Economists call for social protection body, stronger consumer power in 2026 Budget

SHAH ALAM – Malaysia needs a dedicated social protection institution to shield the B40 and other vulnerable groups, as even the national minimum wage of RM1,700 remains below the poverty line of RM2,000.

Economists said the 2026 Budget to be tabled by the Finance Ministry in Parliament on Oct 10, should establish a long-term endowment fund, strengthen consumer institutions and address distorted prices that continued to burden households.

Malaysia University of Science and Technology economics expert Professor Emeritus Dr Barjoyai Bardai said a new institution was crucial to provide systematic support for vulnerable groups.

“The national poverty line stands at RM2,208, while the minimum wage is only RM1,700. In other words, the minimum wage itself falls below the poverty line.

“The government should create an endowment fund, seeded with annual contributions of around RM20 billion to 30 billion. Its returns could then be channelled directly to assist vulnerable groups,” he told Sinar Daily.

He also stressed the need for stronger consumer institutions to protect households from unfair practices.

Taxes and levies, he said were often shifted onto consumers rather than absorbed by businesses, which meant the public ended up paying costs they should not.

Barjoyai pointed out that consumer power remained underutilised, even though the nationwide boycott of Israeli-linked products had shown its potential to pressure markets.

Affordability of essentials was another pressing concern, he said, noting that housing, vehicles and food had all risen sharply compared to incomes.

“For example, while a graduate today might earn RM3,000, a basic house costs around RM300,000, making it far less affordable than in previous generations,” he said.

Meanwhile, Universiti Malaya Social Wellbeing Research Centre research fellow Dr Zulkiply Omar said slower wage growth in recent years had weakened purchasing power.

He stressed that Malaysia’s open economy meant prices for goods and services were tied to global trends and shifts in currency value did little to cushion households.

“Social assistance, such as targeted cash transfers, is the most effective budgetary measure for increasing purchasing power quickly,” he said, adding that such measures should be complemented by long-term productivity reforms and institutional strengthening.

Malaysian Future Institute honorary fellow Datuk Dr Madeline Berma said tax measures could also be used to support struggling households.

She said if strengthening purchasing power was a government priority, one of the most immediate measures would be to raise the personal relief ceiling for B40 and M40 taxpayers.

She added that such a move would ease daily pressures on lower- and middle-income families while complementing broader reforms.

"Over time, structural changes to the labour market and food supply chains would be needed to ensure purchasing power keeps pace with living costs," she said.

The 2026 Budget will be the fourth in a series of Madani budgets and the first under the 13th Malaysia Plan (2026–2030).