It’s an election budget, say economists

The 2027 budget announced today includes increases in cash aid and subsidies, and support for senior citizens. PETALING JAYA: Economists have dubbed the 2027 budget unveiled today an “election budget” packed with cash handouts, subsidies, and tax breaks, but some households would be left struggling because of low wages, assistance gaps and high government spending.

Sunway University economist Yeah Kim Leng said the budget was aimed at easing living costs and giving the economy a short-term boost. “The increased cash handouts and subsidies intended to offer immediate relief and a short-term boost are indicative of an election budget,” he told FMT.

Yeah said the income tax relief, including an increase in personal tax relief from RM9,000 to RM12,000, would leave middle-income earners with more cash in hand.

However, economist Ahmed Razman Abdul Latiff said the budget should be judged by whether it improves household incomes. He said Malaysians in the M40 (middle-income) bracket, gig workers, and households just above aid thresholds could still miss out on support despite rising living costs.

“Although assistance has been expanded, it may not adequately cover households facing high living costs or additional care responsibilities,” he told FMT.

Razman also questioned the heavy amount of estimated operating expenditure, which accounts for nearly 82% of the RM460 billion budget, leaving only RM83 billion for development.

“The real measure of success is whether assistance reaches those who need it most and whether economic growth creates sustainable jobs and better incomes,” he said.

In the 2027 budget tabled today, the government announced an increase in Sumbangan Asas Rahmah aid to RM150 a month for up to nine million recipients. The budget also provides RM1.3 billion in assistance for nearly 200,000 senior citizens.

Economist Barjoyai Bardai of Malaysia University of Science and Technology said that while the budget recognised pressing issues, including healthcare, aid for senior citizens and the plight of contract doctors, it had not sufficiently addressed low wages, besides efforts to encourage the corporate sector to increase salaries.

He said even the increase in the minimum wage to RM2,000 from next June was inadequate, estimating that local workers needed between RM2,300 and RM2,400 to cope with living costs.

“There have been efforts to encourage the private sector and government-linked companies to increase salaries, but these are not mandatory requirements. The M40 and middle-income groups may still be left behind. Reducing income tax rates or increasing tax relief would help ease their financial burden,” he said.