Malaysia's targeted subsidies save RM15.5 billion, keep inflation under 2%

PUTRAJAYA, Jan 15 — Malaysia's targeted subsidy programs have saved RM15.5 billion in public funds while keeping inflation below 2%, Treasury Secretary-General Datuk Johan Mahmood Merican said in an interview.

He stated that targeted subsidies are a realistic and effective instrument to help households manage the rising cost of living.

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

Prime Minister Datuk Seri Anwar Ibrahim announced the savings figure in October, attributing it to the government's targeted approach.

Johan explained that subsidies become problematic when applied as blanket measures, leading to significant leakages like fuel smuggling.

Initiatives such as BUDI Madani and BUDI Madani RON95 tackle these leakages and generate savings, he added.

These savings are redirected to assist Malaysians through the Sumbangan Asas Rahmah (SARA) and Sumbangan Tunai Rahmah (STR) programmes.

Johan stressed that the SARA and STR disbursements do not create inflationary pressure.

He said Malaysia's method differs from some countries that raise prices to market levels and then provide cash assistance.

The Malaysian government adopts a targeted approach specifically to support vulnerable groups, he concluded.