12/05/2026

TUESDAY | MAY 12, 2026

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COMMENT by Dr Roslan Ja’afar

Ensure fairer formula for subsidies S UBSIDY rationalisation has become a critical national agenda due to growing fiscal pressures. The proposal to withdraw petrol aspects that are often overlooked when assistance is determined solely by income categories.

Two households with the same income may not necessarily experience the same financial reality. For instance, a family earning RM7,000 while supporting six children, elderly parents and chronically ill family members would certainly face far greater financial pressure than a smaller family with the same income. In reality, more Malaysians today belong to the “squeezed middle” group even though they are not classified as hardcore poor. They may fail to qualify for assistance simply because their income slightly exceeds the prescribed threshold, yet they continue to struggle with rising living costs, debt commitments and family responsibilities. This highlights another major weakness of rigid income-based classifications. Systems that depend heavily on fixed thresholds can create social injustice. Small differences in income can sometimes lead to major differences in eligibility for government assistance. For example, a household earning RM5,200 may still fall under the B40 category and qualify for certain forms of aid while another household earning RM5,300 may immediately be categorised as M40 and lose access to several forms of assistance. In reality, the RM100 difference does not significantly alter their living conditions. Yet, from a policy perspective, both households are treated differently. Furthermore, income-based distribution tends to reduce people into mere numbers without considering broader social vulnerabilities. Single mothers, persons with disabilities, chronically ill individuals, elderly citizens living alone or families that have recently lost employment may require greater support even if their income does not fall within the lowest category. In an uncertain economic environment, many Malaysians are increasingly exposed to risks such as job losses, income reduction and sudden increases in living expenses. Someone

subsidies from the T20 group represents a firm step towards addressing subsidy leakages. However, eligibility for government assistance should not rely solely on the B40, M40 and T20 household income classifications if the aim is to ensure a fairer and more realistic distribution system. Fundamentally, the use of household income categories as a benchmark for government aid does offer certain advantages. It simplifies the process of distributing assistance in a fast, organised and easily understandable manner. It also allows the government to develop databases and implement targeted policies more efficiently. Nevertheless, excessive reliance on income indicators alone carries significant weaknesses and may potentially create social imbalances within society. One major weakness is that monthly income does not accurately reflect the real economic condition of a household. In today’s reality, income figures alone are insufficient to determine whether a family is financially comfortable or struggling. The cost of living in Malaysia varies greatly depending on location. Families residing in Kuala Lumpur, Putrajaya or Johor Bahru inevitably face much higher living expenses compared to those living in rural areas. For example, a household earning RM6,000 in a major city may still face financial difficulties after accounting for rent, transport, children’s education and daily expenses. On the other hand, a family earning the same amount in a rural area may enjoy greater financial stability due to lower living costs. This clearly shows that income figures alone do not provide a comprehensive picture of people’s well-being. Apart from geographical factors, family size and the number of dependents are equally important

“Government assistance is not merely about statistics and numerical classifications; it concerns the overall well-being and quality of life of the rakyat.

The true objective of government assistance is to ensure that no citizen is left behind in the nation’s development journey. – MASRY CHE ANI/THESUN

As the government moves towards subsidy rationalisation and strengthening the country’s fiscal position, the principle of social justice must not be overlooked. Government assistance is not merely about statistics and numerical classifications; it concerns the overall well-being and quality of life of the rakyat . The middle-income group, in particular, is facing increasing economic pressure. They may not be poor, yet at the same time they are not financially secure enough to cope with rising living costs without some form of assistance. If this issue is not managed carefully, social inequality within society may continue to widen. Ultimately, the true objective of government assistance is to ensure that no citizen is left behind in the nation’s development journey. To achieve this goal, an approach that relies too heavily on income categories alone must be reassessed so that policies genuinely reflect the realities of life faced by Malaysians today. Dr Roslan Ja’afar is a senior lecturer at the Graduate School of Business, Universiti Kebangsaan Malaysia. Comments: letters@thesundaily.com

categorised as M40 today may quickly become economically vulnerable due to unexpected economic shocks. Therefore, government assistance systems must become more flexible and responsive to changing realities. It is, therefore, timely for the government to consider a more comprehensive and multidimensional assessment approach in determining eligibility for assistance and subsidies. Income should remain an important indicator but it should not be the sole measurement. Additional factors such as residential location, local living costs, family size, number of dependents, household debt levels, health status and social vulnerability should also be taken into account. Such an approach would allow for a more accurate, fair and genuinely targeted assistance system. In addition, social assistance mechanisms should not merely focus on gross household income but also consider disposable income – the actual remaining income after deducting essential commitments such as housing, education, healthcare and family responsibilities. This approach better reflects the real financial realities faced by Malaysians.

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