Latest news with #StatisticsDepartment
The Sun
3 hours ago
- Business
- The Sun
Fomca warns M40 squeezed and excluded from current aid framework
PETALING JAYA: Malaysia's middle class is being squeezed out of national policymaking, despite bearing the brunt of rising costs and shrinking financial buffers, says the Federation of Malaysian Consumers Associations (Fomca). Fomca chief operating officer Nur Asyikin Aminuddin said while public aid and subsidies are typically directed at the B40 group, the M40 – those earning between RM5,000 and RM10,000 monthly – are increasingly caught in a financial bind. The middle class is battling inflation, rising living costs and fading financial safety nets. 'They're too 'rich' for aid but not rich enough to withstand economic shocks. Their commitments – housing loans, education, insurance and care for ageing parents aren't factored into current income-based assessments. They're trapped in survival mode.' Nur Asyikin said Fomca has received more complaints from M40 households, especially since the Sales and Service Tax (SST) was raised to 8%. She said it has driven up service costs in logistics, repairs and professional fees – putting further pressure on household budgets. 'M40 families are facing higher prices on essentials like food, transport and utilities. Maintaining a decent standard of living in urban areas is increasingly difficult.' One alarming trend, she noted, is the rising number of families surrendering or letting health insurance policies lapse. 'Premiums have become unaffordable as basic needs take precedence. Any emergency – illness, retrenchment – leads to cost-cutting and insurance is often the first to go. With private healthcare costs rising, insurance is no longer a luxury but a necessity. Yet, many are underinsured or uninsured, forced to rely entirely on the overstretched public system.' Childcare and housing, she added, are critical pressure points. 'In urban areas, early education and daycare can consume 30% to 40% of household income. Some parents cut working hours or rely on unregulated caregivers, affecting both income and child development.' As for housing, many so-called 'affordable' homes fall short, said Nur Asyikin. 'People think they're buying stability, but end up in buildings with broken lifts or overcrowding. Home ownership should come with dignity and safety, not just a roof.' Fomca is calling for a major policy shift – away from rigid income categories like B40, M40 and T20 – to a more nuanced, needs-based framework. Specifically, it urges the adoption of the Reasonable Basic Living Expenses (Perbelanjaan Asas Kehidupan Wajar or PAKW) tool, developed by the Statistics Department. 'PAKW calculates household well-being based on actual spending needed for a dignified life, including food, housing, healthcare, transport and childcare, not just income. 'It adjusts for location, family size and life stage, offering a clearer picture of who truly needs support.' Nur Asyikin said wider PAKW adoption across ministries could make social programmes more effective, especially for urban, middle-income households. Fomca also recommends breaking down the M40 into lower and upper tiers and publishing regional PAKW data for more localised policymaking. 'There is a growing class of 'invisible poor' within the M40 who don't show up in statistics simply because their income sits just above the cut-off. 'The government must realise that well-being isn't just about surviving, it's about helping families live with dignity.'
