Kuala lumpur: Despite the view that subsidies are inefficient and prices of basic necessities should be determined by market forces, the MADANI Government has chosen a more realistic approach by providing targeted subsidies to help households cope with cost-of-living pressures.

According to BERNAMA News Agency, Treasury secretary-general Datuk Johan Mahmood Merican stated that subsidy rationalisation, such as for electricity and fuel, considers the real needs of the people rather than merely following the goals prescribed by economists or the World Bank, which suggest subsidies should be given only to the poor. He emphasized that the government sees subsidies as a vital instrument to assist households if they are managed and targeted more effectively.

Johan highlighted that issues arise when blanket subsidies are implemented, as they lead to significant leakages. He cited examples such as fuel being smuggled across borders, which undermines the subsidy system. In a recent interview with Bernama, he discussed the implementation of BUDI Madani and BUDI Madani RON95 (BUDI95), noting that these initiatives not only address subsidy leakages but also generate savings. These savings are reinvested into assisting the majority of Malaysians through the Sumbangan Asas Rahmah (SARA) and Sumbangan Tunai Rahmah (STR) programmes.

During the tabling of Budget 2026 last October, Prime Minister Datuk Seri Anwar Ibrahim announced that the government's bold move to implement targeted and restructured subsidies had yielded significant results, with total savings reaching RM15.5 billion. Johan also addressed concerns about the inflationary implications of the SARA and STR disbursements, stressing that these measures do not create inflationary pressure. Instead, the targeted approach has enabled the government to keep inflation below two per cent, demonstrating that subsidy programmes such as SARA do not contribute to widespread price increases.

Johan further explained that, unlike the approach taken by some other countries where prices are raised to market levels and cash assistance is then provided, the Malaysian government adopts a targeted approach to support vulnerable groups. This strategy not only helps those in need but also promotes price stability in the market.