Anwar: “How much cheaper can we go?” - Expect fuel price hike in Malaysia, subsidy reform soon

Malaysia’s fuel prices are too low compared to oil-rich Saudi Arabia’s hence spending more for fuel subsidy is deemed unfeasible, said Prime Minister Datuk Seri Anwar Ibrahim.

Referring to the statement he made in 2008 regarding reducing fuel price in Malaysia, Anwar said back then the fuel price in Saudi Arabia was 50 cents/liter whereas ours was RM 1.80/litre. Reducing Malaysia’s fuel price was possible then.

“Now in 2023, fuel price in Arab Saudi is much higher than Malaysia. How much cheaper can we go? Our subsidy is already too high,” he said in a clip posted on X, a platform formerly known as Twitter, yesterday.

According to Anwar, the Malaysian government’s expenditure on fuel subsidy has reached RM 30 - 40 billion a year.

Fuel price in Saudi Arabia were used as a reference as the country’s oil production is much higher compared to Malaysia, but their fuel prices are still higher than ours. Currently, Saudi Arabia’s RON 95 is selling for 2.33 riyals (RM 2.94) per liter.

Photo via Aramco Life

This reiterates Anwar’s statement to the Parliament last month about the impossibility of reducing fuel prices further in Malaysia. Brent crude oil, a benchmark for oil prices, reached USD 95 (RM 470) per barrel as of yesterday. As prices are projected to reach USD 100 (RM 495) per barrel soon, the government is likely to halt spending extra on fuel subsidy.

As reported earlier, fuel subsidy reform may take effect soon enough, as early as 1 January 2024, that will largely eliminate the T20 income group and possibly a portion of the M40 group from the subsidy recipient list. The government may introduce the targeted fuel subsidy when presenting Budget 2024 in Parliament on 13 October 2023, as a replacement for the current blanket fuel subsidy.

Also read: Only selected M40s may receive fuel subsidy in 2024, no blanket for all