The Sun
3 hours ago
- Business
- The Sun
Fomca calls for major policy shift
PETALING JAYA: Malaysia's middle class is being squeezed out of national policymaking, despite bearing the brunt of rising costs and shrinking financial buffers, says the Federation of Malaysian Consumers Associations (Fomca). Fomca chief operating officer Nur Asyikin Aminuddin said while public aid and subsidies are typically directed at the B40 group, the M40 – those earning between RM5,000 and RM10,000 monthly – are increasingly caught in a financial bind. The middle class is battling inflation, rising living costs and fading financial safety nets. 'They're too 'rich' for aid but not rich enough to withstand economic shocks. Their commitments – housing loans, education, insurance and care for ageing parents aren't factored into current income-based assessments. They're trapped in survival mode.' Nur Asyikin said Fomca has received more complaints from M40 households, especially since the Sales and Service Tax (SST) was raised to 8%. She said it has driven up service costs in logistics, repairs and professional fees – putting further pressure on household budgets. 'M40 families are facing higher prices on essentials like food, transport and utilities. Maintaining a decent standard of living in urban areas is increasingly difficult.' One alarming trend, she noted, is the rising number of families surrendering or letting health insurance policies lapse. 'Premiums have become unaffordable as basic needs take precedence. Any emergency – illness, retrenchment – leads to cost-cutting and insurance is often the first to go. With private healthcare costs rising, insurance is no longer a luxury but a necessity. Yet, many are underinsured or uninsured, forced to rely entirely on the overstretched public system.' Childcare and housing, she added, are critical pressure points. 'In urban areas, early education and daycare can consume 30% to 40% of household income. Some parents cut working hours or rely on unregulated caregivers, affecting both income and child development.' As for housing, many so-called 'affordable' homes fall short, said Nur Asyikin. 'People think they're buying stability, but end up in buildings with broken lifts or overcrowding. Home ownership should come with dignity and safety, not just a roof.' Fomca is calling for a major policy shift – away from rigid income categories like B40, M40 and T20 – to a more nuanced, needs-based framework. Specifically, it urges the adoption of the Reasonable Basic Living Expenses (Perbelanjaan Asas Kehidupan Wajar or PAKW) tool, developed by the Statistics Department. 'PAKW calculates household well-being based on actual spending needed for a dignified life, including food, housing, healthcare, transport and childcare, not just income. 'It adjusts for location, family size and life stage, offering a clearer picture of who truly needs support.' Nur Asyikin said wider PAKW adoption across ministries could make social programmes more effective, especially for urban, middle-income households. Fomca also recommends breaking down the M40 into lower and upper tiers and publishing regional PAKW data for more localised policymaking. 'There is a growing class of 'invisible poor' within the M40 who don't show up in statistics simply because their income sits just above the cut-off. 'The government must realise that well-being isn't just about surviving, it's about helping families live with dignity.'
The Star
3 hours ago
- Business
- The Star
Unemployment to remain low, challenges expected
PETALING JAYA: Malaysia's unemployment rate is expected to average at below 3% this year, underpinned by increased employment and sustained job opportunities, particularly in the services sector. However, economists are cautioning that factors such as geopolitical uncertainties could certainly pose risks. Malaysia's unemployment rate dropped from 3.1% in March to 3% in April and May, the lowest in 10 years, according to the Statistics Department. Going forward, Williams Business Consultancy Sdn Bhd founder and economist Geoffrey Williams expects the country's unemployment rate to remain low. 'In the second half of this year, unemployment will be low as usual, underemployment will be high as usual and wages will barely cover rising prices for most people,' he quipped. 'In one sense, the labour market is correcting itself because people are moving more into the gig-economy, micro-enterprises, freelancing and side hustles. 'This is because formal employment is a very bad deal with low wages, bad terms and conditions and not enough flexibility,' Williams told StarBiz. Centre for Market Education chief executive officer Carmelo Ferlito meanwhile said he 'does not foresee any short-term radical change' to the country's unemployment rate. 'I think Malaysia's unemployment remains within what can be called structural unemployment and at a very low rate. 'However, we need to watch the medium-run, to see the effects of the trade war (if it will indeed happen or if it will remain on paper) and the recent decisions from Bank Negara, which may have an alternance of good and bad effects in the medium and long run.' Bank Negara cut the overnight policy rate (OPR) by 25 basis points to 2.75% at its July Monetary Policy Committee meeting. Commenting on Malaysia's job market performance so far this year, Williams noted that everything does look good. At least on paper. 'More people are joining the labour force, but this is not a good signal because they are young individuals who are dropping college to get an income for their families or taking part-time jobs to boost the household income. 