Malaysia's targeted subsidies save RM15.5 billion, ease living costs: Treasury s

PUTRAJAYA, Jan 17 — The Malaysian government is using targeted subsidies to help households cope with cost-of-living pressures, saving RM15.5 billion and keeping inflation below 2%, Treasury secretary-general Datuk Johan Mahmood Merican said.

He stated that subsidies are not inherently bad but serve as an important instrument when managed effectively.

"The issue arises when blanket subsidies are implemented, as they lead to significant leakages — for example, when fuel is smuggled across borders," Johan said in a recent interview with Bernama.

He cited initiatives like BUDI Madani and BUDI95, which tackle subsidy leakages and generate savings redirected to programs such as Sumbangan Asas Rahmah (SARA) and Sumbangan Tunai Rahmah (STR).

During Budget 2026 last October, Prime Minister Datuk Seri Anwar Ibrahim announced the targeted subsidy approach had saved RM15.5 billion.

Johan stressed that these measures do not create inflationary pressure, with inflation kept below 2%.

"This goes to show that targeted subsidies not only help those in need, but also promote price stability in the market," he added.

The government's approach focuses on real needs rather than strictly following economists' or World Bank recommendations for subsidies only for the poor.

Unlike some countries that raise prices to market levels and provide cash assistance, Malaysia adopts a targeted approach to support vulnerable groups.

The savings from subsidy rationalization, such as for electricity and fuel, are used to assist the majority of Malaysians through SARA and STR programs.