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‘Budget 2026 offers little for middle-income earners’

Fomca against move to use EPF for insurance

Ű BY T.C. KHOR newsdesk@thesundaily.com

PETALING JAYA: The Federation of Malaysian Consumers Associations (Fomca) has urged the government against allowing the use of retirement savings to pay for medical insurance, adding that the move could have negative long-term effects. Its CEO Dr Saravanan Thambirajah said while expanding healthcare coverage is vital, the Employees Provident Fund (EPF) must remain untouched. “Many Malaysians have insufficient EPF balances, and diverting funds to insurance would only worsen financial insecurity in old age,” he said, urging the government to reconsider the proposal and instead strengthen pooled health protection schemes or provide targeted subsidies. Saravanan, however, welcomed several consumer-friendly measures under Budget 2026, including the upcoming Consumer Credit Act, the Cybercrime Bill and the expansion of the National Scam Response Centre. He said the Budget reflected a “people first” approach, with initiatives such as the Lemon Law, cost-of-living relief, affordable housing, improved public transport, stronger food security and faster progress towards sustainable energy. “Overall, this budget takes concrete steps to ease cost-of-living pressures, strengthen consumer protection and promote long-term sustainability.” The Consumers Association of Penang (CAP) also hailed the Lemon Law, to be introduced through amendments to the Consumer Protection Act, as a major win for consumers. “We hope the Lemon Law would also cover new cars,” said its president Mohideen Abdul Kader. He welcomed the government’s plan to table the Anti-Bullying Bill 2025, calling for awareness campaigns and skills-building programmes to foster a long-term cultural shift against bullying. However, he expressed disappointment that excise duties on cigarettes were raised by only two sen per stick, while other tobacco products saw increases of RM20 to RM40 per kg “These are too low to reduce smoking rates.” He also said the RM46.5 billion allocation for the Health Ministry was up by only RM1.2 billion from last year, calling for greater investment in preventive healthcare and health promotion programmes to lower long-term treatment costs. He added that CAP had hoped for stronger measures and higher allocations to combat pollution, prevent environmental crimes and support zero-waste community efforts, “but this is not reflected in this year’s Budget”. He also urged the government to ensure that targeted subsidies reach low income groups directly, without leakages. Meanwhile, CAP education officer N.V. Subbarow described the tobacco tax hike as “good news, better than nothing”. “Smokers must realise they are consuming a deadly product. Please stop.” He also praised the alcohol tax increase as “very welcoming, healthy news”. “The revenue collected will support the Agenda Nasional Malaysia Sihat (campaign). This is what we want,” he said, adding that authorities must now act against cigarette and alcohol smuggling following the new tax measures.

o Persisting conditions could lower spending power, living standards: Economist

Ű BY HARITH KAMAL newsdesk@thesundaily.com

PETALING JAYA: Economist Prof Geoffrey Williams said Malaysia’s middle-income earners, the M40, have once again been left out in the cold following the tabling of Budget 2026, adding that stagnant wages, rising costs and shrinking purchasing power continue to batter the “forgotten middle”. He said the latest budget offers “little to anyone” in terms of raising incomes or narrowing inequality, and almost nothing for the middle class. “The government’s cash aid under the Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah programmes was kept at last year’s amount, and with inflation expected at about 2%, purchasing power would fall.” He also said while moves such as raising the minimum wage may narrow inequality, the M40 gain nothing from such interventions. “There is nothing in Budget 2026 to change this. To help everyone, the Sumbangan Asas Rahmah scheme should be made monthly with RM100 available to all. Otherwise, schemes such as Budi95 or tax rebates are not really helpful. “Most M40 are not in the income tax bracket, so rebates do not matter to them.” He added that stagnant wages are a structural problem, not one caused by poor productivity or skills deficits. “Since wages are not related to productivity, improvements in skills training would not help. Only stronger employment rights, trade union representation or redistribution policies would make a difference.” He said if conditions persist, more skilled M40 workers may turn to gig work or side jobs to survive, weakening Malaysia’s formal employment base. “If Malaysia’s middle-income group continues to weaken, spending power would drag, slowing growth and deepening dependency on government support, ultimately lowering living standards.”

