Mr Asrul Hadi Abdullah Sani, partner at strategic advisory firm ADA Southeast Asia, told CNA that the move to ease petrol subsidies is important to address the wealth gap in Malaysia.
But he added that it would not amount to much in subsidy savings in the long run, especially as it would be politically difficult for the government to remove the subsidy completely soon.
“We can expect the federal government to gradually expand the targeted group for those not qualifying for the petrol subsidy,” he said.
While the unity government emerged victorious in recent by-elections in Johor and Kelantan, it knows that the move could trigger public backlash – and negative consequences at the ballot box – if not done gradually and carefully, Mr Asrul Hadi said.
“Despite UMNO’s recent performance in the by-elections, the total removal of petrol subsidies could shift the momentum back to the opposition,” he added, referring to the Barisan Nasional lynchpin party United Malays National Organisation, which is part of the unity government.
“Anwar does not want to repeat the same mistake as Najib when he introduced the GST, which eventually was one of the main reasons Barisan Nasional lost the 2018 general election.”
Despite that, some segments have expressed concern with Mr Anwar’s budget, particularly his move to raise the country’s minimum wage and introduce a dividend tax.
Mr William Ng, president of the Small and Medium Enterprises (SME) Association of Malaysia, said in a statement on Friday that the moves will disrupt SME operations at a time when they are already not earning much.
“Automation is not an automatic answer for SMEs coping with severe margin compression, which will now be made worse by the minimum wage increment,” he said, noting that many SMEs have workers in labour-intensive sectors like retail, cleaning, as well as food and beverage who are not readily replaced by automation.
Furthermore, Mr Ng said the dividend tax will hurt SME owners disproportionately, highlighting that these owners usually get dividends directly, unlike in listed companies where dividends go to “some silent or random investor”.
“Many SME owners do not draw salaries, due to the tight cash flow experienced by most SMEs in recent years,” he added.
“As such, taxing them on dividend from income that is already taxed is not only a form of double taxation, but will discourage SMEs from growing their business or turning in higher profits.”
https://www.channelnewsasia.com/asia/malaysia-budget-2025-anwar-ibrahim-petrol-subsidies-minimum-wage-4687106
