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Budget 2026 comes at a time when Malaysia’s economic recovery appears steady, but not yet even. Inflation has eased, but for many households, the pressure on daily living costs remains. As we head into the next Budget, it’s time to take stock. Have last year’s social protection measures like PekA, Skim Perubatan MADANI, Program Anak Kita, Sejati MADANI and Santuni MADANI, been enough to shield vulnerable Malaysians from economic uncertainty? Or is it time to rethink how we target and design support? On this episode of #ConsiderThis Melisa Idris speaks with Calvin Cheng, Director of the Economics programme at the Institute of Strategic & International Studies (ISIS Malaysia). He works on issues in applied economics, including jobs, social protection and economic development.
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00:00Hi, welcome back to Consider This. I'm Melissa Idris. As Malaysia prepares to table budget
00:232026, it's worth asking how far have we come in protecting the most vulnerable? Now, over
00:29the past year, the government has rolled out several new initiatives and extended existing
00:33ones aimed at easing the cost of living and reducing economic vulnerability. So joining
00:38me on the show to discuss whether or not it has worked, has been effective and how to
00:43make it more effective is Kelvin Cheng, Director of the Economics Programme at the Institute
00:48of Strategic and International Studies, better known as ISIS Malaysia. He works on issues
00:54in applied economics, including jobs, social protections and economic development. Kelvin,
01:00welcome back to Consider This. It's good to have you on the show with me. It's been nearly
01:05a year since Budget 2025 and I'm wondering how you would assess the effectiveness of current
01:11social safety nets in addressing vulnerabilities. How would you describe the current landscape
01:17of social protections in Malaysia? Were there outcomes from Budget 2025 that you would classify
01:25as some clear wins? Well, I think if we look back at Budget 2025, there were certainly wins. Well,
01:33we saw, you know, higher allocations for social assistance, for instance, I think, if I'm not
01:37mistaken, about a five billion increase. And that includes four programmes, including the Sumangatunai
01:43Arama and SARA programmes, as well as some of the JKM transfers for children and the elderly. And
01:49besides that, there were attempts to also widen coverage for some contributory social security
01:54schemes for informal non-standard workers and also individuals engaged in home production or unpaid
01:59domestic work, so to speak. So I think that these have achieved mainly through matching incentives and
02:03subsidies to encourage voluntary contributions, including the ISRI programme, etc. And outside the budget,
02:08over the past year, we've seen some movement on other fronts, including the gig workers,
02:13bill which was just passed, which does extend basic labour protections and social security
02:17protections to some millions of gig workers. But as with anything, there are still, you know,
02:22some more steps that we can take. For instance, on social assistance, we know that from last year's
02:29budget, the Budget 2025, the cash transfer programmes, including the Sumbangan Tunai Ramah programme,
02:34we didn't see a large increase or any increase in actual benefit size, for instance, whereas most of
02:39that increase in benefits came from food voucher programmes, including SARA, right? And we also
02:46know that the other sort of long-term legacy issues of these cash transfer programmes inherited from past
02:53iterations of the Sumbangan Tunai Ramah, including the BSH and BRIM before that, which includes, you know,
02:59issues of regarding targeting exclusion errors and issues regarding programme fragmentation, and also the
03:05existence of benefit cliffs in which there's a threshold in which if you pass that income, you
03:11immediately see immediate loss in benefits. So those are some issues of social assistance, and there are
03:16more on overall social protection structure, if I may. So one of which is obviously there's large progress
03:21being made, but there hasn't seemed to be a shift from the existing system, which is centred around
03:27that concept of a formal stable employment and centred around the idea also of giving back
03:34instead of a larger social protection framework.
03:38I'm curious to know, so when you talked about exclusion errors and benefits cliffs,
03:44when we think about the current discourse around social protection targeting, what is it? I mean,
03:48there's been a lot of debate around unconditional cash transfers, kind of the blanket approach,
03:55then there's targeted vouchers, there's the option of providing services. I'm wondering from your
04:01perspective Kelvin, which policy design best protects against economic shocks, particularly for B40
04:08households in the Malaysian context? Well, I think there are two things to mention here, one of which is
04:15that firstly, you know, social protection is not just for the B40 in the Malaysian context, you know,
04:22it's really it's for everyone, right, to different degrees, and it's really more of a fundamental societal
04:27level policy instead of a type of like a, you know, feed the poor type of framing, right? So that's the
04:33first thing. The second thing I will say is that there is no single best targeting design for any
04:39program, because really, the best design is the one that is fit for the purpose of that specific
04:44program, right? And we know we need a mix of programs for Malaysian social protection system,
04:50right? So I think we can think of it as different layers or components of social protection that need
04:55different types of targeting, and different types of policy design, because they serve different
04:59objectives, and they work sort of alongside each other, and in synergy. So for example, you can think
05:05of the first layer, maybe something like unconditional cash transfer, which is unconditional sense that
05:11as long as you meet that income threshold, and you apply for it, you get it, right? So there's something
05:17like the current STR program. And you can think of it as layers, the second layer would be something
05:23more categorical for life cycle vulnerabilities. So this is the idea that, you know, certain groups
05:28like children, for instance, or the elderly, we may want to take a near universal categorical approach.
