By Tengku Noor Shamsiah Tengku Abdullah
While the numbers projecting the country’s economic performance are good, an economist casts a doubt on their impact on the ordinary folks. He cautions that strong GDP figures may mask deepening income crisis affecting ordinary families.
KUALA LUMPUR, Dec 31: Malaysia is heading into 2026 with impressive economic numbers that tell only half the story. While GDP growth remains robust and inflation stays low, families across the country continue to struggle with daily expenses, according to one economist.
Professor Geoffrey Williams, founder of Williams Business Consultancy, says this disconnect represents Malaysia’s most pressing challenge. “We’ve exceeded growth expectations in 2025,” Williams told Weekly Echo. “But we’re failing at our most fundamental task: giving ordinary Malaysians real income security.”
His message is blunt: economic stability without income growth isn’t prosperity—it’s just stagnation dressed up in better numbers.
A Year of Mixed Signals
Looking back at 2025, Williams acknowledges Malaysia did better than many predicted, likely hitting 4.7% growth. Trade numbers surprised on the upside, and inflation came in lower than expected.
But Malaysian families aren’t feeling the benefits. “The numbers look great on paper,” Williams said. “But households are still struggling with daily expenses. Our core problem isn’t rising prices—it’s that incomes are too low to begin with.”
On the Government assistance programs like STR-SARA? He said: “They provide marginal relief when what we really need is to fix weak wages.”
2026: More Growth, Same Struggles
Williams expects 4.0-4.5% growth in 2026 with low inflation and stable interest rates. He praises Budget 2026 as fiscally responsible, but warns that labour market problems will continue holding back household prosperity.
“Unemployment will stay low on paper,” Williams explained. “But underemployment keeps constraining wage growth. Workers can’t translate economic expansion into higher take-home pay.”
Williams argues Malaysia’s cost-of-living conversation focuses on the wrong problem. “Policy discussions obsess over inflation when we should be talking about income generation,” he said. “The goal must be to raise incomes.”
He sees two paths: direct government intervention through higher minimum wages and progressive wage frameworks, or liberating labour markets for gig economy participation. “Without one of these approaches, households will keep struggling even if inflation stays near zero.”
Subsidies
Williams credits the government for saving RM15.5 billion through subsidy reforms but questions how subsidies are distributed. “The current system benefits rich people more than poor ones. Universal subsidies mean wealthier Malaysians, who use more fuel, get more benefit.
“Better targeting wouldn’t hurt low-income households—the failure to target properly is what’s really regressive.”
No GST, Maybe E-Payment Tax
Williams also said that bringing back the GST may be unnecessary. He points to Budget 2026 as proof Malaysia can raise revenue through smarter SST adjustments. If more money is needed, he suggests a 1% e-payment tax that could raise RM28.8 billion.
On foreign investment, he said: “FDI is high, but it’s concentrated in sectors like data centers that don’t create many jobs.” More worrying is weak domestic investment. “Returns on Malaysian stocks and bonds are poor,” Williams noted.
Bursa Malaysia has delivered near-zero returns this year and negative returns over five years—explaining why Malaysian money flows overseas. He cited three probable causes: over-regulation stifling business, corruption perceptions scaring investors, and rising regional competitors like Vietnam.
Trump Tariffs: Opportunity?
On potential Trump tariffs, Williams breaks from the doom-and-gloom crowd. “Trade disruption has actually been positive for Malaysia. Nearly 3,000 tariffs were eliminated on both sides.” But he insists Malaysia must remove its own protectionist policies to make exporters truly competitive.
The Government Dependency Myth
Williams targets what he calls a dangerous Malaysian mindset. “There’s a myth that government should solve most economic problems. But government’s role is inherently limited. Markets and individuals are often better at solving challenges.” He challenges Malaysians: “What has government policy actually done for you this past year? Beyond small cash transfers and poorly-targeted subsidies, are you really better off?”
The Pension Time Bomb
Williams calls pension reform “the most overlooked opportunity in Malaysia.” He proposes creating a Malaysian Superfund delivering universal basic pensions. “If we don’t fix the pension crisis, many Malaysians will work their entire lives without any hope of secure retirement.”
Malaysia has figured out how to grow the economy. The unanswered question is whether that growth translates into dignity, security, and opportunity for regular people.
“Our 2026 challenge isn’t about achieving growth anymore,” Williams said. “It’s about whether that growth finally improves people’s actual lives.”
Without fundamental reforms to wages, labour markets, and social protections, economic stability remains would be impressive in government reports but may not be visible in family budgets.
The views expressed by Professor Geoffrey Williams in this report are his professional analysis and do not reflect Weekly Echo’s editorial position.