13/05/2026

WEDNESDAY | MAY 13, 2026

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Economists: Fuel subsidy bill unsustainable o ‘Govt caught between maintaining public support and managing debt, as costs to subsidise have surged fourfold due to external price shocks’

Govt to continue rolling out measures to ease cost pressures PETALING JAYA: The government will continue rolling out economic interventions in a cautious, targeted and temporary manner as Malaysia faces mounting global cost pressures while striving to preserve domestic stability. Economy Minister Akmal Nasrullah Mohd Nasir said although overall food prices remain largely stable, early signs of increases are beginning to emerge across several key items, raising concerns over the growing burden on households. “For the period from May 4-6, selected food prices recorded movements ranging from a 2% decline to a 6.7% increase compared with the previous week,” he said during the weekly Global Crisis Briefing. He said beef prices fell 1.4% to RM35.88 per kg from RM36.40 previously, while chicken prices remained stable at between RM9.50 and RM9.51 per kg. However, several essential items registered increases: mackerel rose 3.9% to RM17.42 per kg, white prawns went up 1.2% to RM32.11 per kg, mustard greens climbed 4% to RM7.23 per kg and fresh coconut milk surged 6.7% to RM16.88 per kg. “The prime minister and members of the National Geo-Economic Command Centre have expressed concern that some groups, especially in rural communities, may already be feeling the pressure of rising daily costs.” He said the chief secretary to the government has been tasked with coordinating inter ministerial efforts to ensure that assistance reaches vulnerable groups swiftly and effectively. Akmal also pointed out to changing consumption patterns among Malaysians as households increasingly adopt cost-saving measures. “Rail ridership increased to 1,085,580 passengers daily in April 2026, up 7.6% from March, while daily bus ridership rose 10.3% to 227,448 passengers. Electricity demand edged up 1.4% to 20,097 megawatts. “These shifts reflect more cost-efficient behaviour among households, helping to ease financial pressures.” Akmal said Mara had implemented a 20% rental reduction involving more than 7,135 premises nationwide while Kuala Lumpur City Hall introduced a 50% rental cut for selected traders until 2027, benefiting over 10,000 operators. He also announced the launch of a new global supply crisis dashboard developed in collaboration with the Statistics Department, covering indicators related to energy, commodities and cost of living. The platform will be made publicly accessible on May 15. Citing the World Bank’s warning on intensifying global economic pressures, Akmal stressed that Malaysia’s policy response would remain measured and disciplined. – BY THE SUN TEAM must be factored into any income classification. Umno secretary-general Datuk Dr Asyraf Wajdi Dusuki similarly cautioned against rigid income benchmarks, adding that households earning about RM13,000 a month could still face lower-income realities depending on family size and urban living costs. On Monday, Economy Minister Akmal Nasrullah Mohd Nasir said the government was still refining the income thresholds and implementation mechanism for targeted subsidies to avoid sudden economic shocks while ensuring that assistance reaches the intended groups. Officials are currently reviewing eligibility cut offs involving categories such as T5, T10, T15 and T20 as part of preparations for the phased rollout of targeted RON95 subsidies amid efforts to balance fiscal consolidation with mounting cost of-living pressures. On the use of Padu, Akmal said the assessment framework would extend beyond income levels alone, with eligibility determined using additional socioeconomic considerations.

litres may not save much, as most consumers already use less than 100 litres. “The RM7 billion monthly cost is unsustainable.” Williams proposed a tiered model similar to electricity tariffs, where subsidies decrease as consumption rises. He said, for example the first 100 litres should be fully subsidised, the next 50 litres at 50% subsidy, the following 50 litres at 25%, and no subsidy beyond 200 litres. “This encourages economising, and affects the rich the most.” He cautioned that quotas below 100 litres could spark backlash, stressing that the most effective system must balance fiscal savings with minimal disruption. Finance Deputy Minister Liew Chin Tong had earlier said the government’s top priority is to ensure that the country continues to have sufficient fuel supply for as long as possible. “As a society, we must ensure that we have petrol supply for the longest of time, and at some point we should build consensus to support the effort to reduce fuel consumption,” he said.