'Moreover, unemployment is remaining low but underemployment has become a structural problem. People take jobs below their qualifications because they have no choice and need to support themselves and their families.' Williams also noted that wages are still low and stagnant. 'Median wages only rose by 3.4% last year to around RM3,045. This means half of the people on formal private sector contracts are essentially 'working poor'. They have a job but are still struggling to make ends meet. 'As the cost of living rises, the amount you can buy with your wage, the so-called median 'real wage', has fallen by almost 9%.' Williams said the downward pressure on wages is due to higher labour force participation by younger people and the cost of living. 'Wages are forced down and prices are rising. Also, in manufacturing, persistently low productivity means manufacturing wages have been falling in real terms since the Covid-19 pandemic.' Meanwhile, BIMB Research said the country's job market performance thus far points to rising confidence among job seekers and stronger workforce participation, supported by continued economic expansion. 'The combination of steady job creation and low unemployment suggests improved job matching, with more individuals able to find suitable employment. 'Labour-force growth persisted, bolstered by sustained demand for electrical and electronics exports and broader economic resilience.' However, the research house noted that youth unemployment remained elevated at 10.2%, despite a slight 0.1 percentage point improvement, highlighting persistent structural barriers to youth employment and labour market entry. 'Looking ahead, Malaysia's labour market is expected to maintain a steady trajectory through 2025, supported by resilient domestic demand and ongoing expansion in the services and technology sectors. 'These favourable labour market conditions are likely to bolster consumer spending and help sustain economic momentum, even as global trade headwinds persist.' However, BIMB Research said export-oriented industries may come under pressure from elevated global tariffs, which could dampen hiring activity and wage growth in the external sector. 'In this context, the recent cut in the OPR to 2.75% is expected to provide a timely boost by lowering borrowing costs, stimulating domestic demand, and encouraging private sector hiring, particularly in interest-sensitive sectors such as construction, services, and manufacturing. 'Overall, employment growth is projected to remain firm, with the unemployment rate expected to average around 3.2% for the year, reflecting a broadly stable and resilient labour market despite external uncertainties.' Elsewhere, MIDF Research also remains positive on the outlook for Malaysia's job market. 'We expect Malaysia's unemployment rate to average lower around 3% in 2025 (previous forecast: 3.1%; 2024: 3.3%), underpinned by increased employment and sustained job opportunities particularly in the services sector. 'Job creation and strong labour demand are expected to be driven by resilient domestic consumption and sustained investment activity.' However, the research house said it remains cautious that tariff-related disruptions could dampen global demand and weigh on hiring in export- and commodity-linked sectors. 'On the other hand, rising employment and steady wage growth are likely to be concentrated in domestic-oriented sectors that are relatively insulated from the impact of higher US tariffs.'
CNA
3 days ago
- Business
- CNA
Malaysia's economy grew 4.5% y/y in Q2, advance estimates show
KUALA LUMPUR :Malaysia's economy grew 4.5 per cent in the second quarter from a year earlier, official advance estimates showed on Friday, sustaining the pace of the previous quarter as strong domestic consumption and steady manufacturing growth offset a slowdown in exports. In the first quarter, gross domestic product growth grew an annual 4.4 per cent, slowing from the end-2024 rate as lower oil and gas production tempered strong household spending and a steady expansion in investments. Growth in the April-to-June period was buoyed by resilient consumer demand despite global headwinds, the statistics department said, flagging economic uncertainties driven by U.S. President Donald Trump's tariff drive. "Overall... the external components of the economy remained challenging, weighed down by surrounding tariff developments and continued global political uncertainties," Chief Statistician Mohd Uzir Mahidin said in a statement. The services sector remained the primary driver of economic growth in the quarter, growing 5.3 per cent on-year, while the manufacturing sector rose 3.8 per cent, Mohd Uzir said. Trade activity slowed in May, amid weaker demand in exports, he added. Separate data released on Friday showed exports falling for the second month in a row in June, declining 3.5 per cent from a year earlier after dipping by 1.1 per cent the previous month. Malaysia's economy grew 5.1 per cent in 2024, driven by domestic demand, record approved investments, and robust exports. Prime Minister Anwar Ibrahim said in May that this year's growth target of between 4.5 per cent and 5.5 per cent was unlikely to be met in the aftermath of the U.S. tariffs. The central bank, which earlier this month cut interest rates for the first time in five years, has also said it would have to lower its growth forecast amid risks to the export-oriented economy from tariffs and geopolitical tensions. Malaysia faces a 25 per cent tariff on its exports to the United States, unless it can reach a trade deal before August 1. Final second-quarter GDP figures are expected to be released on August 15.
