Malaysia’s plan to stop wealthier drivers from enjoying cheap subsidised petrol has left Prime Minister Anwar Ibrahim facing a politically fraught question: how to define “rich” without punishing households already squeezed by higher living costs.
The issue has sharpened as the Middle East energy shock strains government finances, forcing authorities to weigh fiscal discipline against the risk of angering middle-class voters in a car-dependent country.
Anwar said the government had agreed in principle to review fuel subsidies for higher-income Malaysians, though it had yet to decide whether the cut-off should apply to the top 20 per cent, 15 per cent, 10 per cent or 5 per cent of earners.
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“We have yet to decide whether [it will be applied to] the T20, T15, T10 or T5 income groups, as we do not want it to [affect] the upper middle class,” Anwar told reporters after an event on Sunday.
The proposal, prepared by a Crisis Management Task Force headed by former state-oil company Petronas chief Hassan Marican under the National Economic Action Council, comes as Malaysia’s fuel bill has surged under pressure from higher crude prices and supply jitters around the Strait of Hormuz, one of the world’s most important oil chokepoints.
Malaysia introduced the BUDI95 targeted fuel subsidy in September last year, allowing eligible citizens to buy up to 300 litres of RON95 petrol a month at 1.99 ringgit (50 US cents) per litre, among the lowest pump prices in Asia.