12/01/2026

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MONDAY | JAN 12, 2026

Early signs of gains from firmer ringgit

Ivan said Merchantrade’s remit tance data points to a notable shift rather than a mere simple outflow narrative. “When we compare December with the same period a year earlier, total remittance outflows from Malaysia actually declined, and the number of transactions fell by about 29%. However, when we looked deeper into the data, we observed two important developments driving this change.” The first was a migration back to formal channels. “We saw new customers entering our ecosystem, many of whom had previously used informal networks,” Ivan explained. “They have now returned to licensed, formal remit tance channels, which reflects both trust and regulatory alignment.” The second trend was a change in remittance behaviour among existing users. “In December, many cus tomers sent money multiple times, but in smaller tranches,” Ivan said. “This was largely driven by currency volatility, where both the ringgit and recipients’ home cur rencies were moving rapidly.” According to Ivan, this pattern was especially pronounced in digital remittance channels. “Digital remittance allows cus tomers to send smaller amounts more frequently because the cost structure is flat,” he noted. “We do not see the same behaviour over the counter, where indirect costs – such as transport and time – are much higher for migrant workers.” Taken together, the data suggest that while overall remittance volumes may be moderating, foreign workers remain economically active in Malaysia, with beha viour increasingly mine the legitimacy of reform, regardless of the fiscal rationale. “Issues such as eligibility errors or delayed appeals, if left unresolved, can quickly erode public con fidence.” The Ministry of Finance said diesel subsidy rationalisation under the Budi Madani Diesel Programme has saved the government about RM5 billion a year since it was implemented on June 10, 2024. Meanwhile, the targeted RON95 petrol subsidy under Budi95, rolled out in late September 2025, is projected to save the government between RM2.5 billion and RM4 billion a year, with around RM800 million already recorded in early savings. Combined, targeted diesel and petrol subsidies are expected to free up between RM7.5 billion and RM9 billion annually, depending on global oil prices. Turn to page 14 shaped by currency movements, cost effi ciency and access to digital financial services.

o Shift in consumer spending and foreign worker remittance patterns emerges, points to Malaysian domestic economy that is gradually regaining confidence

Ű BY JOHN GILBERT sunbiz@thesundaily.com

said consumer spending in the most recent quarter rose about 7% year on-year, with volumes increasing by around 6%, signalling a meaningful improvement in domestic demand. “This marks a clear inflexion from the third quarter, when sentiment was exceptionally soft, and market confidence was visibly lacking across industry forums.” That period of weakness, however, prompted a strategic reset, she said. “The softness in Q3 forced a reassessment of inventory planning and competitive positioning,” Low said, adding that fourth-quarter results reflected “a combination of improved execution and a gradual recovery in consumer confidence”. Rather than expressing confi dence verbally, consumers are re vealing it through behaviour. “What we are seeing in our data is basket upgrading. Customers are increasingly willing to trade up – whether to higher-priced personal care products or items with added functionality – suggesting improved discretionary confidence,” Low said. This shift has been further supported by policy measures. “The capital subsidy introduced in Q4 played a meaningful role in driving footfall, particularly in our hypermarket segment, which re mains commodity-driven,” Low said. AEON Group currently operates 22 hypermarkets alongside more than 25 department stores and supermarkets, with diverging con sumer behaviours observed across formats.

KUALA LUMPUR: A timely question facing Malaysia today is whether a stronger ringgit can meaningfully improve the wellbeing of the rakyat , attract higher-quality foreign direct investment and, ultimately, help the country escape the constraints of a long-standing real income and pro ductivity trap. CGS International Securities Malaysia Sdn Bhd country head Alan Inn said beyond the macroeconomic implications, currency strength has tangible consequences for house holds, businesses and capital mar kets alike. “For investors and fund man agers, a firmer ringgit would warrant a thoughtful recalibration of port folios, particularly towards sectors that stand to benefit from stronger domestic purchasing power – such as retail, travel and other consumption driven industries rooted in Malaysia. “This shift is especially relevant given that the vast majority of companies under research coverage – estimated at nearly 85% – are fundamentally domestic-centric, positioning them to potentially enjoy meaningful earnings tailwinds in an environment of sustained currency strength,” he said during a panel discussion titled “The Ringgit Boost – Implications for 2026” at the CGS International 18th Annual Malaysia Corporate Day 2026 held recently. During the discussion, AEON360 managing director Low Ngai Yuen

