Families in the bottom 40% (B40) household income group have shown remarkable resilience in the face of adversity, and also during the Covid-19 pandemic in 2020 and 2021. But, a significant number have slipped further into poverty due to their inability to recover financially from lost income and jobs.

On top of that, 20% of the middle 40% (M40) household income group have moved down to the B40 category due to income reductions. (This is based on data in the Household Income and Basic Amenities Survey Report 2020 by the Department of Statistics, or DOSM).

Therefore, I can safely say that poverty, lack of funds and escalating prices are making people angry and frustrated. To be fair, the Madani government has made various efforts to reduce inequality and poverty in the last two years. While these initiatives are good, they don’t quite meet the needs of the people. The growing grievances demand a more immediate and impactful implementation.

The worsening of poverty, especially in the urban areas, and the growing noise in the country can be addressed if the present policies and their implementation are targeted at increasing real wages and cash assistance to vulnerable groups.

Poverty and marginalisation

Two Unicef studies titled Families on the Edge (2021-2022) and Living on the Edge (2023) involving 500 and 755 low-income families respectively, including 225 women-led families, showed deteriorating poverty conditions. These studies focused on their daily struggles and challenges, providing a deeper reality of the urban poverty situation in Malaysia, especially among low-income households.

The study found the following:

Eight in 10 households struggle to pay for essential goods, a situation that has worsened compared with the Covid-19 period. Women-led households are particularly affected, with seven in 10 struggling to meet monthly basic needs and six in 10 lacking savings.

While employment rates have increased, paradoxically, many Malaysians have become poorer. This highlights the inadequacy of current wages to meet the rising cost of living, underscoring the urgent need for comprehensive wage reform to ensure a decent standard of living for all.

Children in low-income homes are among the most affected. Over half (52%) eat less than three meals a day, a higher rate than the 45% reported pre-pandemic.

The consumption of unhealthy food increased, with 46% reported to be eating more instant noodles than two years ago during the pandemic.

This worsening poverty situation, pointed out by Unicef, follows an earlier World Bank 2019 study showing that seven in 10 low-income households in Malaysia struggle to meet monthly basic needs, with six in 10 lacking savings.

Therefore, it is really not about the money that the Madani government is spending but how it is being spent.

Reviving the free meals programme for schoolchildren

The Unicef study showed that all 225 women-led households with children lived in absolute poverty. According to the Ministry of Health, in late 2023, children in these households often skipped meals and 30% experienced stunted growth.

This problem is not exclusive to Malaysia. For example, the Mid Day Meal Scheme is a school meal programme in India designed to better the nutritional status of school-age children nationwide.

The situation is compounded by reports that 10,000 school canteen operators in Malaysia are expected to raise their prices by 50% next year. There is clearly an urgent need to address this issue.

A 2019 report by the Ministry of Education indicated that a similar free school breakfast programme that was proposed would have benefited 2.7 million primary schoolchildren nationwide in 2020, with costs estimated between RM800 million and RM1.67 billion.

To ensure nutritious food for B40 children, the government should collaborate with government-linked companies to revive the free meal programmes at schools. Here, local entrepreneurs, including women, could be engaged in catering food to the local schools. The meals programme could create local entrepreneurship and jobs, as well as local demand for food and vegetables, and all of this can generate a multiplier effect in the local economy.

The prime minister has mentioned that Budget 2025 will prioritise addressing the cost of living. This news is very encouraging, but it is also important to ensure that the Budget includes support for providing nutritious meals to school-going children.

Regressive subsidies

It is crucial to rethink our subsidy targeting to ensure the benefits reach those who need them most, addressing the significant tax inequity in current policies.

I say this because subsidies are largely regressive, benefiting the wealthy more than the poor. A 2019 International Monetary Fund study pointed out that for every RM100 fuel subsidy allocated to people with low incomes, the high-income earners received RM35 compared with only RM24 for the low-income group.

For example, the zero tax on electric vehicle (EV) purchases predominantly appeals to higher-income groups. A Malaysian from the B40 group is more likely to buy a budget-friendly car like a Myvi or an Axia, which are still subject to taxes. Conversely, those who can afford luxury EVs, such as Teslas or high-end BMWs, receive tax exemptions, highlighting significant tax inequity.

Progressive wage policy

The government’s progressive wage policy is welcome, but efforts must be made to increase wages for the three million workers in the informal sector and gig economy, setting industry-specific minimum wage levels (Maybank IB Research).

The current design of the progressive wage policy excludes part-time workers and informal workers. In my view, the workers in the informal sector earn low wages, experience non-payment of minimum wages and no social protection such as Employees Provident Fund (EPF), Social Security Organisation and insurance support.

