Puchong Member of Parliament Yeo Bee Yin has urged the federal government in Putrajaya to proceed cautiously with any plan to remove fuel subsidies for higher-income earners, warning that it could trigger broader inflationary pressures.
She said many individuals in the T15 and T20 income categories are business owners, and any increase in fuel and operational costs is likely to be passed on to consumers, affecting prices of goods and services.
Yeo cautioned that such a development could lead to a second wave of inflation, placing additional pressure on lower-income households already grappling with rising living costs.
She also warned that reducing fuel subsidies for wealthier groups could dampen domestic consumption, particularly in retail, hospitality, and service sectors that rely heavily on spending from middle- and upper-income consumers.
According to her, this could weaken Malaysia’s economic momentum at a time when global conditions remain uncertain, including ongoing geopolitical tensions affecting energy markets.
While stressing she was not opposed in principle to subsidy rationalisation, Yeo said the timing of such a policy move was critical given current economic challenges.
She also questioned the mechanism for implementation, asking whether the government intends to use systems such as MyKad verification or a tiered pricing structure to differentiate income groups.
Yeo argued that removing subsidies during an economically fragile period could be counterproductive, suggesting that expansionary fiscal measures may be more appropriate to sustain growth.
She further urged the government to provide data-driven justification to ensure the move would not lead to an inflation spiral or overall economic losses before implementation.
The remarks come after Prime Minister Anwar Ibrahim stated that the government is finalising a review of fuel subsidy targeting for higher-income Malaysians.
Anwar said discussions are ongoing to determine the appropriate income categories, including possible classifications such as T5, T10, T15 and T20, to ensure middle-income households are not unfairly affected.
Currently, RON95 petrol is subsidised at RM1.99 per litre for Malaysians with a valid driving licence, subject to a monthly cap, while diesel prices differ between Peninsular and East Malaysia.
