Sign up | Log in



Home  >>   Daily News  >>   Malaysia News  >>   Economy  >>   Malaysia cuts fuel, sugar subsidies
NEWS UPDATES 16 July 2010

Malaysia cuts fuel, sugar subsidies

Related Stories
July 14, 2010
Malaysian companies should seize on strengthening

July 9, 2010 
Malaysian rate hike unlikely

November 19, 2009
Malaysia: Growth seen at 5% in 2010

November 13, 2009
Analysts predict Malaysia GDP to reach 3.2% in 2010

November 1, 2009
Malaysia: Govt won’t revise credit card tax policy

Malaysia cut fuel and sugar subsidies Friday, the first in a series of "difficult" reforms aimed at saving the government more than 750 million ringgit ($230 million) this year to curb its swollen budget deficit, the Associated Press reports.

However, analysts warned the move was politically risky for Prime Minister Najib Razak, who has struggled to shore up support for his National Front coalition ahead of general elections due by 2013.

In a statement late Thursday, Najib's office said cutting subsidies was part of "difficult but long-needed economic reforms" to shrink its fiscal deficit and help Malaysia become a developed nation, without overburdening the people.

It said subsidies had become ineffective and a barrier to Malaysia's progress as it benefited foreigners, the rich and big businesses rather than the poor, as well as encouraged smuggling to neighboring countries where prices are higher.

"Moving forward, additional, gradual and reasonable changes will be made to our subsidy regime to ensure that Malaysia is able to meet its development goals," it said.

"These measures are a demonstration of our fiscal responsibility. They will enhance Malaysia's financial stability, while also protecting (people)," it added.

Fuel prices rose by about 3 percent Friday, with a liter of petrol costing 1.85 ringgit (57 cents) and diesel 1.75 ringgit (55 cents). Liquefied petroleum gas was up 6 percent to 1.85 ringgit (57 cents) per kilogram. Sugar rose 15 percent to 1.90 ringgit (59 cents) a kilogram. Higher grade petrol will no longer be subsidized.

Even after the cuts, Najib's office said the government will still spend an estimated 7.82 billion ringgit ($2.44 billion) on fuel and sugar subsidies this year, and prices in Malaysia will still be among the lowest in the region.

It gave an assurance that the government will continue to subsidize education and health care, providing training, scholarships and cheaper medical services.

Malaysia's fiscal deficit hit a 20-year high of 7 percent of gross domestic product last year. The government hopes to trim it to 5.3 percent this year and 2.8 percent by 2015 through fuel and other subsidy cuts in the next five years.

Ibrahim Suffian, director of independent research firm Merdeka Center, said Najib could face political fallout from the subsidy cuts, particularly among working-class voters.

"We will see a slight drop in support ... (but) at present it's manageable. It depends what is next," Ibrahim said.

Najib is seeking to woo back voters who abandoned his ruling coalition during 2008 general elections, denying it its usually vast victory margin amid public anger over racial and religious disputes, inflation and corruption. The next elections are due in 2013 but Najib, who took over the helm in April last year, is widely expected to call them earlier.

The economy has rebounded from a recession in 2009 and is forecast to grow 6 percent this year after expanding 10.1 percent year-on-year in the first quarter, its fastest pace in a decade.

Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
  Online Ad Rates

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2017 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand