BIMB Research said the synchronised execution of landmark wage reforms and record-high direct cash assistance have fundamentally reshaped the domestic retail landscape.
PETALING JAYA: Malaysia’s growth story so far this year is being reshaped by a deliberate move away from broad-based subsidies toward a tightly targeted system that channels cash and wage gains directly to active consumers, analysts say.
According to BIMB Research, this is likened to a “double-boost” effect on domestic demand.
“This phenomenon, driven by the synchronised execution of landmark wage reforms and record-high direct cash assistance, has fundamentally reshaped the domestic retail landscape.
“By placing liquid capital directly into the hands of the nation’s most active consumers, the government has not only insulated the economy against global headwinds but also created a high-visibility growth runway for specific corporate sectors,” the research house said.
It noted that the first pillar of the strategy is a structural lift in household income level.
A RM1,700 minimum wage became mandatory for all employers last August, representing a 13.3% increase from the previous level.
“Unlike high-net-worth segments, these groups possess a high marginal propensity to consume, meaning nearly every additional ringgit is immediately recirculated into the local economy through retail spending,” BIMB Research said. The second pillar is the expansion of direct cash assistance.
Budget 2026 raised allocations for Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah (Sara) to a record RM15bil, up from RM13bil last year.
BIMB Research pointed out that timing further amplifies the impact.
Next month brings an unusual convergence of Chinese New Year (Feb 17 and 18) and the start of Ramadan (Feb 19 or 20), compressing gifting, apparel purchases and food stockpiling into a 30-day “double-festive” window.
The government will credit a one-off RM100 Sara payment to all 22 million Malaysian adults on Feb 9, amounting to RM2.2bil in immediate liquidity, a boost particularly significant for grocers and food-and-beverage operators during their highest-margin quarter.
Tourism adds a third layer of demand.
The launch of Visit Malaysia 2026 (VM26) targets 47 million visitor arrivals and RM329bil in receipts.
BIMB Research has a “buy” call with a target price of RM2.40 on MR DIY Group (M) Bhd
as the group is well placed to capture value-segment demand for home décor and household goods, categories that typically see strong turnover during major celebrations.
Its nationwide scale also allows it to absorb higher labour costs more effectively than smaller peers while maintaining competitive pricing, supporting margins even as volumes rise.
Padini Holdings Bhd, with a “buy” call and a target price of RM2.40, is positioned as a direct beneficiary of higher disposable income among civil servants following the latest salary adjustments.
The group’s core apparel brands, including Seed and P&Co, traditionally enjoy peak customer traffic during the Chinese New Year and Hari Raya shopping period, giving the company strong exposure to both the income rise and the compressed festive-demand window.
For broader consumption, Aeon Co (M) Bhd, which BIMB Research has a “buy” call for at a target price of RM1.75, is viewed as a “festive one-stop shop” that caters to the domestic middle class while also tapping into higher tourist spending under the VM26 campaign.
Its department store and supermarket format allows it to capture spending across essentials, gifts, and apparel in a single location, benefiting from both local and international footfall during the peak season.
Farm Fresh Bhd, with a “hold” call and a target price of RM2.45, offers exposure to the gradual “premiumisation” of consumer spending.
As wages for lower-income and middle-class households rise toward and above RM1,700, spending patterns tend to shift from condensed or powdered milk to fresh, higher-quality dairy products.
Meanwhile, Petronas Dagangan Bhd, with a “hold” call and a target price of RM19.50, is expected to benefit from rising mobility during the festive and tourism surge.
Stronger demand for buses, e-hailing services, rental cars and domestic air travel translates into higher fuel volumes, while increased traffic at service stations also supports its retail and convenience-store sales, providing an additional earnings lever alongside core fuel operations.
