Malaysia PM Anwar eyes targeted subsidies for low-income groups

KUALA LUMPUR: Malaysia is reviewing its government subsidies programme, aiming to direct money towards low-income groups, Prime Minister Anwar Ibrahim said on Sunday (Nov 27), prioritising the rising cost of living as he takes office at a time of slowing growth.

Government agencies have two weeks to review the implications of narrowing the subsidies, he told a news conference.

Malaysia offers subsidies to all citizens, with fuel and cooking oil accounting for the biggest expense. It also subsidises electricity, sugar and flour.

"Subsidies must be targeted, otherwise those subsidies are enjoyed not just by the low-income group but also the wealthy," said Anwar, who emerged as Malaysia's prime minister after a closely fought election last week.

Other incentives will be considered for industries that no longer benefit from subsidies, he said. 

In particular, Anwar wants electricity subsidies to be re-examined, as the benefits received by the poor and the rich are almost the same.

“In my view, this is unreasonable," he said.

While Anwar gave assurance that the electricity subsidy will be continued for low-income groups, he added the affluent and big industries should not receive it, as this would be a huge financial burden to the government.

He also asked the Ministry of Agriculture and Food Industries through the Federal Agriculture Marketing Authority (FAMA) to take steps to control the cost of food production.

Anwar is carrying through the stance of the previous administration, which last month proposed a smaller Budget, cutting subsidies due to rising commodities costs and the resulting impact on government coffers. Malaysia is estimated to spend a record 77.7 billion ringgit (US$17.4 billion) this year on subsidies.

Anwar said he will discuss Cabinet appointments with his coalition partners in the next few days.

The 75-year-old was sworn in on Thursday, capping a three-decade political journey from protege of veteran leader Mahathir Mohamad to protest leader, prisoner convicted of sodomy and opposition figurehead.

Investors have cheered his appointment, hoping Anwar would bring stability after political uncertainty that saw three prime ministers in as many years.

The focus is on the new government's policy direction and cabinet appointments. Anwar said on Friday he would have a smaller cabinet than those of previous administrations.