Petrol Subsidy Cuts May Happen in Malaysia’s Budget 2025

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A lot of anticipation is growing as Malaysia now prepares for the Budget 2025 announcement this Friday, with a lot of people focusing on Prime Minister Anwar Ibrahim and his economic plans for the country’s future.

One of the main areas of concern is the possible reductions in petrol subsidies, as the government tries to improve its financial standing and cut down on expenses.

According to CNA, Malaysia recently reduced diesel subsidies in a move believed to gauge public opinion, resulting in a notable rise in diesel prices. Even though cash aid was provided to those impacted, the choice was still criticized and disliked.

Presently, the government is contemplating directing blanket subsidies towards RON95 petrol to substantially decrease the total subsidy expenses.

Analysts predict Anwar will discuss strategies to reduce subsidy expenditures and boost tax incomes in the next budget. Nevertheless, they think that it is improbable for Malaysians to experience an immediate effect in terms of increasing prices.

Anwar, who holds the position of Finance Minister as well, is anticipated to proceed cautiously to prevent any negative effects on the cost of living and guarantee a seamless transition.

Anwar suggested a potential tactic of increasing income levels as a way to address the issue of escalating inflation. This encompasses possible changes to salary practices to tackle the consequences of subsidy reductions. The government is also looking into options like assessing individual tax relief policies, extending the progressive wage policy, and increasing the minimum wage to RM1,500.

With Malaysia’s economy displaying indications of expansion and steadiness, the government is aiming to uphold fiscal consolidation and handle its national debt. Although facing obstacles in fiscal management and results, Anwar stays dedicated to enhancing the nation’s financial prospects.

The government may bring back the Goods and Services Tax (GST) once specific wage thresholds are reached, in addition to continuing petrol subsidies. There have been conversations in the business world and among economists advocating for a wide-reaching consumption tax to increase revenue generation.

In general, Malaysia’s Budget 2025 is developing as a significant point in the country’s economic journey, as Anwar works through obstacles to lead the nation towards financial stability and growth.

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