05:34So this means that we want to extend coverage as much as possible. So this means targeting on age
05:39categories instead of income, for instance. This would be something akin to like the existing Bantuan
05:45Wanga Lamas or Bantuan Kanakana programs, but they would be, you know, non-meas tested and
05:49tending towards greater coverage for an exclusion. And then above and above, we can we can think of
05:54multiple layers that build on each other, including universal services. So I guess all this to say,
05:59it's all part of the toolkit. Okay, so use the different types of tools to address social
06:06protections. We often think of it as the responsibility of government, and largely the government, the
06:12onus is on the government to design good interventions, good social protection policies. But
06:18do you think, Kelvin, there is a role for the public sector to play? And I'm wondering,
06:23can public sector complement government in terms of providing social safety nets for
06:30economically vulnerable Malaysians? Right, so I think, well, as you mentioned,
06:36most of the policy design aspects, I think those are more related to government policy. But there are
06:42some things I think are very basic things that private sector entities could look at. I think
06:47this is very basic. And the first thing is just comply with and support existing social protection
06:53reforms. You know, this means comply with all the sector requirements, either for contributions or,
06:58you know, ensuring compliance in many ways. And this is, again, this is quite basic, but it's often,
07:02sometimes, you know, contravene, right. And also, I think this also relates to sort of having the
07:09private sector have more constructive engagement instead of resistance, right. So I think if a lot
07:14of new social protection policies on the horizon, including the gate workers bill, I think it's
07:19important that the private sector does not sort of seek to undermine some of these well-intentioned
07:23reforms. I think too often, sometimes we see certain lobbying efforts via proxy groups and such,
07:29have sought to delay or dilute the sort of labour and security legislation. And the second step, I think,
07:36there are a lot of voluntary programs that exist. Obviously, there are statutory flaws regarding
07:39standards, regarding some programs, but there are some programs which are voluntary. And this may mean
07:45first, for instance, including going beyond the minimum wage, for instance, to commit to higher
07:50standards, taking the high road in paying living wages, providing decent working conditions beyond
07:55statutory requirements. This may also mean we're possible participating in voluntary programs like
07:59that progressive wage policy, for instance. So I think in all, the biggest word of
08:06private sector can play is having sort of shared values towards social and economic progress over
08:10just profit. All right. Okay, so we are days away from Budget 2026. I'm curious to know what you
08:18would like to see in Budget 2026. Also, what changes, what improvements would you like to see in terms of
08:25social welfare allocations? Well, specifically on social protection, I would say over the past decade,
08:33we need to give credit that Malaysia has made more progress in social protection and Budget 2025,
08:40for instance, as I mentioned, has built on this. I think going forward, Budget 2026 can outline
08:45sort of a stronger vision and roadmap for social protection across agencies, across ministries and
08:51across lifecycle as well. So I think this can mean a few things, and one of which is institutionalizing
08:58programs, so that they continue consistently, rather than, you know, as temporary budget initiatives,
09:03some programs are, you know, annual basis, a renewal basis, so each year would be tuned in to see,
09:09oh, what's in for this year, what's in for this year. I think some of it would be better if it was more
09:14institutionalized across the longer term. And across that would be, I think,
09:18working towards some of these issues that I mentioned prior regarding coverage and adequacy,
09:26right? So increasing coverage is one important priority, I believe, making it easier for beneficiaries
09:33to apply for and receive assistance or to receive support. That also means gradual increases to benefit
09:39levels, perhaps by benchmarking benefit size or something like a percentage of income or adjusting
09:44regularly for inflation, something that's called index thinking, for instance. And overall,
09:49and all above that, I think it's just tackling a lot of these legacy issues in social assistance
09:53programs, including, you know, fragmentation of programs and databases and targeting errors. I think
09:59these are all very important aspects. And to say nothing about, you know, the various issues regarding
10:04fiscal constraints and such. Yeah, it's a tough one, isn't it? Trying to get all this balanced.
10:09Correct. Yeah. Calvin, thank you so much for being on the show with me today and sharing some of your
10:15insights with us. I appreciate your time. Thank you. Thank you very much.
10:18That was Calvin Cheng from ISIS, Malaysia, wrapping up this episode of Consider This.
10:22I'm Melissa Idris signing off for the evening. Thank you so much for watching and good night.
10:36I'm Melissa Idris signing off for the evening.
10:40I'm Melissa Idris signing off for the evening.
10:42I'm Melissa Idris signing off for the evening.
10:44I'm Melissa Idris signing off for the evening.
10:46I'm Melissa Idris signing off for the evening.
10:48I'm Melissa Idris signing off for the evening.
10:50I'm Melissa Idris signing off for the evening.
10:52I'm Melissa Idris signing off for the evening.
10:54I'm Melissa Idris signing off for the evening.
10:56I'm Melissa Idris signing off for the evening.
10:58I'm Melissa Idris signing off for the evening.
11:00I'm Melissa Idris signing off for the evening.
11:02I'm Melissa Idris signing off for the evening.
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