KUALA LUMPUR: The government will roll out a RON95 subsidy programme in the second half of 2024 (2H24), as part of its targeted subsidy programme.
Economy Minister Rafizi Ramli said that a country where the top 20 per cent (T20) receive 53 per cent of blanket fuel subsidies is neither a sustainable model, nor an equitable one.
"These efforts are in line with the government's central position of widening the fiscal paradigm we work in. "Given that our public finances ran a fiscal deficit of more than five per cent for three consecutive years, we must find new avenues to mobilise our resources and reduce wastages within the system," he said at the National Economic Outlook Conference (NEOC) today.
Rafizi added that sidestepping issues of duplication enables the government to take a decisive step away from previous administrations.
He said in 2024, the current administration will switch gears from policy curation towards policy implementation.
This kicks off with the establishment of central database hub (Padu) in January, which gives access to granular data necessary to implement targeted programmes such as subsidy rationalisation or social welfare reform.
Rafizi said another unavoidable aspect of exploring new avenues to mobilise resources involves addressing revenue inadequacy by increasing the country's tax collection.
"Spending more money than we have is never conducive to a dynamic, sustainable state," he added.
On the progressive wage policy which is due to tabled in parliament within three days, Rafizi said it was shocking to him that the nation's median wage is only RM11 above the poverty line.
"Due to the implementation of the minimum wage, as well as the economic conditions and the country's economic response, we have a unique situation where the salaries for young workers entering the workforce or semi-skilled workers who have been working for five or ten years are difficult to increase.
"Therefore, the median salary for our workers is only around RM2,600, which is just RM11 higher than the family poverty line of RM2,589. "As a result, the government believes that we need to complement the minimum wage policy, which protects lower-wage workers and establishes this wage floor, with another policy that can boost and encourage salary increases for other groups that are not subject to the minimum wage," he noted.
Nevertheless, Rafizi said the government will remain mindful that wage growth must be productivity-driven through upskilling efforts.
He added that this has been emphasised by the five High-Growth, High-Value (HGHV) sectors identified in the mid-term review, where the government wants to focus on creating a greater proportion of technological-frontier jobs.
On economic outlook, Rafizi said the government aims to keep economic reforms progressing smoothly in 2023, setting the groundwork for a better global economic situation from 2024 onward.
He added that despite potential risks, there's a general agreement that uncertainties, especially those linked to US monetary policies affecting currency rates, are expected to diminish by 2024.
"Once this occurs, along with the positive effects of the 2023 structural reforms, Malaysia will be in a strong position to take full advantage of the improving global economic conditions in 2024 and beyond," he said.
Additionally, Rafizi said the higher for longer interest rate environment is set to peak in 2024, offering a path for Bank Negara Malaysia to gradually begin reducing the overnight policy rate.
He said the market and businesses will respond in kind to this stimulus and deal flow will grow accordingly.
"Our biggest trading partner, China, is expected to rebound next year, as private sector investments are set to increase.
"This will result in greater demand for our goods and services, which will bolster foreign direct investment (FDI) and exports. Most importantly, a strong Chinese economy will have a stabilising effect on our ringgit due to our strong linkages," he added.
Overall, Rafizi said the culmination of these difficult structural reforms, an easing macroeconomic environment, and a stronger fiscal base will ensure Malaysia is in good stead to achieve next year's expected five per cent growth rate.