CGS International
July 23, 2025

Malaysia Unveils Merdeka Goodies: Cash Handouts, Fuel Price Cuts, and Consumer Boost—Winners and Market Impact

Overview: Government Measures to Ease the Cost of Living

In a significant move to address rising living costs, Malaysia’s Prime Minister Anwar Ibrahim has rolled out a robust package of “appreciation” measures ahead of the nation’s Independence Day. These initiatives, highlighted by broad-based cash handouts, lower RON95 fuel prices, and targeted subsidies, are designed to spur private consumption and offer relief to millions of Malaysians.
Key measures announced include:

• A one-off RM100 cash handout to all adult citizens under the Sumbangan Asas Rahmah (SARA) programme
• Lower RON95 petrol prices for the general public
• Doubled funding for Madani Rahmah Sales (discounted daily essentials)
• Freezing scheduled toll rate hikes on 10 highways

These policy shifts are poised to benefit the consumer sector, especially retail chains serving the mass market. Below, we analyze the implications for key companies, the broader economic outlook, and the strategic nuances of the government’s approach.

Detailed Breakdown of Merdeka Measures

RM100 SARA Cash Handout: Stimulating Everyday Spending

• All Malaysian adults will receive a RM100 cash handout via their MyKad (identification card).
• Funds can be used at over 4,100 retail outlets—including major chains such as Mydin, Lotus’s, Econsave, and 99SpeedMart—between August 31, 2025, and December 31, 2025.
• Estimated 22 million adult beneficiaries.
• Total allocation: RM2 billion, equivalent to 0.1% of forecast 2025 GDP.
• The 2025 combined allocation for Subangan Tunai Rahmah and SARA cash assistance schemes will rise to a record RM15 billion (2024: RM10 billion).

RON95 Fuel Subsidy Rationalisation: Targeted Relief with Market Efficiency

• The government will cut the RON95 petrol price from RM2.05/litre to RM1.99/litre for eligible consumers.
• Higher income earners and foreigners are expected to be excluded from the subsidy, paying market rates instead.
• Rationalisation details are set for announcement in September 2025.
• Reduced smuggling, as seen with retargeted diesel subsidies, will help fund the lower pump prices for the masses.

Expanded Madani Rahmah Sales and Toll Freeze

• Madani Rahmah Sales funding doubled to RM600 million, expanding discounted essentials to more regions.
• Scheduled toll rate increases on 10 highways have been frozen, with the government covering RM500 million in compensation to concessionaires.

Positive Outlook for Private Consumption and Retail

The above measures are projected to underpin private consumption growth, forecast at +5.5% year-on-year for 2025. These steps complement earlier government actions to enhance disposable income, notably:

• Flexible EPF Account 3 (May 2024)
• Civil servant pay hikes (Dec 2024 and Jan 2026)
• Minimum wage increase (Feb 2025)

Retailers with broad reach and mass-market appeal are set to benefit most from the cash handouts and increased consumer spending.

Key Beneficiaries: Company-by-Company Analysis

99 Speed Mart Retail Holdings

• Stock Rating: HOLD
• Target Price: RM2.30
• Closing Price: RM2.34
• Malaysia’s largest mini-market chain with 2,833 outlets nationwide.
• Most products are likely eligible under the RM100 SARA handout.
• Potential for direct and substantial benefit from increased customer traffic and spending.
• Uncertainty remains whether all outlets will participate in the initiative.

Mr D.I.Y. Group (M) Bhd

• Stock Rating: ADD
• Target Price: RM2.09
• Closing Price: RM1.64
• Participating in the RM100 SARA initiative at selected outlets.
• One of the largest retailers for household cleaning products, personal hygiene, and school supplies—items eligible under the scheme.
• Expected boost in sales volume, not just within SARA-covered products but potentially for other discretionary categories as well.

Mynews Holdings Berhad

• Stock Rating: ADD
• Target Price: RM0.75
• Closing Price: RM0.535
• Operates MyNews and CU stores nationwide.
• Well-positioned to capture spillover effects from increased disposable income and discretionary spending driven by the new measures.

Other Consumer Discretionary Names

• 7-Eleven and F&N are expected to benefit from increased mass-market spending due to higher disposable income and broader reach.
• Broader consumer sector, especially those serving the mass market, stands to gain from the government’s record cash aid allocations and other support policies.

Annual Allocation for Broad-Based Cash Aid (RM Billion)

Strategic Implications for Investors

• Malaysia’s consumer sector is set to benefit from historic levels of government cash assistance and targeted subsidies.
• Retailers with extensive networks and mass-market positioning—particularly 99SpeedMart, MRDIY, MyNews, 7-Eleven, and F&N—are positioned for outsized gains.
• Fuel subsidy rationalisation may further shift consumer spending patterns, benefiting businesses that cater to lower- and middle-income groups.
• Investors should monitor the implementation details, especially regarding RON95 subsidy targeting and outlet-level participation in SARA initiatives.

Stock and Sector Ratings Explained

• Add: Expected total return exceeds 10% over the next 12 months.
• Hold: Expected total return between 0% and +10% over the next 12 months.
• Reduce: Expected total return below 0% over the next 12 months.
• Overweight (Country/Sector): Above-benchmark positioning recommended.
• Neutral: In-line positioning with the benchmark.
• Underweight: Below-benchmark positioning advised.

For the quarter ended June 30, 2025, the distribution of ratings across CGS International’s covered companies was: Add 70.6%, Hold 20.5%, Reduce 8.9%. Only a small fraction of these companies are investment banking clients.

Conclusion: A Supportive Backdrop for Malaysian Consumer Stocks

Malaysia’s latest “Merdeka goodies” package represents a powerful tailwind for private consumption and the retail sector. With significant cash handouts, targeted fuel subsidies, and additional measures to boost disposable income, the government is laying the foundation for robust consumer activity. Investors should watch for implementation nuances and focus on retail and consumer discretionary stocks with mass-market appeal for potential outperformance in the coming quarters.