This is supported by the Unicef study, which indicates that 40% of workers, including the self-employed, lack essential social protection coverage, and 92% of self-employed individuals are vulnerable to economic shocks.

Thus, the design of the progressive wage policy should be rethought with a view to financially enable informal sector workers to move out of poverty and enjoy social protection.

Moving towards an inclusive green economy

Let us go back to tax breaks for EV owners: Although the government’s efforts to transition from fossil fuel to renewable energy are important, it must be noted that tax cuts for the purchase of EVs will benefit just the rich because only they can afford to fork out the money for cars in the high price range.

Instead, the government could help set up solar panels in poor communities such as for low-cost houses and rural communities. The effort can generate income and reduce electricity bills, which can translate into savings and could help a solar panel-driven energy boom in the country.

The government does not have to look far for inspiration as the Sime Darby Property Bhd model at Elmina provides solar energy to homes, presenting a scalable framework for addressing energy needs in poor rural areas.

Providing solar panels reduces energy poverty, offers rural communities access to clean energy and creates new income streams by selling excess energy back to the grid.

If we look across the Causeway, the SolarNove initiative taken up by the Singapore government aims to install 113mw of solar panels across more than 1,000 public housing blocks and 100 government sites in Singapore by 2026.

Such initiatives would ensure that the transition towards renewable energy is just, with subsidies for solar panels and other initiatives accessible to low-income households and rural communities.

Social protection for the elderly

The lack of savings for many Malaysians is deeply troubling, more so because Malaysia is experiencing a significant increase in its ageing population. According to the latest DOSM estimates, the proportion of the population aged 65 and over increased from 7.2% in 2022 to 7.4% in 2023. This represents 2.5 million people. Now imagine these people with a lack of savings. It is a depressing thought.

According to a parliamentary reply by the Ministry of Finance, the issue of insufficient savings in the EPF is at a severe level, with 6.3 million members under the age of 55 having less than RM10,000 in their accounts as at September 2023. With savings of less than RM10,000, members are expected to have a retirement income of less than RM42 per month for a period of 20 years.

With 5.7% of households led by individuals aged 65 and above living in absolute poverty (Ministry of Economy, 2022), I propose that Kumpulan Wang Persaaraan (KWAP) utilise its RM190 billion. Assuming a RM200 monthly contribution from EPF and a lifespan of 10 years post-retirement. Given these conditions, if they need RM1,000 monthly, only RM83 can be covered by their RM10,000 savings.

A wealth tax

Implementing a wealth tax on the super rich in Malaysia would raise revenue for all these proposed social protection and welfare programmes.

For example, Malaysia's top 50 wealthiest individuals have a combined net worth of RM390 billion, almost on a par with the national budget. A 2% wealth tax on their collective wealth could generate RM7.6 billion in tax revenue, and a 2.56% tax would bring RM10 billion.

So, is there a way to address the noise? Or rather the anger and frustration of a large section of Malaysian society? There clearly is. But again, it all boils down to political will.

Billionaires often receive government subsidies and support for their businesses. For example, by 2015, Elon Musk had received an estimated US$4.9 billion in government support. Within the Malaysian context, first-generation Power Purchase Agreements for Independent Power Producers, such as YTL Power International Bhd’s  Paka plant, had a return on investment of 20%. It is only right that they give back the wealth they have accumulated for the provision of better public services.

Source: Theedgemarkets

The World Economic Forum last week launched a digital platform outlining 100 policy measures, finance mechanisms and de-risking solutions in 47 emerging and developing economies.

Known as the Playbook of Solutions, it was assembled by the Network to Mobilize Investment for Clean Energy in the Global South, which was launched at the WEF’s annual meeting in Davos in January.

Emerging markets and developing economies will represent 90 percent of the growth in global energy demand by 2035, according to a report by the International Energy Agency and International Finance Corp.

Yet these countries, which are home to a majority of the world’s population, account for less than a fifth of global clean energy investments, the report said.

In order to speed up the transition to clean energy and triple renewables by 2030, the annual average investment in renewable energy will need to reach at least $1.7 trillion by 2030, it said.

With this in mind, the Playbook of Solutions aims to guide governments, finance institutions and energy companies regarding their approach toward energy transition project financing in emerging markets.

It also highlights the need for a multipronged approach of policy action, de-risking tools and innovative financing mechanisms to unlock the $1.7 trillion needed in the Global South.

“The MENA region has shown remarkable advancements in its energy transition over the past decade,” Roberto Bocca, head of the WEF’s Center for Energy and Materials, told Arab News.

He said that according to the WEF’s latest Energy Transition Index, the region’s energy transition scores had increased by 7 percent overall, “with a substantial 22 percent rise in transition readiness.”

