Our Ringgit:
From the People,
More for the People
Whether you realise it or not, every ringgit paid by Malaysians is returned in subsidy, incentives and services— to the point of exceeding what is contributed.
Let’s follow Siti’s money trail to see how it benefits all Malaysians.
This is Siti. She is an executive in Perlis with a salary of RM4,000 monthly.
She works hard to provide for her family. Every year, she carries out her responsibility as a taxpayer.
However, does Siti realise how much she has received from the Government?
People’s Contribution to Government’s Revenue
Every working Malaysian, whether in the public or private sector, contributes to the national tax revenue through various forms of tax payment such as income tax.
But, did you know? Malaysia implements one of the lowest tax-to-GDP ratio in ASEAN.
It is also less than the recommendations made by the World Bank and International Monetary Fund (IMF), who suggested at least 15% to finance development and eradicate poverty.
Siti and most Malaysians actually contribute less than they thought to the national treasury.
Out of 6 Malaysians, how many of them pay tax?
Malaysia Government Revenue
Individual income tax that Siti and other people paid in 2024 only contributed to 12.7% of the Government revenue, while a huge portion of it comes from companies and petroleum resources.
What is the difference between direct and indirect tax?
Direct tax is a tax that is imposed directly onto the income and wealth based on approved acts such as the Income Tax Act 1967. Examples of those taxes include income tax, stamp duty and tax on real estate profit.
Meanwhile indirect tax is consumption tax that is imposed on items and services, borne by the last consumer - whether an individual or a company, such as export duty, import duty, excise duty, sales tax, sales and services tax (SST).
Although the scope of SST has expanded this year, it has contributed around 13-14% to the Government revenue, and about 2% to GDP (nominal). In comparison, consumption tax in other countries reaches 4-6% from their respective GDP.
What do the people receive in return?
Different to private companies that are profit-driven, the Government carries a whole different responsibility.
Tax revenue collected by the Government is disseminated to stimulate the economy and provide a social security network for the people that are unable to earn sufficient income.
After paying debt interest, salary and civil servants emolument as well as operation costs, nearly all tax revenue is returned to the people directly or indirectly.
Aside from direct cash assistance such as Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) - 7 times more than the Bantuan Rakyat 1Malaysia (BR1M) that was first launched in 2012, the Government is also carrying out various initiatives for the people’s short and long term needs.
Since Siti’s monthly salary is below RM5,000, she is eligible to receive STR and SARA.
Other than direct cash aid, Siti also receives benefits from countless subsidies indirectly everyday.
For example, Siti who drives a car to travel to work, needs to fill RON95 fuel at the gas station almost every week. With the Government subsidy, Siti only has to pay RM1.99 per litre as compared to the market price at RM2.60 - a saving of RM0.61 for every litre she buys.
Siti and her family also enjoy a lot of basic services by the Government such as free education, affordable healthcare, and maintained road infrastructure.
All of these services are provided either for free or at a rate way cheaper than the private sector, giving significant value to their daily lives.
Comparison of Subsidy and Income Tax Contribution
These benefits require more funding. To reach this goal, the Government has implemented a comprehensive strategy to ensure each of your ringgit is used optimally.
Strengthening Governance for Economic Sustainability
Aside from combatting corruption actively, the Government has optimised expenses through leakage prevention in subsidy distribution. The targeted subsidy approach is introduced to allow the Government to reduce the absolute amount of subsidy expenditure, but at the same time increase the amount of aid that reaches recipients who truly need them.
The Government has also implemented comprehensive governance reforms to improve efficiency and transparency. This includes introducing the GovTech initiative to enhance digital efficiency in public services, the enactment of the Public Finance and Fiscal Responsibility Act 2023 which sets out the legal framework for responsible financial management, as well as the Government Procurement Bill 2025 to ensure transparency in the Government contracts.
Stricter enforcement measures are also introduced, including mandatory open tender for the Government projects and granting authority to the Auditor General to impose penalties on parties that violate public financial regulations.
Seems complicated, right? But what are the impacts of these measures to the people? Let’s listen to an explanation by an economy expert in this video:
Chief Economist of Bank Mualamat Malaysia Berhad, Dr. Mohd. Afzanizam said, in order to achieve a stable and fair economic growth, the national spending must meet its targets.
For example, the previous World Bank study shows that approximately 53% petrol subsidies are enjoyed by T20 folks, and this issue is what the Government is trying to resolve.
MADANI Economy
Through navigating Siti’s experience, we can see that each Malaysian receives way more than what they contribute in tax.
This is a positive economic cycle, where the national income that is contributed by the people is utilised to reinforce the well-being of the people, and the well-being of the people contributes to the economic stability in the long term.
With this, we can enjoy our lives in a meaningful way in the context of a fair and resilient economy.
According to Dr. Afzanizam, the MADANI Economy framework is like a plan or a blueprint to build a house for the well-being of its residents.
it talks about ceiling and floor;
raising the ceiling and floor. To raise the ceiling, improving the quality of economic growth means it is based on innovation; the floor on the other hand, everybody will be benefitting, no one is left behind in the course of economic development.
The money flow is not just numbers, but it reflects the values of Malaysia MADANI. Every transaction, every aid, and every fiscal policy brings together the principles of sustainability, compassion, and justice.
Let’s continue on this journey together towards a more prosperous and just Malaysia for all.
Project Producer: Nadyatul Syima
Researcher & Writer: Dexter Chan
Web Developer: Newsgraphy
Video Producer: Nadyatul Syima
Videographer: Hairudin Zakaria
Translator: Nur Amira Afrina