Malaysian PM Anwar Ibrahim introduces new measures to address rising living costs amidst public discontent and economic challenges.
Malaysia's Prime Minister Anwar Ibrahim unveiled new measures last week to address rising public discontent on the rising costs of living, including a cash handout for all adult citizens and a pledge to lower fuel prices.
In a televised address, Anwar said the one-off cash aid of RM100 ($24) will be disbursed to 22 million Malaysians above 18 years old and can be redeemed from 4,000 stores across the country from August 31 to December 31.
He also said the government will reduce the price of subsidised petrol from RM2.05 ($0.48) per liter to RM1.99 ($0.47) per liter and freeze planned toll rate hikes on 10 highways.
A public holiday was also announced for September 15 to coincide with Malaysia Day, which marks the founding of the Malaysian federation in 1963.
Anwar's announcement comes as thousands of people rallied across Kuala Lumpur on Saturday to protest escalating prices and the government's failure to deliver on promised reforms. Police estimated that at least 18,000 were in attendance, making it one of the largest protests in Malaysia in recent years.
Since returning to power in 2022 under a reformist banner, Anwar has implemented several measures to boost government revenue, including increased stamp duties, electricity tariffs, and sales taxes on imported fruits and goods. While the government claims the moves mainly target large businesses and the wealthy, critics fear the costs would only be passed down to middle- and low-income consumers.
"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 during his televised address. He also announced more anti-poverty initiatives and more details on the blanket fuel subsidies at a later date.
Analysts say the changes to the fuel subsidy scheme, which was originally scheduled for mid-2025 and aimed largely at removing subsidies for wealthier citizens, could affect Malaysia's fiscal consolidation plans.
Kenanga Investment Bank economist Muhammad Saifuddin Sapuan said the cash handouts and subsidy measures were necessary to boost domestic demand, especially amidst ongoing global economic uncertainty.
"Nevertheless, this comes at a cost, especially on how the government will finance it, and likely put pressure on its fiscal target," he told Reuters on Wednesday.
Kathleen Chen, of Fitch Ratings' Sovereigns team, noted that further delays or insufficient progress on subsidy rationalisation could jeopardise the government's goal to reduce its deficit to 3% by 2028.
She said Fitch expects Malaysia's general government debt to remain high, at around 76.5% of GDP in 2025, with only a gradual decline in the medium term.