Malaysia unveils fuel price cut and cash aid in stimulus package.

Straits Times

3 days ago

The announcement comes just days ahead of a major anti-government protest on July 26.
– Malaysian Prime Minister Anwar Ibrahim on July 23 unveiled a series of economic measures, including
a one-time RM100 (S$30) cash handout for all adults, reduced fuel prices and a delay in toll hikes, aimed at tackling cost-of-living pressures and stimulate spending.
Analysts see the announcement – which had earlier been couched by Datuk Seri Anwar as an 'appreciation package' for Malaysians – as both a 'mini stimulus package' and a strategic move to shore up support amid mounting public frustration over rising prices and looming subsidy cuts.
It also comes just days ahead of a major anti-government protest scheduled for July 26.
In a nationally televised address, the premier said all citizens aged 18 and above will get the RM100 cash aid credited via the MyKad identity card. This can be used to buy groceries and household items at over 4,100 retail outlets nationwide between Aug 31 and Dec 31, and will benefit 22 million people and will cost the government RM2 billion.
Mr Anwar also said that the price of base level RON95 petrol will be reduced by six sen to RM1.99 per litre by the end of September. 'Mind you, the cost is still RM2.50 per litre, but we are selling at RM2.05,' he stressed, referring to the current price cap.
The move would fulfil an infamous pledge he made nearly two decades ago. As opposition leader during the 2008 general election, he had proclaimed that if he were to become prime minister, petrol prices would go down the very next day.
'I apologise for taking more time (to do this)... Now I think we are ready,' the PM said on July 23, adding that the initiative would benefit over 18 million motorists and motorcyclists.
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The price cut will apply exclusively to Malaysians, while foreigners will have to pay the market rate, he said.
The raft of measures also included more discounted essential goods and targeted cash disbursements for the low- and middle-income groups. Toll hikes set to be rolled out for 10 major highways will also be delayed.
Sept 15 has been declared an additional public holiday ahead of Malaysia Day, to 'appreciate our unification', the prime minister said.
'Since the first day of the Madani government, my priority has never changed: the people, the people, the people. Every policy, every decision we make... goes back to the people's welfare – for a more secure, prosperous and dignified life,' Mr Anwar said in his July 23 address.
Madani, an Arabic term that roughly translates as 'civilised', is a catchphrase introduced by Mr Anwar to symbolise his vision of a fair, inclusive and progressive society.
'The initiatives I announced today are a symbol of gratitude to the people for standing with us on the Madani path of reform, as well as an immediate lifeline,' he added.
Kenanga Investment Bank economist Muhammad Saifuddin Sapuan said the initiatives would provide 'a short-term fiscal boost that strengthens Malaysia's resilience amid ongoing global uncertainty', but could strain government finances and threaten fiscal targets.
While Mr Anwar highlighted positive macroeconomic indicators for the country – inflation is at a four-year-low in June of 1.1 per cent, and unemployment at a decade-low of 3 per cent – real incomes for many Malaysians have lagged, while food and dining costs have soared.
New taxes, including an expansion of the sales and service tax from July 1, and planned subsidy cuts have fanned frustration and unease.
The government has struggled to implement politically sensitive measures, such the removal of blanket subsidies on RON95 petrol that was originally scheduled for rollout by the end of 2024 but delayed amid fears of public backlash. Mr Anwar has just said details will be announced by the end of September 2025.
Formed in late 2022 following a hung Parliament, Mr Anwar's broad-based coalition government has provided Malaysia with a period of rare political stability following several changes in government since 2018.
But the PM's reformist credentials have come under growing scrutiny.
Asian Studies professor James Chin of the University of Tasmania said the measures announced were aimed at calming public unease and regaining support, particularly among non-Malays disillusioned by what they see as a lack of reforms implemented by the government.
The opposition-organised rally, which police say could draw up to 15,000 people, is pushing for Mr Anwar to step down over the rising cost of living and his failure to deliver on promised reforms, among other issues.
The recent appointment of a new Chief Justice after a weeks-long delay, has also helped defuse concerns over judicial independence, which had become another thorny issue for his unity government.
Mr Anwar's approval rating edged up to 55 per cent in May, buoyed by earlier cash aid and relative political stability, but analysts warn that support remains fragile.
Still, people like Mr Ricky Ng, 51, a Grab driver in Johor Bahru, gave the prime minister's moves the thumbs up.
'RM1.99 RON95 is better than nothing. Mr Anwar has managed to stabilise the government,' he said.