Malaysia ready to shoulder fuel subsidies of up to RM45 billion a year
With global crude oil prices rising to between U.S.$120 and U.S.$130 a barrel, the government has kept the price of RON95 petrol at RM1.99 per litre. The move puts potential annual subsidy costs at between RM42 billion and RM45 billion to ease cost-of-living pressures, particularly for lower- and middle-income groups.
Highlights
- Malaysia is prepared to bear fuel subsidy costs of up to RM45 billion a year if global oil prices continue to rise.
- The decision to maintain subsidies is intended to protect the public from rising retail fuel prices, which could add RM2 to RM10 a day to household expenses.
- Maintaining RON95 prices focuses on protecting lower- and middle-income groups amid pressure from international energy prices.
This article was translated from the original. Read the original version by our correspondent here.
Subsidy commitment amid rising oil prices
As reported by The Edge Malaysia, Prime Minister Datuk Seri Anwar Ibrahim said the government was prepared to absorb rising fuel subsidy costs rather than pass the burden on to the public through higher retail prices.He said the approach was intended to protect the public from the impact of rising global fuel prices and the resulting pressure on household spending. He said that if oil prices continued to rise, the cost to the government could reach between RM42 billion and RM45 billion a year.
Anwar said fuel prices rising in line with market rates would force consumers to pay an additional RM2 or RM3, or at least RM5 a day. For households that need to take their children to school and commute to work, that could increase to an extra RM10 a day.
Implications for the national cost of living
The government’s stance keeps policy focused on protecting consumers’ purchasing power as pressure from international energy prices mounts. By keeping RON95 prices unchanged, the administration is seeking to limit the knock-on effects on families’ daily spending, as well as on lower- and middle-income groups.Anwar made the remarks at the Sentuhan Kasih Madani programme and the launch of the National Cost of Living Action Plan 2030 at the Hang Jebat Sports Complex in Krubong, Melaka, on Saturday. The statement positions fuel subsidies as one of the government’s main tools for managing the cost of living amid fluctuations in global oil prices.
In our previous coverage of fiscal consolidation in Malaysia and its target of reducing the deficit to below 3% of GDP, we explained how targeted subsidy reforms and the digitalisation of systems can improve public spending efficiency while protecting vulnerable groups. We also highlighted that the deficit trajectory and the government’s debt position are influenced by factors such as oil prices and pressure from social spending.
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