‘Once-in-generation’ RON95 Subsidy Reform Painful But Critical For Fiscal Reform - Rafizi

Prime Minister Anwar Ibrahim recently announced during the tabling of the Budget 2025 that the government aimed at eliminating gasoline subsidies in the middle of 2025 using a tiered system that would maintain the status quo for 85% of Malaysians while eliminating aid for the top 15% of earners.
According to Economy Minister Rafizi Ramli, there will probably be criticism from the public over the enrollment, but it is essential for the nation's fiscal reform. Rafizi stated in an interview with Bloomberg TV that although this plan may cause price increases and inflation, the government is ready for the difficulties that lie ahead, as reported by Malay Mail.


Rafizi predicts that after any increase in fuel prices, inflation will cycle for 12 months before stabilizing at about 2%, which is still a significant cause for concern.
“We are prepared for the choppy waters ahead,” Rafizi said, calling the move “a once-in-a-generation decision that affects everyone’s lives.”
Rafizi stated that the country's fiscal stability depends on cutting subsidies and broadening the tax base, and the government could not afford any more delays. In order to draw in investors and bolster the economy, he continued, the government's top priorities are cutting the budget deficit and maintaining Malaysia's top credit rating.
From the early 1980s onwards, Malaysians have benefited from decades-long gasoline subsidies. Fuel subsidies have increased over time to account for a sizable portion of government spending. Anwar claims that Malaysia spent more than RM50 billion on direct fuel subsidies just last year.

The Prime Minister stated in his Budget 2025 speech that switching to targeted subsidies would save the government RM8 billion, or 40% of the total amount, of the RM20 billion Malaysia spends annually on RON 95 subsidies to keep pump prices at RM2.05 per litre.