4-10-2023 (KUALA LUMPUR) Malaysia is preparing to transition to a targeted subsidy system, with the expectation of saving between $1 billion and $2 billion annually, as part of its efforts to reduce the fiscal deficit. Economy Minister Rafizi Ramli announced that the government will unveil a “concrete move” away from the current blanket subsidy system in the upcoming 2024 budget.
Additionally, the government is developing a cash aid distribution system to counter the impact of reduced subsidies on inflation. This initiative is expected to benefit around 80% of the country’s 8 million households.
While the Ministry of Economy did not respond immediately to Reuters’ request for confirmation, the government currently subsidizes essential goods such as fuel, cooking oil, and locally produced rice, and is projected to spend 64 billion ringgit ($13.54 billion) on subsidies, aid, and incentives this year.
In February, Prime Minister Anwar Ibrahim pledged to maintain subsidies and other forms of government support for lower-income groups in response to rising costs and slowing economic growth.
