Malaysia’s Anwar vows to ‘not burden the people’ with subsidy cuts aimed at big businesses

Government subsidies are expected to reach a record US$18 billion in Malaysia this year, about half going to concessions on fuels and cooking gas
Malaysia’s prime minister said in a briefing on Wednesday that subsidies should not be given to multinational companies and corporations that export

Malaysia

Bloomberg

Published: 5:02pm, 14 Dec 2022

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Malaysia will start reducing power subsidies for large businesses and multinational corporations, Prime Minister Anwar Ibrahim said, as the government looks to channel spending towards the needy.

Subsidies should not be given to multinational companies and corporations that export, he said in a briefing after chairing a cabinet meeting on Wednesday. Small- and medium-sized enterprises and those involved in agriculture and food production will not be affected, he added.

“The decision is clear: we will not burden the people,” Anwar said. The increase for businesses would be “very gradual, reasonable so that it will not disrupt their operations”, he said, adding that power subsidy for next year is estimated to cost the government 30 billion ringgit (US$6.8 billion).

A farmer works in a field in Bali. Anwar said businesses involved in agriculture and food production will not be affected by subsidy cuts. Photo: AP

Anwar has maintained that reducing the burden of rising prices on low-income groups is the top priority of his administration. Two weeks ago he asked relevant ministries and agencies to come up with measures to tackle rising living costs and look at ways to redistribute blanket subsidies that are currently enjoyed by the rich as well as businesses.

Malaysia, which runs Southeast Asia’s widest fiscal deficit after the Philippines, has seen its budget strained by the cost of keeping essentials at below-market prices. Government subsidies are expected to reach a record 80 billion ringgit (US$18 billion) this year, with concessions on fuels and cooking gas alone projected to account for about half the amount.

While Malaysia’s economy has rebounded rapidly from the pandemic, the uneven recovery has left many struggling to afford basic foods amid soaring inflation.

Malaysia’s Anwar says subsidies must be targeted to low-income people

On Tuesday, Anwar said the concessions must be funnelled to the most needy, citing an example of state-run power producer Tenaga Nasional Bhd., whose 1 million corporate customers enjoy more than 50 per cent of the electricity subsidy. He also said the government will consider intervention methods at the consumer level to address supply shortages.

Anwar, whose unity government is supported by at least four political groups, also said he is confident of surviving a confidence vote next week. He has vowed to show that his alliance commands a majority through the vote when parliament meets for two days from December 19.