Budget 2025: A Budget of care and pragmatism

1 November 2024

PENAMPANG: Malaysia's 2025 Budget, the largest to date at RM 421 billion, was presented by Prime Minister Datuk Seri Anwar Ibrahim on 18 October 2024. Widely described as a caring and pragmatic budget, it addresses the needs of diverse sectors and communities across the nation. This was echoed by Datuk Stephen Sampil, Deputy President of the Momogun National Congress and Vice President of the Kadazandusun Chamber of Commerce and Industry Malaysia.

"The proposed Budget extends benefits to all—be it the people on the street, small entrepreneurs, farmers, workers, civil servants, or the various state governments," Sampil remarked.

Sampil further praised the Madani government's proactive measures in managing the national debt, now at RM 1.2 trillion or 65% of Malaysia’s GDP. For the first time, Prime Minister Anwar has made a bold commitment to reducing the fiscal deficit to 4.3% of GDP by 2024. To achieve this, the government has introduced new taxes such as expanding the scope of the Sales and Services Tax (SST), and initiated subsidy rationalization.

For Sabah, Budget 2025 presents both opportunities and challenges. The state has received the highest budget allocation of RM 6.9 billion. Additionally, in alignment with the Malaysia Agreement 1963 (MA63), Sabah and Sarawak will receive an annual grant of RM 600 million.

This increased funding is expected to accelerate Sabah’s economic development through numerous projects. However, Sampil emphasized the importance of effective implementation, especially since the Trust Fund proposed by the Sabah State Government was rejected by the federal government.

"The current implementation framework needs a thorough review to ensure projects are completed on time," he stated.

Sampil suggested that funds be allocated to the state by February each year. This, he noted, would enable more efficient execution by government agencies, aiming for an 85-95% fund utilization rate, a significant improvement from the current 60-65%.

The new minimum wage of RM 1,700 is a welcomed relief for workers in Sabah, providing an increase of RM 200 or 14%. This is especially helpful given Sabah's higher cost of living. However, most employers in the state are micro, small and medium enterprises (SMEs), which constitute 98.6% of Sabah's businesses.

Already grappling with high production costs, limited markets, and low productivity, many MSMEs may struggle with this wage increase. It could potentially lead to business closures or job cuts, hindering MSME growth in the region.

To mitigate this, Sampil proposed that Sabah’s MSME earning potential be enhanced by creating a more supportive business environment, improving financial access, and offering other assistance programs. By increasing their profitability, these businesses will be better positioned to meet the new wage requirements.

Sampil also lauded the Madani government for continuing the Sejati Madani program, which has received RM 1 billion in funding. This program is designed to empower rural communities by engaging them in income-generating activities to raise their standard of living.

With 70% of Sabah’s population residing in rural areas, this initiative is crucial. It provides funding for five core socio-economic activities that leverage local resources and skills, creating employment and enhancing entrepreneurial talent at the village level.

The continuation of the Tamu Desa program, championed by Datuk Ewon Benedick, also received Sampil's praise. Launched in 2024, the program funds the construction of tamu (market) facilities in small towns and rural areas, providing villagers with safe, stable spaces to sell their goods. Before the program, villagers often had to rely on makeshift structures along roadsides. The Tamu Desa program not only provides them with safer facilities but also opens avenues for income generation, employment, and poverty reduction in rural Sabah.

As initiatives like Sejati Madani and Tamu Desa increase output, Sampil emphasized the need for a well-coordinated promotion and marketing strategy. He encouraged empowering rural entrepreneurs with digital tools to improve cost-effective production, processing, and distribution.

In essence, Budget 2025 stands out as a thoughtfully crafted budget that aims to meet the needs of every stakeholder across Malaysia. By addressing fiscal sustainability, rural empowerment, wage adjustments, and support for SMEs, the budget balances care and pragmatism in guiding Malaysia towards a more sustainable and inclusive future, Sampil concluded.