KUALA LUMPUR, June 8 —The government’s subsidy policy is increasingly focused on ensuring public funds reach those who need them most, shifting from broad-based assistance to more targeted support that reduces leakages and improves fiscal sustainability.

Chairman of the Crisis Management Task Force (PPPK) Tan Sri Mohd Hassan Marican said the challenge lies in balancing immediate relief for households with the need to preserve national resources for the future.

PPPK, which operates under the National Economic Action Council (MTEN), is responsible for coordinating the Government’s response to the global energy crisis stemming from the conflict in West Asia.

“The strategic implementation of the rationalised subsidy framework has played an important role in stabilising the domestic economy against severe external shocks. 

“Had the government not proactively pursued fuel subsidy reforms over the past two years, Malaysia would find itself in a far more precarious position today,” Mohd Hassan said in an interview with Bernama recently. 

He said evolving global conditions require continuous reviews of subsidy mechanisms, quotas and distribution systems to ensure they remain effective and aligned with current realities. 

“The geopolitical fallout in West Asia has completely shifted our reality. Our fuel subsidy bill has surged from RM700 million in January to an unprecedented RM5.0 billion a month within a short time. 

“A subsidy bill of this scale is simply not sustainable and puts a massive strain on our national budget,” he said.

At the same time, Petronas has continued to play a critical role in ensuring domestic fuel security by helping to address supply shortfalls by other oil companies operating in Malaysia despite significantly higher procurement and operational costs.

Currently, Petronas is absorbing these additional commitments that can run into hundreds of millions of ringgit, on top of the existing subsidy burden borne by the Government, he said. 

Beyond ensuring sufficient fuel supplies, Mohd Hassan said the government is also strengthening measures to protect the broader supply chain that supports the economy and daily livelihoods.

“We are actively coordinating national logistics, intensifying anti-smuggling enforcement, and stabilising food supply lines,” he said. 

Moving forward, the challenge is not just about securing fuel but also about managing broader supply chain bottlenecks, logistical disruptions and intensifying international competition for resources.

“What the government and industry are trying to do now is strengthen buffers and ensure critical sectors continue to function smoothly while longer-term supply conditions evolve.  

“We also have to take into consideration that securing supply in a highly volatile global market now comes with significantly higher additional costs,” he added. 

For example, Mohd Hassan said that assuming crude oil prices remain around US$100 per barrel, disruption-related premiums could add another US$30 to US$40 per barrel. 

At the same time, he said higher shipping, insurance and other operational costs would further increase the financial burden of maintaining a stable domestic fuel supply.

Mohd Hassan said these realities highlight the growing importance of preparedness, prudent resource management and supply diversification in strengthening Malaysia’s resilience against future shocks. — Bernama