The governance aspect of Environmental, Social, and Governance (ESG) frameworks often receives less public attention than its environmental and social components, which is no surprise given the global spotlight on the imminent challenges of climate change and its widespread impacts.

Yet, effective governance is key in ensuring state institutions remain transparent, accountable, and committed to the rakyat's wellbeing.

Through the 'Strengthening Governance' vertical, Putrajaya has laid out a comprehensive roadmap to restore fiscal discipline, enhance public service delivery, and promote socio-economic equity across Malaysia.

Budget 2025, tabled on Oct 18, underscores the government’s continued commitment to reducing the national deficit and managing public debt, which has limited economic flexibility and posed challenges to development efforts in recent years.

These fiscal measures aim to build a resilient economy while addressing growing economic disparities.

During his address, Prime Minister Datuk Seri Anwar Ibrahim said the government was on track to narrow the deficit to 3.8% of gross domestic product (GDP) next year from an estimated 4.3% in 2024.

Central to this effort is subsidy rationalisation, a key pillar of the government’s fiscal responsibility framework - by phasing out blanket subsidies in favour of targeted assistance.

By directing subsidies to only the most vulnerable groups, the administration seeks to ensure equitable distribution of resources without compromising fiscal health.

A portion of these savings will go towards increasing the allocation for Sumbangan Tunai Rahmah from RM8 billion to RM10 billion, benefitting nine million recipients nationwide.

To further strengthen its revenue base, the government is also expanding the scope of the Sales and Service Tax (SST) and introducing a 2% dividend tax on dividend income exceeding RM100,000 per annum.

At the same time, the government plans to leverage public-private partnerships (PPPs) to deliver critical infrastructure projects to alleviate fiscal pressures while ensuring the timely execution of national development plans.

The Public-Private Partnership Master Plan (PIKAS) was rolled out last October, aiming to increase private investment by RM78 billion and generate 900,000 job opportunities by 2030 via stronger collaboration between the public and private sectors.

In tandem with fiscal reforms, the government has a renewed focus on good governance and anti-corruption measures. 

These include the increased allocation for Parliamentary oversight bodies to empower the Public Accounts Committee (PAC) and the Special Select Committees of the Dewan Negara and Dewan Rakyat.

Moreover, reforms are underway to enhance the accountability of government-linked companies (GLCs) and statutory bodies to ensure they deliver on their mandates and contribute meaningfully to Malaysia’s socioeconomic progress.

Putrajaya aims to make bureaucratic inefficiency a thing of the past through initiatives including Pasukan Star - a task force aimed at cutting red tape and improving public service delivery.

It also leverages digital solutions to address inefficiencies by modernising administrative processes and streamlining operations.

The rule of law is a critical foundation for effective governance. Therefore, the government is implementing reforms to ensure that Malaysia’s legal framework is up to date.

These reforms are pivotal not only in maintaining social order but also in fostering investor confidence and driving economic growth.

Cybersecurity has emerged as another critical area of focus, driven by the growing challenges in this increasingly digital landscape.

More funding will be directed towards safeguarding the nation’s digital infrastructure, ensuring that individuals, businesses, and state institutions are protected against cyber threats.

The 2025 Budget initiatives reflect the government’s overarching vision to balance fiscal responsibility with socio-economic development.

By addressing structural inefficiencies, implementing targeted reforms, and enhancing governance measures, these efforts will undoubtedly have a direct impact, not just on the nation's economic growth but social equity as well, paving the way towards a more sustainable and inclusive Malaysia.

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