Collective action needed to address high cost of living in Malaysia

The escalating cost of living is straining the nation’s wallets. ‘Cost of living’ describes the lowest amount of money needed for a family to sustain their preferred level of life over a certain amount of time.

In this regard, the issues of high housing costs, taxes on products and services, reduced subsidies, high healthcare and education expenditures, and reliance on imports all contribute to Malaysia’s high cost of living, aside from being largely due to inflation.

Despite declining headline inflation and predictions of stronger economic development this year, Selena Ling, chief economist at OCBC, predicts that concerns about the cost of living will still plague Malaysians in 2024.

Niaz Asadullah, an economics professor at Monash University Malaysia, believes that the growing cost of living is mostly the result of an imbalance between income and expenses.

According to him, Malaysian wage growth needs to be minimal and sluggish, with the bottom 40 per cent (B40) of the workforce being the most vulnerable.

Due to the rising cost of city property rentals, more and more Malaysians are moving out of metropolitan areas. The lower rental prices of larger houses are another draw for those who relocate to suburban areas outside large cities.

According to the PropertyGuru Malaysia Consumer Sentiment Survey conducted in the second half of 2023, 87 per cent of prospective homeowners were turned off by high property prices, with high mortgage rates being a major deterrent for 65 per cent.

Renting was becoming a more popular option for those who could afford it. Due to a lack of cash for a downpayment on a property, around 65 per cent of survey respondents still live in rentals.

With this, the government declared that RM10 billion would be allocated for monetary assistance through Sumbangan Tunai Rahmah (STR). To assist more individuals in coping with the effects of the growing living expenses, the government has raised the STR Phase 1 payment to a maximum of RM500 from the RM300 handed out in 2023.

Apart from that, this year’s disbursements will extend its coverage to include the poor and extremely poor groups who have also been receiving help under eKasih, in contrast to the previous year, when it was restricted to beneficiaries experiencing extreme poverty.

Prime Minister Datuk Seri Anwar Ibrahim said that in line with the objectives of the Madani economic framework, which is to enhance the standard of living of the rakyat, the government will prioritise and guarantee the uninterrupted provision of essential help to low-income households.

According to Anwar, the Madani administration is cognizant of the public’s concerns and will keep improving the STR in an attempt to assist the rakyat in coping with the rising cost of living. Recipients perceived donations from STR as helping them manage the high cost of living and lessen the stress of everyday expenses.

Up to 8.2 million eligible people have registered for STR 2024; this number is anticipated to increase to about 9 million this year because updates and new applications are accepted all-year long instead of only during a set period, as in the past.

In conclusion, the ongoing struggle with the high cost of living in Malaysia remains a pressing concern for many individuals and families across the nation.

The government’s efforts are steps in the right direction. However, addressing this issue requires collective action. As citizens, we can advocate for policies that promote fair wages, affordable housing, and accessible healthcare and education. We can also support initiatives aimed at improving financial literacy and empowering individuals to better manage their finances.

I urge all of us to remain engaged and proactive in addressing the challenges posed by the high cost of living. Let us work together to build a more equitable and sustainable future for all, where every individual has the opportunity to thrive.

Datin Sri Professor Dr Suhaiza Hanim Mohamad Zailani is the Director of the Ungku Aziz Centre for Development Studies, Universiti Malaya.