WITH the introduction of the Madani Economy Framework in July last year, the government set ambitious goals to transform the country’s economic landscape.
The framework aims to create a sustainable, inclusive and equitable economic model by focusing on key areas such as job creation, enhancing the well-being of citizens and attracting high-value investments.
While the economy is forecasted to grow between 4% and 5% in 2024, and inflation is expected to remain manageable at around 2.0% to 3.5%, the lived reality for many Malaysians seems to tell a different story.
Despite positive economic indicators, including recent appreciation of the ringgit against the US dollar, Singapore dollar, etc., and an increase in foreign direct investment, many Malaysians are struggling with the rising cost of living.
Friends and colleagues alike have reported that everyday expenses, particularly for food, are becoming more burdensome. Even tourists from Singapore have noticed how much more expensive food has become in Kuala Lumpur.
As a freelancer, I have noticed the cost of eating out has skyrocketed in recent months. Eating at least two meals per day outside (with good nutritional value) can easily set you back RM60 in just two days, while cooking at home can stretch that same amount for around five days. This stark contrast has made it clear that many are feeling the pinch, even as economic metrics suggest improvement.
The Madani Economy Framework is centred around several key initiatives designed to uplift the economic status of the nation. These include increasing the minimum wage, promoting digital transformation and enhancing the country’s social safety net.
A significant part of this framework is aimed at creating a more equitable distribution of wealth through progressive taxation and targeted subsidies.
Additionally, the government is focusing on improving the productivity and competitiveness of local industries by providing incentives for digital adoption and green technology investments.
One of the key components under this framework is the introduction of a progressive wage model by Economy Minister Rafizi Ramli. This model aims to provide a structured wage increase for low- and middle-income earners, tying salary increments to productivity and skills development.
While this initiative is a positive step towards improving income levels, it will take time to realise its full benefits. Employers require time to adapt to this new system, and significant changes in wage structures are not expected to happen overnight.
The situation is more challenging for small and medium enterprises (SME), which form the backbone of the Malaysian economy, contributing nearly 40% to the gross domestic product (GDP) and employing almost two-thirds of the workforce.
With new regulations on e-invoicing and Environmental, Social and Governance (ESG) compliance set to become mandatory, businesses are bracing for increased operational costs. These added expenses could stifle the growth of SME, limiting their capacity to thrive and contribute meaningfully to the economy.
Furthermore, SME are still reeling from the impact of the pandemic and are struggling to keep up with the fast pace of regulatory changes.
The introduction of the ESG framework, while crucial for long-term sustainability, may require significant financial and resource investments that many small businesses are not prepared for.
It is essential for the government to provide clear guidance, support and possibly financial aid to produce sustainability reports to help these businesses navigate the changes effectively.
The Madani Economy aims to improve the standard of living through various initiatives such as job creation, upskilling and attracting high-value investments. The framework also emphasises fiscal sustainability, including subsidy rationalisation and climate transition management. However, the benefits of these reforms are yet to be fully felt by the general population.
While these measures are expected to improve productivity and economic competitiveness in the long run, immediate relief seems lacking. For instance, the government has introduced various schemes to support low-income households, such as targeted cash transfers and subsidies on essential goods. Yet, these measures are often insufficient to offset the overall rise in the cost of living, especially in urban areas where the cost of essentials has soared.
To bridge this gap, the government needs to focus not only on macroeconomic figures like GDP growth and foreign investment but also on how these translate to improve quality of life for average citizens.
Interviews and engagements with ordinary Malaysians are essential to understanding their struggles and crafting policies that address these issues effectively.
It is crucial to implement more inclusive economic reforms that consider the everyday experiences of Malaysians. These include stabilising food prices, ensuring fair wages and providing support to SME navigating new regulatory landscapes.
Structural reforms are vital for sustaining economic growth but they must be accompanied by policy measures that directly alleviate the financial pressures faced by the public.
The Madani Economy sets Malaysia on the right path, aiming to build a more resilient and competitive economic system. However, without addressing the immediate concerns of rising costs and limited wage growth, the true impact of these reforms will remain out of reach for many Malaysians.
It is time for policymakers to not only celebrate improved metrics but also to ensure that these translate into tangible benefits for all Malaysian citizens.
In short, while Malaysia may be performing well on paper, the reality for many citizens tells a different story. Only by listening to the voices of the people and implementing comprehensive economic reforms can we ensure that the prosperity of the nation is shared by all.
The writer is a freelance sustainability consultant and trainer. She occasionally comments on economic affairs as a senior fellow at the Pacific Research Centre.
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