Malaysia will continue with its fuel subsidy reform despite the possibility of a general election this year, according to Deputy Finance Minister Liew Chin Tong.
The government is considering whether to “slightly reduce the quota” of subsidised fuel for Malaysians to manage demand, while ensuring that lower-income individuals are protected in the global energy crisis, Liew said at an event on Tuesday. Another measure under review is to shift diesel usage for Borneo states to a similar subsidised allocation mechanism, he said.
Policymakers in the Southeast Asian country are preparing for a more targeted approach in subsidies as global energy costs remain elevated from the war in Iran. Over the weekend, Prime Minister Anwar Ibrahim said the government was reviewing a rationalisation of fuel subsidies for higher-income earners.
While Liew doesn’t rule out the possibility of a general election this year, he said he doesn’t “see political factors coming into this.”
The move comes as Malaysia faces a sharp increase in fuel subsidy spending. The country was expected to spend about 7 billion ringgit ($1.8 billion) on fuel subsidies in April, about 10 times more than before the conflict, highlighting a mounting fiscal strain.
Liew said ensuring “consistent supply for as long as possible” was a bigger concern for him at the moment than fiscal issues.
The government reduced in April the subsidised fuel allocation for its most popular fuel from 300 liters to 200 liters per citizen. The subsidised price has remained unchanged at 1.99 ringgit ($0.50) per liter since the Iran war started on Feb. 28. Diesel in Sabah and Sarawak has been capped at 2.15 ringgit per liter.
Bloomberg
