RM600 cash aid for single Malaysians, revision on the minimum wage, petrol subsidy removal, increased taxes on the mahakaya - these are the top headlines of Budget 2025, which came in at RM421 billion.

It is (yet again) the biggest expenditure from the government, 6.9% larger than 2024’s budget at RM393.8 billion.

The education, finance, and health sectors are the 3 main recipients, totaling RM173.3 billion, or 41% of the total budget.

Key Highlights

Sales and Service Tax (SST)

• SST will be expanded by mid 2025 and implemented “progressively”.

• Basic food items will be exempted but premium imported goods (ie. salmon and avocado) will be taxed.

• Govt will not bring back GST until the minimum wage rises to RM3,000.

Dividend Tax (targeted at the Mahakaya)

• 2% tax on dividend income exceeding RM100,000, effective YA2025.

• Exempted for EPF, PNB (like ASB etc) and dividend income outside Malaysia.

• With Maybank’s yearly dividend of 6-7%, you would need to hold ~160,000 Maybank shares (worth RM1.70 million) to be affected by this new tax.

Salaries and Wages

• Minimum wage raised to RM1,700 from RM1,500, effective Feb 2025 (companies with fewer than 5 workers will be given a time extension until Aug 1).

• Wage guidelines for all employment sectors (starting salary of production technician is RM2,290, a mechanical engineer is RM3,380, and a creative content design professional is RM2,985).

• Progressive Wage Policy (PWC), which began in June, will continue to be implemented.

Subsidy Rationalization

• Targeted subsidy for RON95 will be enforced by mid-2025.

• T15 (top 15%) to be affected by this rationalization, while 85% of the population will still receive fuel subsidies.

• Govt is considering MyKad verification to pump RON95.

Read the full list of details here.

What’s Good (and Bad) For Me?

Increased Individual Tax Reliefs (Good):

Increased Property Tax Relief for First-Time Buyers (Good):

More Cash Aid (Good):

• Single individuals to receive RM600 under the Sumbangan Tunai Rahmah (STR), up from RM500 this year.

• Cash boost expected to benefit 9 million recipients (60 per cent of the adult population).

• Additional cash of RM100/month to 4.1 million households under the Sumbangan Asas Rahmah SARA programme.

• Monthly cash aid to be credited to recipient’s MyKad starting April 2025 (can be spent on over 600 stores and supermarkets nationwide).

You can check your eligibility for STR and SARA here.

Bonus Retirement Savings for Informal Workers and Freelancers (Great):

• EPF i-Saraan matching scheme has been increased from 15% to 20%.

• Subject to an annual limit of RM500 or lifetime limit of RM5,000.

• To encourage informal workers and those without a fixed income to contribute to their retirement savings.

^ If you’re not employed or have kids that are aged 14 and above, please apply for i-Saraan and start contributing to EPF to build your retirement savings. You’ll be eligible for tax reliefs and a 20% bonus for your contributions.

Sales and Service Tax Increase (Bad):

• Premium imported food items like salmon and avocado will see a sales tax increase (meaning that your Poke bowls are likely to get more expensive).

How are investors and the rakyat reacting?

Investors, analysts, and economists are generally satisfied on Budget 2025.

Here are some of the top comments:

“Budget 2025 has significant impact on Selangor’s economic growth, infrastructure,” - Menteri Besar Datuk Seri Amirudin.

“The government’s measures and incentives under Budget 2025 prioritize the nation’s competitiveness, especially in investment and business destination as a strong trading partner,” - CGS Malaysia.

“Ordinary Malaysians the real winners of Budget 2025,” - Bernama.

“Despite financial challenges and global unrest, the budget has progressed according to the Madani Economy framework,” - Nga Kor Ming.

The Rakyat, meanwhile, has a different viewpoint on some of the policies in Budget 2025.

For starters, some are complaining about the minimum wage increase to RM1,700, stating that RM200 is too small and inconsequential.

Next, the subsidy removal for the Top 15% (T15) has drawn a lot of criticism, as data by DOSM revealed that you only need a monthly household income of >RM13k to be classified as this group.

For more details on Budget 2025, click here.

That’s all for this week’s newsletter!

Receive daily updates from us. Miss nothing from the markets.

By joining our WhatsApp group, you’ll receive spam-free notifications on all things finance plus thoughts from financial experts: CFP Hann Liew and Economist Sani Hamid.

✅ 200+ people have joined.

✅ We don’t spam.

✅ It’s only $0.25/week.

✅ Pay monthly, cancel anytime.