Consumers are expressing their growing confidence through their spending behaviour. – BERNAMAPIC

the system.” Even well-designed reforms can face backlash if inflationary pressures are unevenly felt or poorly managed, Tan said. “Reforms must be carefully sequenced and buffered, particularly for lower- and middle-income house holds, to avoid reversal under public pressure.” People need to see savings translated into tangible benefits such as targeted cash assistance, health care, education or infrastructure, Tan said.“When savings are not clearly felt, political and social resistance can build quickly.” He added that targeted subsidies depend on trust in data accuracy, fairness of eligibility rules and the responsiveness of appeal mecha nisms. Tan shared that ADL’s research shows frequent errors, delays or opaque decisions can quickly under Low said, “the interplay between policy support, currency strength and underlying economic resilience will remain critical in shaping consumer behaviour going forward.” Moving on, Merchantrade Asia Sdn Bhd’s chief commercial officer, Ivan Alias, said the dynamics of foreign labour and cross-border remittances are becoming increasingly im portant parts of Malaysia’s broader economy. He said in the first three quarters of last year alone, foreign workers remitted an estimated RM39 billion out of Malaysia, underscoring both the scale of migrant labour parti cipation and the capital flowing offshore. At the same time, policy signals indicate a longer-term intention to reduce reliance on foreign workers, raising questions about how labour patterns and remittance behaviour may evolve.

registration for identity-linked schemes like Budi95 is relatively effective. “A single national ID reduces duplication and improves verification, which is a strong foundation compared to many other systems globally.” Where the real operational lessons emerge is beyond registration, parti cularly around eligibility calibration and exception handling, Tan said. “Early rollout inevitably surfaces edge cases: for example, e-hailing drivers whose income patterns or vehicle usage didn’t fit neatly into initial eligibility assumptions.” Furthermore, he said, Malaysia’s fuel subsidy reform will be sustainable if it strengthens the social contract with fewer blanket subsidies, but stronger, fairer, and more transparent protection where it’s needed. “Whether subsidy rationalisation is sustained has far less to do with headline fiscal savings and much more to do with public confidence in Low said spending patterns are also evolving beyond essentials. “In urban and higher disposable income segments, consumers are planning travel, including overseas destinations such as Japan,” she noted, adding that demand for imported food and international offerings gained traction in Q4 compared with the prior quarter. Taken together, these trends point to a gradual restoration of confi dence. “We are seeing early but tangible signs of consumers be coming more comfortable with how they spend,” Low said. A key question often asked, she said, is how much of current con sumption is driven by Sumbangan Asas Rahmah (Sara) assistance versus factors such as ringgit appreciation and a stronger-than expected macroeconomic backdrop. With the government confirming the continuation of Sara this year,

Expert lauds Malaysia’s ‘responsive approach’ to fuel subsidy reform

qualified for a 300-litre monthly quota just like other motorists. After stakeholder feedback and usage data analysis, that quota was doubled to 600 litres, and then increased again to 800 litres per month for drivers

Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

PETALING JAYA: Malaysia’s handling of fuel subsidy reform reflects responsive governance and adaptive

exceeding certain mileage thresholds under the tiered eligibility scheme.” He added that the key is institutionalising this responsiveness – ensuring that appeals, data updates and rule refinements con tinue in a transparent and timely manner as more edge cases emerge. “Over time, this ap

execution, said Arthur D. Little (ADL) Malaysia associate director Tan Qizhen ( pic ). He said Malaysia is mana ging its targeted fuel subsidy reform as a “live” operational programme rather than a fixed, one-off policy. “Rather than indicating

weakness, this kind of res ponsive adjustment is the right way in terms of Malay sia’s approach to introduce targeted subsidies schemes,” he told SunBiz . He said the government’s adjust ment of the e-hailing fuel quota is a good example of adaptive execution. “Initially, full-time e-hailing drivers

proach strengthens trust. People may accept tighter targeting, as long as they see that errors are corrected quickly and the system listens.” With Malaysia’s MyKad infra structure already in place, he said,