30/09/2025

TUESDAY | SEPT 30, 2025

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COMMENT by Dr Paul Anthony Maria Das

For citizens affected by inflation, the small but symbolic drop to RM1.99 offers relief at the pump and a reminder that subsidy reform can be politically palatable if handled carefully. – BERNAMAPIC Reform, relief and road to ballot box M ALAYSIA’S Budget 2026 is not just another fiscal blueprint, it is a statement of intent at a time when the nation faces economic strain and rising public expectations. As the first budget under the 13th Malaysia Plan (13MP), it must walk a tightrope, providing relief to households, proving the government’s commitment to reform and signalling fiscal discipline to investors. Madani framework, the government has signalled measures to strengthen transparency in procurement, restructure state-linked enterprises and accelerate the digitalisation of public services. The proposed legislations, such as a Freedom of Information Act and an Ombudsman Act, could become cornerstones of a new governance framework. If sincerely implemented, these reforms could restore trust and raise Malaysia’s attractiveness to investors.

With speculation of a general election in the second half of 2026 or in 2027, depending on coalition stability and public sentiment, every line item in the budget carries economic and political weight. Subsidy rationalisation, symbolism One headline policy ahead of the budget is the adjustment of the RON95 petrol subsidy, which reduced prices from RM2.05 to RM1.99 per litre for Malaysian citizens effective Sept 30. Under the Budi Madani RON95 scheme, targeted subsidies limit access to citizens while excluding corporations and most non-citizens, with exemptions for groups like e hailing drivers. The government argues this targeted mechanism reduces leakage, especially cross-border smuggling of fuel, while freeing up between RM2.5 and RM4 billion annually for reinvestment in public transport, healthcare and assistance for lower-income groups. For citizens affected by inflation, the small but symbolic drop to RM1.99 offers relief at the pump and a reminder that subsidy reform can be politically palatable if handled carefully. Governance and reform Beyond subsidies, governance reform is expected to feature strongly in Budget 2026. Under the Ekonomi

Competitiveness also looms large. The government has identified semiconductors, artificial intelligence (AI) and the digital economy as high growth sectors. With semiconductors already contributing more than 5.1% of gross domestic product (GDP), Budget 2026 is expected to include incentives to move Malaysia up the value chain, from being an assembly and testing hub to becoming a centre for design, innovation and advanced packaging. Investment in talent development, particularly in AI and automation, alongside stronger industry academia linkages, is seen as vital. Success here will determine whether Malaysia escapes the middle-income trap or risks stagnation in an increasingly high tech global economy. Social welfare, public sentiment Social welfare will remain a key pillar. With food and housing costs rising, and many households still recovering from pandemic-era financial strain, cash aid and targeted subsidies are likely to be expanded. The challenge lies in balancing compassion with prudence. Subsidy rationalisation, while necessary to curb wastage, can spark discontent if poorly communicated. The government must convince voters that rationalisation is not austerity but reallocation, channelling scarce

resources to where they are most needed. Fiscal consolidation and climate imperatives Malaysia’s fiscal deficit, which surged during the pandemic, has narrowed in recent years – though public debt remains high at around 64.6% of GDP – testing the country’s fiscal limits. Growth in 2025 hovers at 4.1%, reflecting resilience and also exposure to risks, such as a slowing China, volatile commodity prices and ongoing geopolitical tensions. For Putrajaya, the message is clear: fiscal space is limited but expectations for action are immense. Fiscal consolidation cannot be ignored. The government has pledged to reduce the deficit to below 3% of GDP by 2030, a goal requiring spending discipline and new revenue streams. Options include expanding the tax base through stronger SST compliance, raising taxes on alcohol or tobacco and exploring carbon taxation. Simultaneously, Malaysia’s

