Kuala Lumpur: The government of Malaysia will focus on reducing the RON95 petrol subsidy this year before implementing a carbon tax in 2026, as stated by Finance Minister II Datuk Seri Amir Hamzah Azizan. He emphasized the need to address fuel subsidy issues, especially those in the energy sector, before introducing the carbon tax. The government had previously announced the carbon tax plan targeting the iron, steel, and energy industries by 2026, as outlined in Budget 2025.
According to BERNAMA News Agency, Datuk Seri Amir Hamzah highlighted the importance of precursor steps before the carbon tax rollout, stressing that Malaysia must avoid unintended consequences in the transition. He noted the current system’s distortions, particularly subsidies in the energy sector, and emphasized the necessity to scale back these subsidies to avoid conflicting policies.
Amir Hamzah shared these insights during the ‘Delivering Malaysia’s Energy Transition’ session, where he was joined by Deputy Minister of the Ministry of Energy Transition and Water Transformation (PETRA), Akmal Nasrullah Mohd Nasir. The session was chaired by Tan Sri Abdul Wahid Omar, a senior independent and non-executive director of IOI Corporation Bhd. Amir Hamzah stressed the importance of subsidy rationalisation as a foundation for sustainable mechanisms and policy frameworks.
He also mentioned that structured measures, including climate action frameworks and robust measurement tools, are expected to be introduced, culminating in the carbon tax’s implementation. Amir noted that for the transition to be effective and sustainable, the entire system must respond cohesively rather than through isolated announcements or standalone policies. The government’s challenge lies in integrating these measures coherently and effectively.
Prime Minister Datuk Seri Anwar Ibrahim recently assured that the RON95 petrol price adjustments would not impact 85 to 90 per cent of the population. Anwar underscored that the government’s subsidy rationalisation move is crucial to effectively channel national resources to benefit the lower-income group.