PUTRAJAYA: The Madani government has adopted a “realistic” approach to targeted subsidies rather than following rigid economic models that suggest aid should only be given to the poor, Treasury secretary-general Datuk Johan Mahmood Merican said.
Johan said the government believes subsidies remain a vital instrument to assist households, provided they are managed effectively to prevent leakages such as cross-border fuel smuggling.
“The subsidy rationalisation, including for electricity and fuel, takes into account the real needs of the people rather than merely following goals prescribed by economists or the World Bank,” he said.
Citing the implementation of Budi Madani and Budi Madani RON95 (Budi95), Johan pointed out that these initiatives not only tackle subsidy leakages but also generate savings which are then ploughed back into assisting the majority of Malaysians through the Sumbangan Asas Rahmah (Sara) and Sumbangan Tunai Rahmah (STR) programmes.
During the tabling of the 2026 Budget, Prime Minister Datuk Seri Anwar Ibrahim announced that the government’s bold move to implement targeted and restructured subsidies had borne significant results, with total savings reaching RM15.5 billion.
Meanwhile, touching on the inflationary implications of the Sara and STR disbursements, Johan stressed that these measures do not create inflationary pressure.
He said the targeted approach has enabled the government to keep inflation below two per cent, demonstrating that subsidy programmes such as Sara do not contribute to widespread price increases.
“This goes to show that targeted subsidies not only help those in need, but also promote price stability in the market,” he added.
Johan further explained that, unlike the approach taken by some other countries, where prices are raised to market levels, and cash assistance is then provided, the Malaysian government adopts a targeted approach to support vulnerable groups.
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