Malaysia PM Anwar announces US$24 cash handout for all adults, cheaper petrol to head off rising costs
Details on a long-awaited plan to remove blanket subsidies on the widely used RON95 transport fuel will be announced before the end of September.
KUALA LUMPUR: Malaysia's Prime Minister Anwar Ibrahim on Wednesday (Jul 23) announced new measures to address growing public disquiet about the rising cost of living, including a cash handout for all adult citizens and a promise to lower fuel prices.
The announcement came ahead of a planned protest to be held in Malaysia's capital Kuala Lumpur on Saturday, calling for Anwar to step down over escalating prices and a failure to deliver on promised reforms, among other concerns.
Anwar's administration has carried out a number of measures to boost revenue and productivity this year, including a minimum wage hike, increased electricity tariffs on heavy power users, and new sales taxes on some imported fruits and luxury goods.
Anwar has said the moves were mainly targeted at large businesses and the wealthy, but critics have voiced fears that higher costs would eventually be passed down to consumers, including lower and middle income earners.
On Wednesday, Anwar said all adult Malaysians above 18 years old will receive a RM100 (US$24) one-off cash aid to be disbursed from Aug 31.
The government will spend a total RM15 billion in cash aid in 2025, up from RM13 billion originally allocated for the year, he said.
Police have said they expect between 10,000 and 15,000 people to attend the Saturday protest, which has been organised by opposition parties.
"I acknowledge the complaints and accept that the cost of living remains a challenge that must be addressed, even though we have announced various measures thus far," Anwar said.
He added that further initiatives to aid those in poverty will be launched on Thursday.
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Anwar said the government will also announce details on a long-awaited plan to remove blanket subsidies on the widely used RON95 transport fuel before the end of September.
Once the subsidy changes are implemented, Malaysians will see fuel prices at the pump drop to RM1.99 per litre, compared to the current price of RM2.05, Anwar said.
Foreign nationals, however, will have to pay unsubsidised market prices for the fuel, he added. Anwar did not provide details on how the measure will be enforced.
He previously said in his Budget 2025 speech last year that RON95 subsidies will be cut for Malaysia’s top 15 per cent income group. It is not clear whether this remains part of the rationalisation plan.
Some middle-class Malaysians had expressed concerns that they could fall into this group - which a 2022 income survey defined as households with a combined monthly income of at least RM13,500 - despite already struggling with rising expenses.
Analysts say changes to the fuel subsidy rationalisation scheme - originally set for mid-2025 and aimed at also removing subsidies for the wealthy - could affect Malaysia's fiscal consolidation plans.
Kenanga Investment Bank economist Muhammad Saifuddin Sapuan said the cash handout and subsidy measures were necessary to boost domestic demand, amid external headwinds arising from ongoing global uncertainty.
"Nevertheless, this comes at a cost, especially on how the government will finance it, and likely put pressure on its fiscal target," he said.
Kathleen Chen, of Fitch Ratings’ Sovereigns team, said further delays or insufficient progress on subsidy rationalisation could jeopardise the government’s goal to reduce its deficit to 3 per cent by 2028.
Fitch expects Malaysia’s general government debt to remain high, at around 76.5 per cent of GDP in 2025, with only a gradual decline in the medium term, she said.
Anwar on Wednesday also announced additional allocations for a government programme aimed at increasing access to affordable goods and necessities, and vowed to improve other existing aid measures.
Malaysia has seen inflation fall this year, but worries persist over increasing prices of basic necessities like food.
Data released this week showed consumer prices rising 1.1 per cent from a year earlier last month, but the costs of food and beverages were up at a faster pace of 2.1 per cent.
Separately, Anwar also declared Sep 15 as an additional public holiday in celebration of Malaysia Day, affording the public the potential for a long weekend from Sep 13 to Sep 16.
