It’s an election budget, say economists

The 2027 budget recently unveiled has been labeled as an "election budget" by economists due to its focus on cash handouts, subsidies, and tax breaks, according to Sunway University economist Yeah Kim Leng. The budget aims to alleviate living costs and provide a short-term economic boost. Income tax relief, including an increase from RM9,000 to RM12,000, would benefit middle-income earners with more disposable income.

However, economist Ahmed Razman Abdul Latiff cautioned that the budget should be evaluated based on its impact on household incomes. Middle-income earners, gig workers, and households just above aid thresholds might still face challenges despite the expanded assistance. Razman also expressed concern over the high estimated operating expenditure, which makes up nearly 82% of the RM460 billion budget, leaving only RM83 billion for development projects.

The government announced a monthly aid of RM150 for up to nine million recipients under the Sumbangan Asas Rahmah program. Additionally, RM1.3 billion will be allocated to support nearly 200,000 senior citizens. While the budget acknowledges pressing issues like healthcare and support for senior citizens and contract doctors, economists argue that low wages and inadequate salary increases remain unaddressed.

Malaysia University of Science and Technology economist Barjoyai Bardai stated that the proposed minimum wage hike to RM2,000 from June next year is insufficient, suggesting local workers require between RM2,300 and RM2,400 to manage living expenses.

Economist Barjoyai Bardai emphasized that encouraging the private sector and government-linked companies to increase salaries is not mandatory, and such measures are unlikely to benefit the middle-income group (M40) and middle-income earners. Bardai suggested that reducing income tax rates or increasing tax relief could help alleviate the financial burden on these groups.