Putrajaya likely to fork out more for fuel subsidies, says economist

Universiti Malaya’s Nazari Ismail says rising geopolitical tensions and higher personal vehicle usage will drive fuel prices and consumption up.

Experts say the government should consider reducing subsidies, despite its commitment to provide cheap fuel to the people.

“The price of oil will likely increase due to the ongoing Israeli attack on the Palestinians. The ongoing Ukraine-Russia conflict is also another factor,” he told FMT. According to the report, Putrajaya spent RM13.1 billion on subsidies in 2021, which ballooned to RM55.4 billion last year. He said the worry of the government at the time was that the people, having become “used to inexpensive fuel prices”, would reject any increase.However, Geoffrey Williams from the Malaysian University of Science and Technology does not expect fuel prices to go up, noting that they are lower now compared to 2022.

Economy minister Rafizi Ramli said the price of energy, especially crude oil, was high. As a result, he told reporters that government expenditure on subsidies was likely to increase further in the future unless action was taken now to address the issue.

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