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Fomca hails Budget 2025 as people-centric, with targeted assistance and innovative MyKad-linked subsidies

Prime Minister Datuk Seri Anwar Ibrahim tabling Budget 2025 in Parliament on Oct 18, 2024.

Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, tabled Budget 2025 in the Dewan Rakyat this evening.

At RM421 billion, it is the nation’s largest, surpassing the RM393.8 billion, unveiled last year.

The highlights include:

• Targeted subsidies for RON95 fuel to be implemented mid-2025.

• RM13 billion for Rahmah Cash Contribution (STR) and Sumbangan Asas Rahmah (Sara) cash aid initiatives, benefitting 60 per cent of the adult Malaysian population.

• 4.1 million households will receive RM100 in Sumbangan Asas Rahmah cash aid a month, compared with 700,000 households this year. The cash will be credited to the recipients’ MyKad from April 2025 and can only be spent on basic necessities; singles will receive RM600 each. Six hundred supermarkets have agreed to be part of this initiative.

• Individual income tax relief for education and medical insurance premiums raised to RM4,000.

• Minimum wage raised from RM1,500 to RM1,700 per month, effective Feb 1, 2025; enforcement of the new wage will be deferred for employers with fewer than five employees for six months (starting Aug 1, 2025).

• Government plans to gradually increase the excise duty on sugary drinks by 40 sen per litre starting from Jan 1, 2025. The revenue will be used to treat diabetes and provide peritoneal dialysis treatment for end-stage kidney patients in the country.

• RM200 million allocated to carry out the Progressive Wage Policy; RM250 million to improve participation in the People’s Income Initiative (IPR).

• Sales tax will no longer be imposed on basic food items from May 1. However, it remains for premium, imported goods like avocado and salmon.

• RM100 million for services like mobile clinics to cater to rural communities.

• RM250 million allocated for slope repairs nationwide.

• RM20 million for GLIC and GLC foundations to help them provide aid to flood victims; RM600 million for the National Disaster Management Agency to prepare for flood disasters; and RM150 million to mitigate flash floods.

• Almost RM550 million for tourism promotions and activities for Visit Malaysia Year 2026.

• Government to make it mandatory for foreign workers to contribute to EPF. This will be done in stages.

• RM64.1 billion for the Education Ministry; RM2 billion for upgrading and maintaining schools nationwide; 44 schools to be built nationwide next year.

• RM870 million for the supplementary food programme; nearly RM800 million for early schooling assistance.

• RM25 million for the Rakan Muda programme.

• RM300 million to build two special needs schools, one focusing exclusively on autism.

• Additional tax relief for disabled couples raised to RM6,000; additional tax relief for taxpayers with unmarried disabled children raised to RM8,000.

• RM230 million for national sports development; RM15 million for the national football senior, Under-18, and Under-13 teams.

The Federation of Malaysian Consumers Associations (Fomca) said Budget 2025, which is themed ‘Reinvigorating the Economy, Driving Reforms, Prospering the Rakyat’, lived up to its name of being a people-centric budget, with a list of targeted assistance for the people.

Among the highlights, Fomca says, is the initiative to channel the Rahmah cash incentive directly via MyKad for the first time.

“This marks an important shift towards digital governance, streamlining the disbursement process, minimising bureaucracy, and ensuring faster and more secure access to financial aid,” said Saravanan.

“The integration of the Rahmah cash aid with the MyKad reflects the government’s move toward a centralised welfare and subsidy system, similar to the e-Kasih programme, which already uses MyKad to facilitate welfare disbursements.”

Saravanan said the government’s move of leveraging the MyKad would also ensure immediate access to funds through participating supermarkets, retail stores, and service outlets, reducing the need for physical cash collections, and improving accessibility for recipients.

He said Fomca also believes the government’s decision to link the Rahmah cash incentive to the MyKad could serve as a pilot initiative for future subsidy programmes, including RON95 petrol subsidies.

“If successful, the same digital infrastructure can also be applied to targeted fuel subsidies, where consumers will only pay subsidised prices after they present their MyKad at petrol stations, when buying fuel.”

“This system would enable real-time monitoring of subsidy usage, reduce misuse, and ensure that subsidies are allocated fairly based on income levels and household eligibility.”

However, Saravanan said there should be contingency plans to handle system failures or issues related to MyKad usage, ensuring that recipients can access their aid through alternative means if necessary.

“If executed properly, this approach will ensure greater convenience for consumers, reduce fraud, and enhance the government’s ability to track and manage public resources efficiently.”

Saravanan acknowledged the ‘ultra-rich’ may soon start to feel the pinch even more as they no longer get to enjoy subsidies like before, but said unlike the poor, those in the T20 group had options.

“For the B40, they do not have any other alternatives. They will be severely impacted if they cannot afford food, for example, whereas the rich can still opt for cheaper options as they can still afford it.”

Other announcements that caught Fomca’s attention included the plans to develop the Sarawak Cancer Centre, estimated to cost RM1 billion.

“This will ensure people in the state would not need to travel to the peninsula to seek treatment,” Saravanan said.

In his speech, Anwar said the development allocation for Sabah and Sarawak would be increased to RM6.7 billion and RM5.9 billion respectively. Special grants for both states would also be doubled to RM600 million, beginning next year.

Other initiatives that would afford better protection to consumers, Saravanan said, included the tabling of the Consumer Credit Bill, and the merger of the Malaysian Aviation Commission (MAVCOM) and the Civil Aviation Authority of Malaysia (CAAM).

On the war on sugar, Saravanan said the tax is beneficial in curbing sugar consumption among the people. However, he said the tax collected should be channelled properly.

Anwar said the revenue would be used to treat diabetes and provide peritoneal dialysis treatment for end-stage kidney patients in the country.

“The sugar tax should also be channelled to healthcare or research institutions to conduct studies on diabetes and other related illnesses,” Saravanan said.

“We also hope the sugar tax will work in the long run as we do not want to see another failure like what happened in the ‘Tak Nak’ campaign, which was aimed at getting people to stop smoking.”

On the increase of the minimum wage from RM1,500 to RM1,700, Saravanan said the government must continue to monitor employers to ensure that they did not take advantage of the situation.

“Businesses may increase the prices of goods to ensure they can pay the minimum wage to their staff. Employers should also not take advantage of the situation by passing the burden onto the consumers,” he said.