Among the various announcements made during the Budget 2023 speech on Feb 24, 2023, in Malaysia, the one thing I expected to see – but in many ways didn’t – was how we would cut down on subsidies. In particular, it was earlier announced that there would be a “gradual move towards a more targeted subsidy mechanism”, yet the total allocated to subsidies in Budget 2023 amounted to RM55bil, more than the RM31bil in 2022.
The benefits of a targeted subsidy system are clear. Last year, Deputy Finance Minister Datuk Seri Ahmad Maslan highlighted in Parliament that the country’s top 20% income group, known as T20, received petrol, diesel, and LPG subsidies worth between RM15bil and RM17bil annually. This equates to approximately 30% of the RM50.8bil fuel subsidy as a whole.