KUALA LUMPUR, October 18 – Prime Minister Anwar Ibrahim announced that the Malaysian government will cut back on subsidies for the second consecutive year as the country’s economic growth picks up. Subsidies and social assistance will be reduced by 14.4% to RM52.6 billion in 2025, primarily targeting fuel and electricity, as part of the government’s efforts to narrow the fiscal deficit. This move comes as the economy is forecast to grow between 4.5% and 5.5%, supported by improved global trade and strong domestic consumption.
Anwar, who is also the finance minister, presented the largest-ever budget of RM421 billion, with a 3.3% increase in spending focused on operational costs like civil servants’ wages. Despite these cuts, the government will maintain development expenditure at RM86 billion and invest in key infrastructure projects, including a bridge in Sarawak, highway upgrades in Johor, and public housing developments. These initiatives are aimed at enhancing regional growth and attracting foreign investments, including those linked to Malaysia’s cross-border special economic zone with Singapore.
Inflation is expected to rise slightly, averaging between 2% and 3.5%, partly due to anticipated increases in the minimum wage and civil servant salaries. With these fiscal reforms, Anwar aims to rebuild the nation’s financial health, reduce the debt-to-GDP ratio, and solidify Malaysia’s status as a leading economy in Southeast Asia.