This progress “reflects the importance and efficacy of implementing a comprehensive blend of policies and strategies to unlock clean energy investment” and the new playbook “showcases various tools and measures for achieving this,” he said.

The playbook also highlights the success stories of four countries: Egypt, India, Chile and Brazil and how they raised billions in clean energy capital through a combination of strategies including policy measures and finance platforms.

“Country-led commitment reforms and platforms are critical to align sustainable development efforts in a way that prioritizes national objectives and accelerates progress toward a just, green transition,” said Rania Al-Mashat, minister of planning, economic development and international cooperation of Egypt and co-chair of the Network to Mobilize Investment for Clean Energy in the Global South.

The playbook “provides an effective way to exchange best practices and lessons learned between peer countries, thus unlocking just financing solutions that accelerate progress toward a just energy transition,” she said.

Source: ARAB

The Asean bloc remains a "stabilising force" in Southeast Asia despite making only incremental progress on key issues, including Myanmar's civil war and the drafting of a code of conduct for the South China Sea, its secretary general said.

Leaders of the 10-member Association of Southeast Asian Nations are meeting in Laos this week with heads of government and top diplomats from partners including the United States, China, Japan and Russia.

The bloc, home to over 685 million people and representing around 8% of global exports, has been unable to push resolutions on difficult regional issues, which analysts say risks undermining Asean's central role in its backyard.

But Asean's Secretary General Kao Kim Hourn insisted the grouping has constantly pushed for dialogue and diplomacy, ensuring that negotiations move ahead.

"Asean has been, I would say, the stabilising force," the former Cambodian diplomat told Reuters in an interview late on Wednesday.

"We take the issues head on," he said. "People always put too much emphasis on problems, but the way I look at Asean, we have come a long way."

For instance, Kao Kim Hourn said, with member economies increasingly integrated and trade agreements in place with many external partners, Asean attracted US$230 billion (RM988.2 billion) in new investments in 2023.

"The fact that there is confidence and trust in Asean, that's why the US$230 billion investment moves into Asean," he said. "The future is here."

Myanmar is ‘complex’

Asean has made little progress with its "Five Point Consensus" peace plan for Myanmar, unveiled months after a 2021 coup, but Kao Kim Hourn said the leaders of Asean remain adamant that the grouping will stay engaged with Myanmar.

"We need time and patience," the secretary general said. "Myanmar is such a complicated, a complex issue... We should not expect a quick fix."

Conflict has raged in Myanmar, with an expanding armed resistance against the military government. Some 18.6 million people, more than a third of the population, are estimated to be in need of humanitarian assistance.

Despite losing control of wide swathes of territory and being pinned down across multiple front lines, the junta appears to be pushing ahead with plans for an election next year, which has been widely derided as a sham.

Asean will continue to push for "inclusive political dialogue" among all conflicting parties in Myanmar, said Kao Kim Hourn, even as leaders look to scale up humanitarian assistance.

Thailand has offered to host an "informal consultation" on Myanmar in December among Asean members, some of whom are divided between those who want the junta to do more and those calling for more talks among warring parties.

South China Sea dispute

Another major concern for Asean is tension in the South China Sea, where confrontations in disputed waters continue between China and the Philippines, and more recently Vietnam.

The situation has brought renewed attention to Asean's protracted negotiations with Beijing towards creating a code of conduct for the vital waterway, a process in motion since 2017.

"Until now, there have been ongoing negotiations," Kao Kim Hourn said, "It's not static, it's not standstill, but things are still moving ahead."

China claims almost the entire South China Sea, a conduit for US$3 trillion of trade annually, and has deployed an armada of coast guard deep into areas claimed by Asean members Vietnam, the Philippines, Indonesia, Malaysia and Brunei.

While some Asean countries hope the code can be concluded in a few years, prospects for a legally binding text remain distant, analysts say.

"The good part is that as long as there are still dialogue and diplomacy on the table and moving forward, I think there's a lot of hope there," Kao Kim Hourn said.

Source: The edge markets

In recent years, sustainability has increasingly had to cope with toughened market conditions, policy, and geopolitics. Meanwhile, despite technological advancements, many clean-energy options remain costly to deploy. All these factors are affecting how companies execute transition plans, requiring them to think more critically about their sustainability strategies.

That is reflected in this year’s New York Climate Week, where participants went beyond emphasising ambition and achievements to discussing what challenges we face to accelerate the energy transition and what innovative solutions we can embark on.