Williams said while moves such as raising the minimum wage may narrow inequality, the M40 gain nothing from such interventions. – ADAM AMIR HAMZAH/THESUN

engineer, said while targeted relief is welcome, structural issues remain unresolved. “Honestly, it feels quite unfair at times. We do not earn enough to feel secure but we also do not qualify for most forms of aid. “Prices for groceries, rent and transport keep rising, so many of us feel left out.” He urged the government to consider practical support mechanisms instead of blanket rebates. “I would propose flexible tax deductions or rebates tied to essential spending such as education, healthcare and transport, not handouts but practical relief that acknowledges the squeeze we are feeling.” He said many others in his income bracket have seen no improvement in financial stability compared with last year. “Everything costs more, but our pay has not changed. “While Budget 2026 helps lower-income groups, its impact on middle-income families is limited. It feels like we are quietly slipping through the cracks.” – By Harith Kamal “Maybe Budget 2027 would improve the use of refined data to provide more effective subsidies to the M40. “Nonetheless, Budget 2026 marks a positive step in data utilisation as the government continues to adopt digital technology under the 13th Malaysia Plan.” He said the full-scale rollout of targeted subsidies next year is expected to yield significant fiscal results, particularly in reducing the government’s deficit to 3.5% of GDP. The national budget, tabled in Parliament last Friday by Prime Minister Datuk Seri Anwar Ibrahim, carries a RM470 billion allocation with a strong focus on fiscal discipline, targeted aid and support for lower-income groups. While the B40 community received most of the direct financial assistance, many middle-income Malaysians say they are still bearing the brunt of rising costs with little help in sight.

Nuraida Mohd Ramlee, 42, a mother of three, said the strain on working parents is worsening. “Some parts are okay, such as tax relief for child education and the continuation of Budi95, but overall, it is still not enough for the M40. With three kids, childcare, groceries and school fees take up a huge part of our income. We are not poor enough to get aid, but not rich enough to cope easily.” She said even modest support could go a long way. “Even small help with childcare, housing or daily costs would make things a bit easier for working parents. “The gap between the B40 and lower M40 is narrowing. Many of us are struggling in cities, especially those with young children. The focus should be more balanced.” Desmond (not his real name), 30, a site Meanwhile, Universiti Kuala Lumpur Business School economist Assoc Prof Dr Aimi Zulhazmi Abdul Razak said Budget 2026 must be viewed as part of a broader shift towards fully targeted subsidies on essentials such as fuel, electricity, diesel and liquefied petroleum gas. “The recent budget focuses on implementing targeted subsidies on a full scale in 2026, following various preparatory measures in 2025.” He said the success of this approach depends on accurate data from the government’s centralised income database, Pangkalan Data Utama. “This is crucial to identify the financial burden of the M40, which may be masked by gross income data. “Net income is not revealed, and this is especially important for those in urban areas facing high housing, food and childcare costs.” He added that more refined data in future budgets could help deliver support effectively.

Limited relief leaves M40 struggling to keep up PETALING JAYA: Malaysia’s middle-income earners (M40) say Budget 2026 offers limited relief as they continue to be squeezed by rising living costs, stagnant wages and shrinking disposable income, trapped between aid for the poor and the privileges of the rich. lower-income group was understandable but left others behind. “The B40 need help, yes, but middle-income families also face financial pressures and do not see much direct benefit from the Budget.”

While some welcomed targeted measures such as Budi95 and tax breaks, many said the focus remains heavily on the B40, leaving middle-income families struggling to keep up. Tina Abdullah, 50, a logistics manager, said while a few initiatives were helpful, many M40 households fall just outside the eligibility bracket for most assistance schemes. “Some are suitable, but some are not. Apart from the Sumbangan Asas Rahmah and Budi95 programmes, many M40 families are no longer eligible for other forms of subsidies or cash aid. “It is somewhat unfair because some people end up paying more than usual. Under Budi95, for instance, those who use more than the subsidised limit have to pay RM2.60 per litre for the rest.” She said the government’s focus on the