The Star
4 days ago
- Business
- The Star
Mixed views on 2H25 external trade growth
PETALING JAYA: Economists are offering varying views as to whether external trade will grow in the second half of the year or 2H25 after the slight year-on-year (y-o-y)dip in May, with June's numbers scheduled to be out tomorrow. Nevertheless, they remain confident that the country can achieve a gross domestic product (GDP) growth rate of between 4% and 5% this year, although a continued slowdown is being forecast for 2026. Late last month, the Statistics Department released May's trade figures which showed that the export unit value index had nudged down 1.5% y-o-y to 148 points. Likewise, the import unit value index had also registered a fall of 1.1% to 124.8 points in May, while the terms of trade also declined by 0.5% month-on-month to 118.6 points. Professor of economics at Sunway University, Yeah Kim Leng, said that the ringgit's appreciation against the US dollar was the main cause for the marginal dip in May exports in ringgit terms, and for the seemingly modest export growth averaging 5.7% a month over the same period. With the ringgit having appreciated against the US dollar by an average increase of 7% a month in the first five months of the year, he said Malaysia's y-o-y exports in dollar terms grew by 13.1% a month, while imports expanded by 14.6% during the same period. 'With (US President Donald) Trump's tariffs delayed to Aug 1, Malaysia's export and import growth in ringgit terms is expected to revert to positive territory while maintaining double-digit increases in the US dollar,' he told StarBiz. Asia Pacific chief economist at credit insurer Coface, Bernard Aw, said that so far in 2025, the country's external trade was driven by re-exports, which made up 20% of total exports, which is in contrast to last year where re-exports shrank and domestic exports picked up the slack. Observing that re-exports rose 13.8% in January to May 2025 while domestic exports lagged with a much smaller 3.5% growth, he said this reflected the transshipment narrative as businesses try to stock up ahead of the US tariffs. Expecting export front-loading demand to taper off in the coming months as uncertainty remains high and businesses finish their stock-building, Aw said this means export performance would weaken. 'Assuming Malaysia fails to reach a favourable deal before the end of July, the direct impact of US tariffs from a 10% baseline to 25% and indirect impact on its main trading partners will weigh on the country's economic and export activity,' he said. Frederic Neumann, chief Asia economist and co-head of Global Investment Research Asia at HSBC, concurred, saying shipments are likely to cool as higher tariffs made Malaysian and other Asian goods more expensive in the United States. Even if tariffs did not climb as much as feared, he said there would still likely be a slowdown in trade as front-loading has swelled inventories, which in any event will need to be whittled down. The projected brakes on trade notwithstanding, chief economist at Bank Muamalat Malaysia Bhd Mohd Afzanizam Abdul Rashid is predicting GDP to grow by 4.1% in 2025, noting that business and consumer sentiments are expected to be cautious due to numerous factors, local and foreign. 'The impact of US levies on the global economy as well as domestic policies such as the sales and service tax, electricity tariffs, the Employees Provident Fund contribution for foreign workers and the impending RON95 subsidy rationalisation will tilt the needle. 'Having said that, while sentiment remains cautious, the economy should be able to grow as the labour market is still in full employment status along with ongoing investment activities among the private firms,' he said. Meanwhile, Neumann said that on average, Malaysia could still see a decent expansion of exports for the year, echoing Yeah's view, although he added that the annual numbers masked a sequential slowdown, while demand in the United States is shifting from front-loading to inventory destocking. He said this means that headwinds for trade could persist into 2026, especially if higher tariffs in the United States spark an economic slowdown there and across much of the world. Neumann commented: 'A positive is that lower oil prices should help cushion the impact of a global trade slowdown due to tariffs. 'Nevertheless, persistent policy uncertainty in the United States will likely mean that growth over the coming years will need to be driven more by domestic demand, especially consumption.' Coface's Aw sees the economy slowing to 4% in 2025, and 3.5% in 2026, anticipating household spending to hold up GDP growth this year. However, he said the risks to his forecast remained on the downside, before adding that if the tariff war escalates or the Middle East conflict widens regionally, global growth is likely to fall below 2%, which will impact Malaysia.
