Malaysia's fiscal predicament

Government announced MyKad and drivers' license will be used to limit subsidised Ron 95 petrol to 300 litre per month commencing September 30th. Beyond 300 litre, the petrol price will not be subsidised. 

Rafizi, who is in favour of targetted subsidy using the RM85 million spent PADU database, is obviously sceptical of MOF-preference for subsidy for all Malaysians. Naturally, there will be various issues raised, including 300 liter allocated as not enough. 

Be that as it may, cutting subsidy is one of the textbook options available to elevate fiscal deficit, which include high public debt-to-GDP ratio (64.6% for 2024 from about 30% in 2000s), over-reliance on petroleum revenue, limited tax base and increasing expenditure for public services.

Malaysia has an endemic fiscal history in which cycles of stimulus during crises, followed by consolidation could never fully achieve balance. It has structural challenges of subsidies, narrow revenue base, and commodity dependence made deficit a permanent feature. 

Growing the economy is another possible option, but historically, pro-cyclical nature of its economic sectors depended on expansionary policy to attain growth and it compromised fiscal consolidation. 

Only outstanding strong growth and political will could redress the fiscal deficit and put it high up on the national agenda. To do so, it needs policy innovation, economic leadership and relentless effort.

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Lesson from Indonesia for Malaysia

Economic insecurity means political danger

By Liew Chin Tong / theedgemalaysia.com

17 Sep 2025, 12:00 pm

The recent protests in Indonesia expose a serious socioeconomic root cause: millions of people work in the informal sector, especially as gig workers, and face low wages as well as the lack of opportunity in the formal sector.

And a day before a young Gojek rider Affan Kurniawan was killed during one of the Jakarta protests, the Malaysian Parliament passed the first-ever dedicated gig worker legislation.

The Gig Workers’ Bill 2025 mandates contribution to social security funds and creates a form of tribunal to handle the grievances of gig workers. Human Resources Minister Steven Sim and the Madani government deserve compliments for this pathbreaking action.

The consensus among Members of Parliament (MPs) is that the government should strengthen protections for gig workers while also expanding access to better-paying, stable jobs for all Malaysians beyond the gig economy.

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Bias allegation against DEI-claimed Sumitomo Malaysia

Donald Trump's "Liberation Day" tariff was meant to protect U.S. industry, punish foreign exporters, and raise revenue, but it was done without consideration to consumer welfare, livelihood of workers in the global supply chains, and sensitivity of low-income households to price increases. 

Reciprocal tariff severed international cooperation and goodwill by alienating allies and trading partners. As a result of the inhumane manner it was implemented, the tariff policy led to domestic cost burden, pushback on US businesses, retaliation from trading partners, legally and economically unenforceable, and risk of global isolation. 

This highlights the problem with trade or business that over-focus on narrow economic and business objectives without consideration for social, cultural and environmental expectations. 

For companies operating in a developing country and sensitised environment such as Malaysia, it need be aware of the national aspirations and extend beyond the mandated corporate governance. 

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Transforming Tabung Haji: Obviously Rashid Hussein not learned from his past

TH chairman Tan Sri Abdul Rashid Hussain outlined his vision for the institution's long-term financial sustainability with a proposed revision of the Tabung Haji Act 1995 (Act 535). [The details in the Business Times report reproduced at end of this posting.] 

He is suggesting reforms to align with TH's operation by strengthening its depositor base, improving cost-of-fund management, and regulatory safeguards for long-term investments. The gist of his transformation is to turn TH from a syariah-based savings institution into a full fledged Islamic investment company. 

Naturally it is appealing to bankers conversant with such terms as asset-liability mismatch, cost of fund and pursuit for "competitive" return. And there is a professor fascinated with digitalisation, and AI to the prospect of effectively investing in Bitcoins and Stablecoins. 

But it is not unique. 

Rashid is duplicating his rise and fall path as a former securities salesman from Singapore, who established RHB by the rapid growth of acquiring D&C and Kwong Yik Banks. 

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