Subsidy cuts, tax reforms set to reshape Malaysia’s economic landscape, say experts
The country’s record budget is expected to drive fiscal consolidation, but concerns over inflation and long-term impacts remain
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[KUALA LUMPUR] As Malaysia rolls out its largest budget on record, phasing out subsidies and introducing broader tax measures, market watchers anticipate rising inflationary pressures while maintaining optimism about the country’s economic outlook.
Their comments followed Prime Minister Anwar Ibrahim’s announcement of a larger RM421 billion (S$128 billion) budget for 2025 last Friday (Oct 18), with government revenue projected to grow 5.5 per cent to RM339.7 billion, driven by higher tax collections.
A key pillar of Budget 2025 is the shift to targeted subsidies, designed to channel support directly to lower-income groups while phasing out benefits for higher-income earners – a decisive move towards greater fiscal responsibility.
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