Budget 2025: Malaysia on path to becoming Asian Economic Tiger - Economist

SHAH ALAM - The Budget 2025, presented by Finance Minister Datuk Seri Anwar Ibrahim last Friday, balanced fiscal consolidation with growth, development, and social objectives.

According to economist Datuk Dr Madeline Berma, Budget 2025 aimed to help the Madani government distribute resources efficiently and effectively, based on economic and public priorities.

She added that the budget aimed to increase the fiscal ceiling and restructure the economy, positioning Malaysia to potentially achieve the status of an Asian Economic Tiger in the future.

Madeline said that the budget's core focus was on raising income levels to ensure that all segments of society, including those in rural areas, urban poor, and remote regions, benefit from the nation’s progress.

“The Budget 2025 seeks to reduce inequality by modifying the tax system, such as increasing taxes for higher-income groups.

"Consequently, the government plans to expand the progressive tax base by introducing a two per cent dividend tax on dividend income exceeding RM100,000 for individual shareholders starting in 2025,” she said.

Madeline also welcomed the Madani government's proposal to implement targeted subsidies for RON95 petrol for the T15 group.

She highlighted that the savings from this measure would enable the government to allocate funds for more beneficial purposes, such as providing financial assistance to 60,000 underprivileged students—particularly from Sabah and Sarawak—for purchasing flight tickets to return home.

She added that the government's plan to introduce grants and financial aid through Bank Negara Malaysia (BNM), amounting to RM3.8 billion, would support small and medium enterprises (SMEs) transitioning from manual systems to digitalisation and automation, aligning with the latest technological advancements.

Meanwhile, Universiti Teknologi Malaysia lecturer Professor Dr Mazlan Ali described Budget 2025 as a "people’s budget," as most announcements focused on the Madani government's efforts to assist low-income households in managing the rising cost of living and increasing prices of goods.

This includes Anwar's announcement to increase the allocation for the ‘Sumbangan Tunai Rahmad’ (STR) and ‘Sumbangan Asas Rahmah’ (Sara) to RM13 billion in 2025, compared to RM10 billion in 2024.

The increase would benefit nine million recipients, representing 60 per cent of the country's adult population.

A total of RM4.1 million STR household recipients will receive RM100 per month under the Sara program, compared to 700,000 recipients this year.

The maximum household assistance in 2025 will rise to RM4,600, up from RM3,700 in 2024, while the single category will see an increase in aid to RM600.

In further support, the government announced an increase in the monthly welfare assistance provided by the Social Welfare Department.

Assistance for children from the poorest families, aged six and below, will rise from RM200 to RM250, while those aged seven to 18 will receive an increase from RM150 to RM200.

The elderly will also benefit from an increase in welfare aid, rising from RM500 to RM600.

Mazlan praised the highest STR aid in history, stating that Malaysia is now on the right track to restoring its economy, attracting foreign investment, and strengthening the ringgit's value against foreign currencies, including the US dollar.

“The announcement shows that the Madani government is delivering on its promise to increase direct cash assistance to the people and eligible groups, following the withdrawal of various subsidies. I also see the increase in the minimum wage to RM1,700 per month as a step to boost incomes and encourage young people to enter formal employment,” he said.