Get used to the business as ‘unusual’

An insightful aspect to many New York Climate Week conversations centred on disruptive ways of doing business: committing to sustainability means getting used to the business as ‘unusual’, whether it is exploring the unknown, managing trial and error, or engaging in difficult but constructive conversations with clients. These changes may be costly to invest in and challenging to implement at the beginning. But in the long term, business as ‘unusual’ in sustainability can transform burden into benefits, as evidenced in later analyses.

The road toward sustainability is never linear, complicated by frequent policy and market disruptions. This therefore requires companies to practice sustainability with constantly refreshed minds. Sustainability goes beyond compliance to managing risks, harnessing opportunities, aligning customer demand, and creating value.

What is the golden ratio between carrots and sticks?

Policy is crucial in facilitating the energy transition, as it can support nascent technologies, more properly price dirty economic activities, harmonise industry practices, and create level playing fields. As we have pointed out in many analyses, the US’ energy transition largely relies on incentives (carrots) to scale up the production of clean technologies, whereas the EU relies relatively more on standards and mandates (sticks) to steer demand toward a greener direction.

A topic we heard companies and investors talk about during the climate week is how to effectively enhance the demand for clean energy. On the one hand, if producers cannot secure long-term offtake agreements in large amounts, then it is hard for projects to advance even if the necessary technology, resources, and infrastructure are all available. On the other hand, if regulations and demand-side mandates are unrealistic, then there can be excessive non-compliance that defeats the purpose of regulation. The best ratio might be different across regions, but each jurisdiction needs a combination of carrots and sticks in terms of policy for decarbonization. Overly relying on one and ignoring the other will not yield optimal results.

Refine business strategy through broadened sustainability metrics

Companies have emphasised the importance of pursuing environmental stewardship, which lies beyond adhering to the most used sustainability measurements such as emissions reduction and renewable energy usage. And the notion of stewardship can be highly industry specific. In the food and agriculture sector, stewardship can represent strengthening soil health and improving water availability and quality. Doing this can not only enhance crop output and resiliency, but also prevent land degradation. This does not mean that the emissions metric should be discarded; rather, a wider range of considerations can together lead to a more holistic approach to sustainability that highlights sector materiality.

Some jurisdictions are encouraging this holistic thinking through sustainability disclosure requirements. The EU’s soon-to-be-mandatory Corporate Sustainability Reporting Directive (CSRD), for example, requires some 50,000 EU companies and at least 10,000 foreign companies to report in phases on sustainability metrics such as water, biodiversity, and circularity. In addition to complying to the law, companies can also benefit from using their own ESG data to refine sustainability strategies. These include improving sustainability strategy through gap analyses and increasing internal business efficiency. Standardized disclosure, coupled with enhanced ESG strategy, can also help companies enhance the access to capital.

Marry sustainability with customer centricity

According to a global study conducted by Bain & Company, around 60% of consumers have become more concerned about climate change in the past two years, with packaging and recyclability emerging as two main major considerations. This means that companies, especially those in the consumer goods and retail sectors, would appeal to sustainability-conscious consumers by closing the loop for the full product life cycle.

Consumers have become more concerned about climate change

Respondent answers to the question of ‘How have your climate change concerns have changed over the past two years?’

Note: Excludes respondents who said they do not believe the climate is changing, n=18,991. Source: Bain Consumer Lab ESG Survey 2024

Meanwhile, however, anecdotal evidence shows that sustainability can move down the priority list if sustainable products are too costly or inconvenient to use. While it is debatable how much more expensive sustainable products can be and who should be bearing that cost increase, sustainability should not derail from being consumer-centric.

In the automotives industry, for example, companies can design electric vehicles (EVs) through leveraging their brands’ traditional selling points, whether it be luxury, coolness, or ease of use. While creating luxury/cool EVs relies on product design, one way to boost the ease of use is to partner with restaurants, shops or office buildings for EV charging. This can help consumers overcome their unwillingness to wait a long time charging EVs and narrow the infrastructure gap that countries like the US are facing.

On top of that, communication is key. Companies would benefit from laying out how their products are sustainable to consumers, as opposed to only having a sustainability label or certificate. Moreover, companies are starting to link sustainability with other benefits consumers care about. For instance, real estate sustainability efforts are being communicated to customers as a means to ensure economic security through increased energy efficiency. Real estate companies are also exploring the ‘S’ aspect of ESG through boosting affordable housing and creating value for local communities. All in all, sustainability is about operating businesses in ways toward consumers’ long-term wellbeing.

Committing to sustainability is committing to the business as unusual. Given the uncertain and ever-evolving nature of climate change, companies would need to take on a comprehensive approach to sustainability in their decision-making processes, which often involves challenging the existing energy system. All these cannot be achieved without collaboration and dedication despite the many challenges ahead.