PETALING JAYA: Economist Prof Geoffrey Williams said Malaysia’s middle-income earners, the M40, have once again been left out in the cold following the tabling of Budget 2026, adding that stagnant wages, rising costs and shrinking purchasing power continue to batter the “forgotten middle”.
He said the latest budget offers “little to anyone” in terms of raising incomes or narrowing inequality, and almost nothing for the middle class.
“The government’s cash aid under the Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah programmes was kept at last year’s amount, and with inflation expected at about 2%, purchasing power would fall.”
He also said while moves such as raising the minimum wage may narrow inequality, the M40 gain nothing from such interventions.
“There is nothing in Budget 2026 to change this. To help everyone, the Sumbangan Asas Rahmah scheme should be made monthly with RM100 available to all. Otherwise, schemes such as Budi95 or tax rebates are not really helpful.
“Most M40 are not in the income tax bracket, so rebates do not matter to them.”
He added that stagnant wages are a structural problem, not one caused by poor productivity
or skills deficits.
“Since wages are not related to productivity, improvements in skills training would not help. Only stronger employment rights, trade union representation or redistribution policies would make a difference.”
He said if conditions persist, more skilled M40 workers may turn to gig work or side jobs
to survive, weakening Malaysia’s formal employment base.
“If Malaysia’s middle-income group continues to weaken, spending power would drag, slowing growth and deepening dependency on government support, ultimately lowering living standards.”
Meanwhile, Universiti Kuala Lumpur Business School economist Assoc Prof Dr Aimi Zulhazmi Abdul Razak said Budget 2026 must be viewed as part of a broader shift towards fully targeted subsidies on essentials such as fuel, electricity, diesel and liquefied petroleum gas.
“The recent budget focuses on implementing targeted subsidies on a full scale in 2026, following various preparatory measures in 2025.”
He said the success of this approach depends on accurate data from the government’s centralised income database, Pangkalan Data Utama.
“This is crucial to identify the financial burden of the M40, which may be masked by gross income data.
“Net income is not revealed, and this is especially important for those in urban areas facing high housing, food and childcare costs.”
He added that more refined data in future budgets could help deliver support effectively.
“Maybe Budget 2027 would improve the use of refined data to provide more effective subsidies to the M40.
“Nonetheless, Budget 2026 marks a positive step in data utilisation as the government continues to adopt digital technology under the 13th Malaysia Plan.”
He said the full-scale rollout of targeted subsidies next year is expected to yield significant fiscal results, particularly in reducing the government’s deficit to 3.5% of GDP.
The national budget, tabled in Parliament last Friday by Prime Minister Datuk Seri Anwar Ibrahim, carries a RM470 billion allocation with a strong focus on fiscal discipline, targeted aid and support for lower-income groups.
While the B40 community received most of the direct financial assistance, many middle-income Malaysians say they are still bearing the brunt of rising costs with little help in sight.
