Kuala lumpur: The government's strategic move to temporarily adjust the fuel subsidy mechanism is seen as an effort to find a balance between the welfare of the people and the country's fiscal discipline amid geopolitical uncertainty in West Asia.
According to BERNAMA News Agency, Universiti Teknologi MARA (UiTM) Faculty of Administrative Science and Policy Studies senior lecturer Mujibu Abd Muis stated that the temporary adjustment of the Budi MADANI RON95 (BUDI95) programme, effective April 1, is considered an important step towards targeted subsidies to prevent leakage and ensure optimal use of fiscal resources. He highlighted that this move is particularly significant in the context of global energy price volatility.
"The West Asian crisis exerts external pressure on global energy prices, and this government measure is seen as capable of relatively reducing the impact, not eliminating it entirely. Interventions such as targeted subsidies and price controls help absorb some of the cost shocks, especially for vulnerable groups," he explained. He added that in the current economic situation, blanket subsidies are no longer sustainable, making the shift to targeted subsidies a necessary reform step, even if unpopular.
On Thursday, Prime Minister Datuk Seri Anwar Ibrahim announced several strategic national measures to fortify Malaysia's readiness to face the global energy crisis triggered by the conflict in West Asia. These measures include maintaining the subsidised price of BUDI95 petrol at RM1.99 per litre, alongside a temporary adjustment of the monthly quota from 300 litres to 200 litres. The ceiling limit for targeted RON95 petrol subsidies for e-hailing and gig workers remains up to 800 litres. Meanwhile, people in Sabah and Sarawak continue to receive subsidised diesel at RM2.15 per litre, and the public service sector is granted phased and selective work-from-home arrangements.
Further commenting, Mujibu noted the challenges posed by the temporary adjustment of BUDI95, particularly for the 'squeezed middle' group, which is not statistically poor but significantly affected due to exceeding the 300-litre usage limit. He suggested that the government consider an appeal mechanism or conditional flexibility to ensure fairness without compromising fiscal objectives.
"The challenge is to ensure the social legitimacy of this policy remains high, so that the people understand the rationale behind the short-term sacrifices," he mentioned. He warned that minority voices framing the government as neglecting the people could disrupt public perception and undermine economic confidence.
Meanwhile, the Federation of Malaysian Consumers Associations (FOMCA) regards the decision to maintain the subsidised price of BUDI95 as crucial in shielding consumers from price increase ripple effects, thus helping ease the cost of living pressure amidst global fuel price uncertainties. Dr. T. Saravanan, FOMCA's chief executive officer, asserted that while the measure offers short-term relief and stabilises consumer sentiment, a long-term solution requires comprehensive structural reform in subsidy policies and cost of living management.
He emphasized the need for improved subsidy targeting and integrated data usage to ensure aid reaches the truly needy groups, noting that some groups, particularly among the M40 and informal workers, have been overlooked. He also highlighted the importance of maintaining diesel prices in Sabah and Sarawak for controlling logistics costs and preventing goods price hikes, while structural issues like supply chain efficiency and intermediaries' roles need thorough addressing.
Sharing a similar perspective, economic analyst Associate Professor Dr. Zainizam Zakariya remarked that the government's efforts to balance protecting the people, controlling the fiscal deficit, and ensuring a stable fuel supply make clear sense from a public economics standpoint due to the swift surge in subsidy bills. He explained that while almost 90 percent of eligible citizens use less than 200 litres of petrol monthly, groups requiring long-distance travel, such as cross-district commuters and rural households, may feel the additional burden, highlighting the varied impact across consumer groups.