By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
Malaysia’s recent announcement of a one-off RM100 cash aid to every adult citizen is not just a populist gesture—it could be the foundation of a historic policy shift that positions the country as a global pioneer in welfare reform.
That is the assessment of economist Professor Geoffrey Williams, who describes the initiative as a “pilot for a Universal Basic Income (UBI)” that could shape Prime Minister Anwar Ibrahim’s legacy.
In a detailed response to DagangNews.com, Prof Williams lauded the universality, simplicity, and fiscal responsibility of the initiative. Under the RM2 billion Sumbangan Asas Rahmah (SARA) package, announced during Anwar’s National Appreciation Address on July 24, every Malaysian aged 18 and above will receive RM100 credit via their MyKad—regardless of income level.
“It has all of the features of a Universal Basic Income because it is a cash transfer, to individuals not households, without any conditions and available universally to all Malaysians without the need to apply,” said Prof Williams.
A Modest Sum, But A Transformative Impact
While RM100 may seem small, Prof Williams emphasized its meaningful impact on low-income groups:
For someone earning RM1,700 (the new minimum wage), it represents a 6% income boost.
For a family of four adults in the B40 group, it adds up to RM400—enough to cover basic food expenses.
When multiplied across 22 million adults, the RM2 billion injection could generate a RM6 billion boost to the economy through consumption and multiplier effects.
“This will particularly help SMEs in local communities,” he noted. “It is a small stimulus that supports growth in the second half of the year, which is expected to be weaker.”
A Step Toward Structural Reform
Prof Williams believes the universal payout is more than a temporary relief—it’s a model for long-term social reform.
“The most important thing is to learn lessons about the impact so that Malaysia can move to a regular monthly payment. Hopefully this can be announced in Budget 2026,” he said.
By eliminating the administrative complexity of distinguishing between “deserving” and “undeserving” recipients, a universal approach reduces costs and inefficiencies in welfare distribution. “Later changes can be made to make it more progressive,” he added.
No Fiscal Risk, Thanks to Subsidy Reallocation
The RM100 payment is fully funded from savings generated through the government’s subsidy rationalisation programme. This, Prof Williams argues, ensures the initiative will not increase public debt or harm Malaysia’s fiscal position.
“It is a transfer of money from one use to another. If it supports growth, then GDP will be higher than 4%, which helps the debt and deficit ratios stay on target,” he explained.
He also praised the targeting mechanism via MyKad, which ensures that regulated outlets maintain price controls and prevent profiteering.
Petrol Price Cuts and Fiscal Balance
Commenting on the drop in RON95 petrol prices to RM1.99 per litre under the new targeted subsidy plan, Prof Williams welcomed the move but cautioned that it offers only marginal relief.
“If RON95 prices followed market rates, they would rise by more than RM1 per litre—unaffordable for many, especially M40 groups,” he said. “We still need a form of subsidy to ensure petrol remains accessible for the poor.”
Broader Economic Picture: Sound Fundamentals, But Risks Remain
Williams also acknowledged Malaysia’s recent economic achievements:
- GDP growth of 4.4% in Q1 2025, with Q2 projections at 4.5%.
- The ringgit’s 5% appreciation, inflation at a 52-month low of 1.1%.
- Record investment approvals and improved global competitiveness rankings.
“These are signs of strong fundamentals,” he said. However, external risks such as geopolitical tensions and trade disruptions—particularly the U.S. reciprocal tariffs—remain a concern.
“The new U.S. tariff deals with Japan, Indonesia, the Philippines, and Vietnam place Malaysia at a disadvantage. We must pursue zero-tariff policies and reduce non-tariff barriers to stay competitive,” he warned.
Living Wage and Poverty Eradication: Room for Innovation
Responding to the government’s directive for GLCs and GLICs to pay a minimum RM3,100 wage, Prof Williams described it as positive but difficult to replicate across the private sector.
He proposed a “reverse income tax” model—where workers earning below RM3,100 receive government tax credits to supplement their income—as a more practical and scalable solution.
On poverty eradication, he acknowledged progress with nearly 150,000 households lifted out of hardcore poverty but stressed the need for sustainable income policies beyond cash aid.
A Pilot with Global Implications
If Malaysia builds on this one-off universal transfer, it could become the first country in the world to implement a full Universal Basic Income.
“It may seem small, but this is a significant step. If turned into a monthly programme, it could be a game-changer in global social welfare policy,” Prof Williams concluded.
As Budget 2026 looms and the 13th Malaysia Plan (RMK-13) is set to be tabled on 31 July, the world will be watching whether Malaysia chooses to institutionalize what could be one of the most ambitious social policy experiments of the decade.
