Universiti Kuala Lumpur’s Aimi Zulhazmi Abdul Rashid said the trade war would see import tariff hikes which, in turn, could disrupt the supply chain and cause the prices of goods to rise.
Should this occur, Aimi said, the consumer price index (CPI), which monitors a fixed basket of goods and services, would be at risk of rising.
“The government may have to further increase its Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara) cash aid to the people in order to absorb the impact,” he told FMT.
Under the 2025 budget, Putrajaya increased its allocations for STR and Sara from RM10 billion to RM13 billion. The schemes benefit nine million recipients.
Aimi said the government must employ several approaches, including rolling out the targeted RON95 petrol subsidy, to fund a higher allocation for cash aid.
He said the distribution of STR and Sara must also be accurately targeted to prevent wasting resources.
“(The government) must determine a household’s net income, location and various other data so that this aid can be channelled effectively,” he said.
Ahmed Razman Abdul Latiff of Putra Business School said targeted government subsidies, including for RON95 petrol, would give Putrajaya more funds that could be channelled to crucial areas like healthcare and education.
This meant that the 85% of Malaysians who would be eligible for the RON95 subsidy would get to enjoy improved public services in such areas.
“It’s estimated that the government would save RM8 billion a year through the targeted RON95 subsidy,” he said.
Separately, Universiti Putra Malaysia’s Chakrin Utit said the targeted subsidy should be rolled out in stages alongside additional mechanisms to protect the welfare of affected segments of the community.
He said this was crucial to prevent the targeted subsidy from causing a chain reaction on transportation costs and the prices of goods.
He also said it was important to boost productivity in the agriculture sector to stabilise food prices, adding that this could be done through the use of modern technology like artificial intelligence and regenerative agro models.