‘Risk is very real’: Malaysia’s Anwar gambles on petrol subsidy cuts

Expertly switching between woks as he whips up appam, the coconut and rice batter pancakes that draw morning commuters to his roadside stall in a Kuala Lumpur suburb, Raj Kumar harbours anxieties that simmer away beneath the calm: petrol subsidy cuts are looming and prices may soon rise again.

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At 44, Raj feels every shift in Malaysia’s rising cost of living – both in the prices he pays for ingredients and the rueful faces of his customers.

“Our suppliers raised prices after diesel subsidies were cut last year,” he told This Week in Asia. “If they cut petrol subsidies, prices are sure to go up again.”

Prime Minister Anwar Ibrahim announced in May that his government would press ahead with its plan to restructure subsidies for RON95 grade petrol in the second half of this year.

The move is part of a bid to slash an unwieldy subsidy bill that soared to an all-time high of nearly 80 billion ringgit (HK$148.6 billion) in 2023, with about half spent on fuel – both petrol and diesel.

Malaysian Prime Minister Anwar Ibrahim in Jakarta last month. His government is still planning to go ahead with petrol subsidy cuts in the second half of this year. Photo: AFP
Malaysian Prime Minister Anwar Ibrahim in Jakarta last month. His government is still planning to go ahead with petrol subsidy cuts in the second half of this year. Photo: AFP

The government’s aim is to end blanket subsidies and ensure that only the most needy receive state support – a move that is fiscally prudent but politically dangerous for Anwar with a general election due by 2028 at the latest.

  

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