Malaysians are bracing for possible price hikes this year, namely due to the planned increase in electricity tariffs, and the introduction of targeted fuel subsidies.
Both these measures, expected to kick in mid-2025, had to be taken to lower the government’s subsidies costs, which amount to billions of ringgit annually.
Here’s what we know so far:
New electricity tariffs
Prime Minister Datuk Seri Anwar Ibrahim on Tuesday stressed that the new electricity rates would not burden the business community. He added that 85 per cent of households would continue to receive subsidies. He assured that any increase in tariffs would not burden the business community. Anwar, who is also the finance minister, denied that the tariffs would increase by 14 per cent.
So, were the stakeholders consulted prior to the decision? And what’s the increase going to be like?
The Energy Commission, in a statement yesterday, said it will expedite engagement sessions with industry players and the business community.
The commission added that the engagement sessions would also serve as a platform for stakeholders to share their “views and concerns about the electricity tariff schedule, which is set to be finalised and announced by the government in due course”.
The percentage of the hike remains unclear.
Opposition leader Datuk Seri Hamzah Zainudin, in Parliament on Tuesday, wondered if the government had a proper structure in place to exclude 85 per cent of the population from the proposed electricity tariff increase.
Kebir Singh, the information chief for Parti Bangsa Malaysia Selangor said the decision was unacceptable and unjustifiable, at a time when Malaysians were already grappling with skyrocketing costs of food, transportation, and housing.
“The rakyat are struggling to survive, with many living paycheck to paycheck. The last thing they need is another financial burden,” Kebir said in a statement.
He urged Anwar to redirect government funds to subsidise electricity tariffs instead of elsewhere that do not directly benefit the rakyat, adding that the “government must take responsibility and act in the best interest of the people”.
Targeted fuel subsidy
In the Budget 2025 speech last October, Anwar said that the government would implement targeted subsidies for RON95 petrol starting mid-2025. The subsidies will be restructured to exclude foreigners, businesses, and the wealthiest 15 per cent of Malaysians.
However, the government will continue to allocate RM12 billion to subsidise petrol for 85 per cent of Malaysians. The subsidy of diesel, meanwhile, will be concentrated on essential industries and lower-income households.
Malaysia’s King, Sultan Ibrahim, in his opening speech in Parliament on Monday, welcomed the federal government’s subsidy reform approach.
“I therefore welcome the targeted subsidy approach as an effort to strengthen the government’s financial position. However, I urge that such subsidies be distributed efficiently and effectively, reaching only those who truly deserve them,” he said.
DAP’s Lim Guan Eng, however, urged the government to postpone targeted subsidies for RON95 to avoid floating its price on the market. He said this move, among others, could trigger inflation and increase transportation costs. Lim, a former finance minister, was responding to US President Donald Trump’s recent move to impose tariffs on Canada, Mexico, and China.
However, the mechanism to implement this unprecedented move, to date, remains unclear.