discontent, whether online or in the streets, as exemplified in Jakarta and Kathmandu. Tax reform can no longer be framed as a technical necessity. It must be framed as a renewal of the social contract, a promise that sacrifice will be shared fairly and that contribution will be matched with delivery. And boy, do we have promises ahead of the incoming elections! As he finishes his breakfast, the man at the warung glances again at the crowd – still debating. He puts his cup down, wipes his hands and gets up to leave. The parang will wait until tomorrow. The question is whether those wielding the nation’s tools have the courage to cut where it matters most or feature in tomorrow’s read – for another headline, another laugh. Comments: letters@thesundaily.com liability. Conversely, if it strikes the right balance between relief and reform, it could be remembered as the budget that restored fiscal credibility while keeping Malaysians onside during tough times. Ultimately, Budget 2026 is about more than balancing numbers; it is about charting a vision of Malaysia that is productive, equitable and resilient. It must reassure international markets that fiscal discipline remains intact while persuading citizens that sacrifices are fairly shared and future prosperity is being built today. In an environment where every sen counts and every move is politically scrutinised, this budget may decide not only the health of the economy but also the course of Malaysia’s next election. DrPaul Anthony Maria Das is a senior lecturer at the School of Accounting and Finance, Faculty of Business and Law, Taylor’s University. Comments: letters@thesundaily.com

climate vulnerability demands heavy investment in flood mitigation, renewable energy and resilient infrastructure spending that is urgent and politically difficult to postpone. The test will be whether these priorities can be delivered without overshooting fiscal limits already stretched by high debt. The ballot box In such a climate, Budget 2026 inevitably doubles as a political manifesto. Measures like the petrol price cut to RM1.99 can be read as both a policy and pre-election gesture, designed to show that the government is easing the rakyat ’s burdens while pushing reforms. Whether voters view these moves as genuine relief or electioneering will depend on how credibly the government delivers broader reforms in governance, growth and equity. Still, the risks are clear. If subsidy reforms trigger discontent, if growth falters under global pressures or if governance reforms stall, Budget 2026 could quickly become a political

COMMENT by Kadir Danial Kadir Roslan

Tax reforms: No ‘cents’ of fairness for the man on the street HE starts his day at 5am, with the sun yet to crack the horizon. A cool morning breeze seeps into his already chilled, air-conditioned room, which has gone on through the night. folks from the mosque have just returned from prayers. Trying hard to ignore, his ears catch fragments of their conversation. “They are not taking this case seriously!” someone mutters. everyday life – from the price of food at the warung to how much savings his children can put aside. but they feel the effects immediately – raise excise duties and cigarettes cost more; adjust fuel subsidies and a cup of kopi-o goes up by 20 sen.

The government insists reform is urgent: the revenue base is narrow, oil and gas dividends won’t last forever and subsidies are increasingly unsustainable. On paper, they are right. Malaysia cannot afford to delay. But what policymakers often overlook is that tax is not merely an economic tool; it is a social contract. In Malaysia, that contract is badly frayed. Why? Because for decades, Malaysians have paid their dues only to see their contributions evaporate in corruption, leakages or endless mega projects of questionable value. To succeed, this reform must confront this trust deficit. Otherwise, it will be seen not as a path to fairness but just another way of squeezing the rakyat . People may not parse fiscal reports

The man sipping his kopi-o knows this instinctively. He doesn’t calculate elasticity curves but he knows one thing: if people don’t feel it’s fair, it will fail. Fairness means taxing not just consumption but also wealth and profit. It means making it visible where every ringgit of tax goes – into schools, hospitals, roads – not lost in corruption trials that drag on for years. For younger Malaysians, tax is not an abstract line on a payslip; it is about whether they will ever afford a house, whether salaries will keep pace with living costs and whether a pension or healthcare system will still exist when they need it. This generation is less forgiving. They demand not just reform but fairness. They expect accountability, and they are not afraid to voice their

He checks his phone for messages, then scrolls through the latest news, looking for the day’s amusements. As expected, world leaders have said something outrageous again. Another headline, another laugh, another reminder that politics everywhere thrives on theatrics. He tosses the phone aside, pulls on yesterday’s jeans and makes his way to the back of the house, where his weapons of choice are neatly laid out. He chooses a light tool for light work to start the day – the parang . The ground behind the house needs tending, branches need trimming and the fruit trees could use some pruning. Two hours later, sweaty and half tired, he heads to the warung . The

He feels the familiar tug of frustration. It could be about corruption, justice or perhaps the latest policy blunder. It hardly matters; it is always the same cycle. He has often told his children to work hard and save, and they will be fine. But even he knows, it is not so simple anymore. The cost of living eats into wages and subsidies are stretched thin. And reform promises? They remain just that – promises. Now, there is this new debate: Malaysia’s tax reform. For most Malaysians, it feels like a distant conversation – just numbers in the papers and speeches in Parliament. Yet, it cuts directly into