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