Productivity, Not Handouts, Essential to Curb Rising Cost
The Rising Cost of Living
The rising cost of living in Malaysia, from surging food prices to increased housing costs, continues to put a strain on household budgets, leaving many struggling to make ends meet.
A Dual Strategy
In response, the government has introduced a dual strategy of immediate relief and long-term reforms to foster financial security. With these measures, the government hopes to ease financial burdens and promote economic mobility. However, their success will depend on a results-oriented approach.
Immediate Relief for Vulnerable Groups
To help those most in need, Putrajaya has rolled out aid in the form of cash and basic necessities such as the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA). With an unprecedented allocation of RM13 billion, this will give cash assistance to nine million Malaysians, equivalent to 60% of the adult population. Under SARA, a component of the STR, approximately 4.1 million vulnerable households will receive RM100 a month each to pay for essential items.
Handouts Alone Are Not the Solution
However, history and economics have shown that handouts alone do not offer long-term solutions to challenges such as the rising cost of living. Handouts add liquidity in the economy and enhance purchasing power but there is no corresponding increase in productivity. This leads businesses to raise prices, thus contributing to higher inflation.
Major Boost Needed
Learning in-demand skills is key to building long-term resilience. To that end, the government has allocated RM7.5 billion in technical and vocational education and training (TVET) programmes, which in 2023 boasted a 96.5% employability rate — compared with 88.3% among higher education graduates. This also opens the way to higher-paying jobs in emerging sectors such as AI, green technology and advanced manufacturing.
Prioritising Sustainability and Digitalisation
Central to the effort to strengthen the workforce is a focus on sustainability and digitalisation. To rope in private sector participation, government guarantees and rebates on interest rates are offered to companies that adopt green technology under the RM1 billion Green Technology Financing Scheme. The savings from reduced borrowing costs and operational expenditure is expected to be passed on to consumers, thereby keeping prices down while boosting productivity.
Ensuring Food Security and Affordable Housing
Given how critical food and housing are, nearly RM4 billion has been set aside to meet these basic needs. A sum of RM300 million will go into funding federal-state collaboration to enhance production of staples like rice and fish. Combined with RM2.78 billion in subsidies for farmers and fishermen, these measures should stabilise local food prices while reducing reliance on imports.
Conclusion
A comprehensive plan that offers both short-term relief and long-term solutions is now in place. Structural reforms ensure that the emphasis is on sustainable solutions over temporary fixes. However, Malaysia also has a track record of introducing ambitious policies only to be held back by implementation gaps such as inconsistent oversight, weak coordination and ineffective communication. Bridging the gap between planning and execution will enable Putrajaya to overcome current obstacles and build a more resilient, prosperous economy for the future.
FAQs
Q: What is the government’s strategy to address the rising cost of living?
A: The government has introduced a dual strategy of immediate relief and long-term reforms to foster financial security.
Q: What are the key components of the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) programmes?
A: The STR and SARA programmes provide cash assistance to nine million Malaysians, equivalent to 60% of the adult population, and approximately 4.1 million vulnerable households will receive RM100 a month each to pay for essential items.
Q: What is the focus of the government’s education and training initiatives?
A: The government has allocated RM7.5 billion in technical and vocational education and training (TVET) programmes to equip Malaysians with in-demand skills, which will open the way to higher-paying jobs in emerging sectors.
Q: How will the government ensure food security and affordable housing?
A: The government has allocated RM4 billion to meet these basic needs, including funding federal-state collaboration to enhance production of staples like rice and fish, and subsidies for farmers and fishermen to stabilise local food prices and reduce reliance on imports.