KUALA LUMPUR, Oct 19 — Prime Minister Datuk Seri Anwar Ibrahim’s Budget 2025 is an expansionary plan aimed at sustaining growth and implementing structural reforms, according to economists.

They said the RM421 billion budget, grounded in the government’s Madani framework, ensures no one is left behind while promoting fiscal prudence.

Khazanah Research Institute chairman Nungsari Ahmad Radhi told Malay Mail, that the budget strengthens the country’s safety net, particularly for vulnerable groups.

"This is a distinctly Madani budget, focusing on the elderly, children, and the underprivileged,” he said, adding that the announcement was forward-looking, with a focus on future industries and efforts to shift Malaysia away from being a low-cost economy.

Nungsari noted the fiscal numbers are on the right track and align with the Fiscal Responsibility Act.

"The deficit target for 2025 is 3.8 per cent of GDP, down from 4.3 per cent in 2024, signalling a slower growth in government debt,” he added.

A balanced budget for all

Olive Tree Property Consultants CEO Sr Samuel Tan described the budget as fair, noting that the top 15 per cent income group (T15) will redistribute wealth through a 2 per cent dividend tax and the removal of the RM95 fuel subsidy.

"As expected, this is an expansionary budget, introducing measures to alleviate the high cost of living and improve quality of life,” he said.

Socio-Economic Research Centre executive director Lee Heng Guie said the government’s commitment to sustained growth and structural reforms was evident.

"The budget is set to boost domestic spending, helped by the recent salary adjustments for civil servants, which will also impact retirement funds,” he added.

Sunway University economics professor Prof Yeah Kim Leng said increased spending under Budget 2025 would help sustain growth while reducing debt levels and the fiscal deficit, projected at 3.8 per cent of GDP.

"This pro-growth budget contains various measures to uplift vulnerable groups while sparing the majority from significant tax increases,” he said.

Universiti Putra Malaysia senior economics lecturer Sabarina Mohammed Shah commended the budget for its focus on diversity and inclusivity, particularly with incentives aimed at empowering women, people with special needs, and military veterans.

"There’s also more allocation for East Malaysia, with Sabah and Sarawak receiving additional funding,” she said.

RON95 subsidy removal and minimum wage

On the planned rationalisation of the RON95 fuel subsidy, Lee said the timing is right, given the current drop in global crude oil prices and the stronger ringgit.

Other economists agreed that targeting the T15 for subsidy removal aligns with the government’s broader wealth redistribution goals.

On the increase of the minimum wage to RM1,700, Nungsari called it a positive move, though Malaysia University of Science and Technology professor Geoffrey Williams cautioned that it remains low.

"It barely keeps pace with inflation, so its impact will be minimal,” Williams said.

Johor South SME Association adviser Teh Kee Sin welcomed the wage hike but warned it could lead to higher costs for industries and businesses, pushing some to hire foreign workers to reduce expenses.Incentives for homebuyers

Tan praised the government’s decision to offer tax exemptions on housing loans for first-time homebuyers under Budget 2025, describing it as a "proactive measure” to encourage homeownership.

"For properties valued over RM500,000, a RM7,000 deduction will be available, while a RM5,000 deduction applies to homes priced between RM500,000 and RM750,000, for sales and purchase agreements signed from January 1, 2025, to December 31, 2027,” he explained.

Sabarina also commended the promotion of Islamic financing based on a profit-loss sharing model, which she said offers a more equitable alternative to debt-based contracts.

"This encourages innovative business ventures. However, implementation and monitoring will be key,” she said.

She also welcomed green investment initiatives, saying they would push companies towards adopting cleaner practices.

"Carbon tax will serve as a mechanism to ensure compliance from corporations that choose to stick to outdated methods despite being capable of adopting greener practices,” she added.