Rafizi Urges Radical Budget Reforms Says Malaysia Addicted To Goodies

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Former economy minister Rafizi Ramli has warned that Malaysia can no longer afford to treat the federal budget as an annual exercise in distributing “goodies”, urging the government to embark on radical reforms.
He said the nation had become too accustomed to viewing the budget as a handout-driven exercise rather than a serious plan to strengthen long-term economic fundamentals.
“In the end, the budget boils down to what is being given out and how to pay for it. So I don’t know what other ‘goodies’ can still be offered.
“Malaysians themselves must come to terms with this, and it requires a gradual awareness and a change in attitude among our people,” said the Pandan MP on KiniTV’s “Explain Sikit, Kini!” podcast.
Rafizi said that although some form of goodies are justified, this should not override the need for long-term changes the government must make.
“To me, that is the measure of a good government versus a bad government.”
Rafizi, who resigned from the cabinet in May, pointed out that government revenue now stands at about RM340 billion annually. However, he argued that there has been little evidence of a “radically different” approach to expenditure.
“What I want to see is how radically different we are going to manage our expenditure. At present, we hardly hear about how radically spending is being done differently.”
With a general election looming, he cautioned that political pressures could tempt the government to repeat the same cycle of populist handouts.
“As we head into a general election, people expect more handouts and cash. But what I want to see is how fundamentally different we are going to manage our expenditure,” he said.
Trapped between weak growth, election handouts
The former PKR deputy president also cautioned that the federal government is heading into the 2026-2027 budget, trapped between slowing revenues and mounting political pressure to deliver election handouts.
ADSRafizi said previous budgets had focused largely on ways to raise revenue and reduce dependence on borrowings, but had not demonstrated a radically different approach to spending.
The Madani Budget book after Budget 2025 was presented in Parliament, Oct 18, 2024“That is where the clash usually lies - between policymakers who take a long-term view and those who focus on the short term. If you want to spend in a radically different way, then you first have to resolve the structural issues. Only by addressing those structural issues can you then rebalance expenditure.
“So, for the 2026–2027 budgets, I think the government will be caught between two pressures. The first is that we have to accept that global economic growth is going to slow down. Everything will slow down, and that will have an impact on Malaysia. If you look at the latest economic growth revisions, forecasts have been cut from 4.5-5.0 percent, down to 4.2 percent.
“The spillover will happen in 2026–2027. So you can expect government revenue to be roughly RM330–340 billion,” Rafizi said. 
He also said that since the government cannot “squeeze” further contributions out from Petroliam Nasional Berhad (Petronas), it is essentially stuck between tight revenues and political demands for populist spending.
Since its establishment in August 1974, Petronas has contributed over RM1.5 trillion in the form of dividends, state sales tax, cash payments, export duty, and the national trust fund, and is Malaysia’s most valuable brand.
However, in recent years, the government has been trying to diversify revenue streams and reduce overreliance on the state-owned oil and gas titan.
Transform SMEs, reform wages
Rafizi said Malaysia’s economic sustainability also largely depends on transforming its small and medium enterprises (SMEs) and reforming wages.
However, he acknowledged that these are not quick solutions, as they require long-term structural reforms, despite the public’s demand for immediate relief from the cost of living.
Small business vendor“Firstly, in terms of economic sustainability, the most important issue in my view is how we can support and enhance the competitiveness and value creation of our SMEs. SMEs make up easily 95 percent of enterprises in Malaysia, and they are also the largest employers.
“The strength of Malaysia’s future economy will depend on how successful we are in raising our SMEs to be on par with those in more dynamic economies. People often cite examples of SMEs in Germany, or the significant share of SMEs in China, and so on.
“I think this is a very important long-term trajectory which the government should take into account and prioritise in every annual budget,” he added.
Rafizi also pointed out that while the cost of living is the government’s most pressing short-term challenge, fixing prices and wages are not so simple.
“It is a function of both. But here lies the difficulty - both are, in fact, long-term issues.
“If we want to improve the competitiveness of our SMEs, it cannot be done simply through grants or subsidies. It requires a complete understanding of what SMEs are, what they do, and what their capacities are.
“Similarly, any matters relating to wages involve long-term labour market reforms which cannot be carried out overnight,” he added. - Mkini

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