Are there really reforms happening in Malaysia?

KUALA LUMPUR, Sept 9 — The Madani government came to power on a demand for reform. But are the changes underway truly delivering, and are they for better or worse?

Terms like “fiscal reform” and “subsidy rationalisation” dominate headlines. But what do they mean, and how do they affect Malaysians?

What is fiscal reform, really and does it mean we’ll be paying more taxes?

Malaysia remains under taxed. In 2024, tax revenue was 12.4 per cent of GDP, among the lowest in the region. At the same time, subsidies for daily essentials and a RM1.3 trillion debt burden pressure public finances. Interest payments alone hit RM54.7 billion, exceeding the Health Ministry’s budget.

The Ekonomi Madani framework aims to strengthen the economy while promoting social justice. Fiscal reform is not austerity but rebalancing contributions and benefits, broadening revenue without burdening the vulnerable and directing spending toward maximum public impact.

This is why SST has been expanded to cover more discretionary goods and services while keeping essentials exempt and targeted aid for lower and middle income households.

Why are we still paying SST and is it because the government is broke?

Not quite. Only one in six Malaysians pays income tax, most at 3 to 4 per cent of salaries, insufficient to fund services and development. SST helps broaden the base.

Sales tax applies at manufacturer or importer level, while service tax is visible on dining, subscriptions, and hotel stays. Though consumption taxes are regressive, Malaysia’s SST exempts essentials and focuses on discretionary items. Expansions in 2024 and 2025 also capture foreigners and businesses.

Small businesses are protected with higher thresholds, ensuring compliance does not weigh on micro enterprises. Ultimately, SST ensures those who spend more contribute more.

All these reforms, and all I got is RM100 one off Sara assistance?

In 2024, RM67.4 billion went to subsidies and social aid. Revenue is recycled into the economy through salaries, procurement, transfers, and infrastructure.

The RM100 Penghargaan Sara, costing RM2.2 billion, symbolises early fiscal gains. It complements existing programmes like monthly Sara, quarterly STR, and fuel and electricity subsidies. Total cash aid this year exceeds RM15 billion.

RM100 may feel small, but it is part of a wider effort to provide targeted relief while ensuring long term fiscal stability.

But why don’t I feel better off?

Structural change takes time. For decades, Malaysia relied on low cost models that held wages flat. Assistance like STR and Sara provides short term relief, but the real goal is long term restructuring.

Beyond fiscal reform, the government is pursuing industrial upgrading and global investment missions. Frameworks like the NETR, NSS, and NIMP 2030 target high value industries, while initiatives such as SejaTi Madani and Kampung Angkat Madani close development gaps nationwide.

The full impact will take time, but the direction is clear: a more competitive, fair, and future ready Malaysia.