Author name: insap

In the intricate geopolitical arena of Southeast Asia, ASEAN has long been positioned as akey player. ASEAN’s leadership often invoked in international summits and diplomatic gatherings represents not only symbolism but also the real, albeit subtle, influence this diverse coalition of member countries wields within the global diplomatic architecture. Particularly in the context of the South China Sea disputes and with Malaysia now officially ASEAN chair, ASEAN’s role as a mediator and stabilizing force will be rigorously tested.

Recent data from the Department of Statistics Malaysia (DOSM) released on October 2024 shows that the consumer price index (CPI) recorded a slight decrease, with September’s monthly inflation rate easing to 1.8% down from 2.0% in July. This cooling inflation rate might seem like a light at the end of a long tunnel of rising costs for the average Malaysian, especially considering the high inflation period following the COVID-19 pandemic. However, a lower inflation rate often leads to misunderstandings about what it actually means for prices and purchasing power.

In the recent Budget 2025, the Malaysian government announced an expanded SST scope to cover more services and non-essential goods beginning 1 May 2025. However, this announcement with the specifics of the new SST scope remains unclear, causing confusion among businesses and tax professional communities. Most importantly, average Malaysians remain unaware of how this new scope will upset their cost of living and purchasing power.

The Prime Minister and Finance Minister YAB Dato’ Seri Anwar Ibrahim announced the budget for 2025 and tabled a total allocation of RM421 billion.1 This represents an increase of RM27.2 billion compared to the previous year’s Budget 2024, RM393.8 billion. This is the first time in Malaysia’s budget history that the total allocation has exceeded RM400 billion. The government has allocated RM64.1 billion specifically for the education sector which became the sector that received the highest allocation in Budget 2025. This marked an increase from the RM58.7 billion allocated in 2024.2 With the Ministry of Education receiving the highest allocation in history, it’s clear that education is a top priority.

INSAP appreciates the Ministry of Finance’s commitment to supporting Malaysia’s elderly population, with the 2025 budget allocating RM1 billion (similar to last year) and expansion of cash aid programs. However, temporary measures are insufficient. With the growing number of Malaysians aged 65 and older, we urge the government to consider long-term, proactive strategies, including the proposed life cycle approach to social protection. Comprehensive reforms and sustained budget commitments are essential to effectively address the challenges of an aging population.

The recent announcement of a 2% tax on dividend income exceeding RM100,000 annually, introduced as part of Malaysia’s Budget 2025, has sparked concern among SME owners and investors alike. Coming into effect on January 1, 2025, this policy is a departure from Malaysia’s previous tax-free dividend environment, under which shareholders received dividends exempt from personal tax obligations. While ostensibly a minor change, this tax is poised to have a pronounced impact on small and medium-sized enterprises (SMEs) and their owners.

As Malaysia faces persistent challenges such as widening income inequality, the rising cost of living, and increasing global uncertainties, the need for effective solutions has never been more pressing. The upcoming National Budget 2025, set to be unveiled on 18 October 2024, arrives at a pivotal moment for the nation. With Malaysia at a critical crossroads, this budget is expected to redefine the country’s economic trajectory. Among the key areas of focus is tax reform, which holds the potential to boost national revenue while addressing societal needs and fostering a more equitable distribution of wealth.