Ű BY QIRANA NABILLA MOHD RASHIDI newsdesk@thesundaily.com

“When income stays the same but spending rises, it leads to debt. The question is who pays later? Most likely the current or future generation.” She added that Malaysia has been working to reduce its debt-to-GDP ratio after the Covid 19 pandemic, and warned that cutting fuel quotas is only a short-term fix. She said Malaysia should gradually reduce subsidies and invest more in renewable energy in the long term while ensuring that vulnerable groups are supported through broader energy diversification. Economist Prof Geoffrey Williams agreed that reducing the RON95 quota could lower costs, but argued that a tiered pricing system would be more effective. He said lowering the monthly quota to 150

PETALING JAYA: Malaysia’s fuel subsidy bill has reached unsustainable levels amid rising global oil prices, with economists cautioning that the current system places a heavy strain on national finances and must be reformed. Putra Business School economist Assoc Prof Ida Md Yasin said the government is caught between sustaining public support and managing debt, as subsidy costs have surged fourfold due to external price shocks. “The issue is not about reducing subsidies but the rising cost of maintaining them.” Ida said while government revenue remains largely unchanged, expenditure has risen sharply leading to deficits and borrowing.

‘Cut T20 Budi95 subsidies at risk of fresh inflation, recession’ Liew said the government’s top priority is to ensure that the country continues to have sufficient fuel supply for as long as possible. – MASRY CHE ANI/THESUN

Ű BY THE SUN TEAM newsdesk@thesundaily.com

expenses. “The government cannot throw around labels like T20, T15, T10 or T5 and expect people not to panic.” Lim also questioned whether the government’s Central Database Hub (Padu) would play a meaningful role in determining eligibility, given that it was introduced as a key data platform for targeted policymaking. “If the final decision is still based on broad labels without proper assessment, then what is the point of Padu?” He warned that households just above the cut-off threshold risk being unfairly penalised. “Do not turn the middle class into the government’s ATM.” From the opposition bench, Perikatan Nasional deputy chairman Datuk Seri Tuan Ibrahim Tuan Man said the government must first clearly define who qualifies as “rich” before proceeding with subsidy cuts. “The T20 should not automatically be labelled as rich,” said the PAS deputy president, arguing that rising living costs and unstable incomes

operating costs. “Is the time right, at the risk of inflation, shrinking consumption and slowing the economy?” said the Wanita DAP deputy chief. She said many within the T15 and T20 categories comprise small business owners and professionals whose higher fuel and transport costs would likely be passed down the supply chain, fuelling broader inflationary spillovers. “If not handled properly we are at risk of a full blown recession,” she said, adding that domestic consumption, a key driver of economic growth, could weaken sharply if disposable incomes continue to be squeezed. Kepong MP Lim Lip Eng urged the government to clearly explain the mechanism behind the proposed subsidy reform, warning that labels such as T20 and T15 oversimplify the financial realities faced by many urban households. “High income does not mean rich,” he said, adding that families above the T20 threshold in major cities could still struggle after accounting for housing, education, loans and daily living

PETALING JAYA: The government’s proposed rationalisation of RON95 petrol subsidies is drawing growing political resistance, with lawmakers warning that the move could trigger fresh inflationary pressures, widen inequality and further burden Malaysia’s already strained middle class. The backlash follows Prime Minister Datuk Seri Anwar Ibrahim’s announcement that Putrajaya had agreed in principle to remove fuel subsidies for higher-income groups as part of wider fiscal reforms aimed at improving subsidy efficiency and strengthening national finances. Critics, however, cautioned that the timing of the move could backfire amid rising living costs, fragile global economic conditions and lingering geopolitical uncertainty. Puchong MP Yeo Bee Yin warned that higher fuel prices would not only affect wealthy households but also ripple across the broader economy through increased logistics and