Malaysia's Subsidies: Saving or Sinking the Economy?

Malaysia's government has historically provided billions in subsidies to its people. But is it free money, or does it come with a cost?

--Note--
This video is based on publicly available data and analysis. It represents the author’s perspective and should not be taken as professional or financial advice.

Brought to you by the Behind Asian Team.

[BehindAsia]

Do you think Malaysia should continue giving out subsidies, or reduce it?

[eibenstr]

I would add one point. the subsidies are so engrained where the public take it for granted as their right that it becomes a political issue whenever any rationalisation is proposed. anwar is taking some steps in the right direction but political considerations constantly cloud decisions. bear in mind he is leading a coalition formed from a marriage of convenience which could falter should public anger boils over.

[DarthSidious]

Problem with Malaysia is that most citizen cannot see things in the long term. A large portion of the working class do not pay taxes due to low income but are so entitled that they demand more subsidies. And the middle and high income earners need to pay taxes to fund the subsidies for these entitled fools.

[ghostJammerz]

As a Malaysian, I think there are some parts of the subsidies is too much, especially in supporting the B40 class. That makes the B40 class become less hardworking to improve their living condition. While the middle class are actually struggling. Gov should better invest billions to support Malaysian improve their financial. Every year billions in subsidies, ridiculous! Mana yg tau, tau la. B40 tapi boleh pula pakai iphone paling latest. Aku pula selagi phone tak rosak, tak tukar.. mindset B40 kena tukar

[akasiakasya]

I am Malay, I go through the systems we are from poor family in Kampung Kelantan and now my siblings and I are all have high education and working in MnC earnings more then the medium income but looking back yess many locals do take it for granted, I believe even if the Govt reduce subsidies & increase tax properly and with strategic steps, people will able to adapt, people are resourceful, mostly are educated, suffers a bit for a better future, if the reductions will bring more economic opportunities and healthy market, a risk must be take, we can't satisfy everyone

[sharonwong]

Malaysia has an entrenched subsidy culture. What it is based on (aside from the legitimate social contract of helping and lessening the burden of the population), lies a political strategy. To me, much of our very generous but unsustainable subsidies, is to assuage the B40 population, largely made up of poor Malays in exchange for their votes. This borders on the illegitimate especially as the government overtly creates easy pathways for Malays/Bumiputras to jump queues and have special privileges in terms of education/university places; govt. projects; discounts on purchasing homes. I would like to call this a "subsidy" - that is, a race-based subsidy that eases their burden that is not open to any others EXCEPT the Bumiputras. This is painfully short-sighted that ultimately, handicaps the very people that needs to be lifted up. I love Malaysia. It troubles me that as a country, we are forever stuck with a majority population of Malays who are used to this steady diet of handouts and privileges. They deserve better.

[ALong-foso]

The long run objective should be to rid of these ‘crutches’. We cannot go on relying on these subsidies.

[corptaxmyautotalk]

That fuel subsidy is not just a social aid, it is also a tool to support the local automotive industry. That is why we have very high car ownership in this region. Pulling this subsidy may reduce car usage and the rippling effect is not just the automotive industry but also toll collection, car insurance, car repair ... many sectors will be impacted.

[Ananda]

You won't need subsidies if your economy is well managed that the people has better purchasing power, and education on managing finances.

[MuhammadAhmad-dbsf]

Malaysia need to reforms to become least corrupt nation the subsidies are loss less where corruption high in the country no single project completed and country always still remain underdeveloped may Malaysian government focus on that problem... 🦾🇲🇾 great Malaysia

[striker]

No more subsidi. No more free money. Yes gst. Yes annual salary increase.

[johnmonk]

The problem with replacing subsidies with infrastructure investment is WHAT INFRASTRUCTURE INVESTMENT SHOULD BE IMPLEMENTED THAT WON'T BE SUBJECTED TO THE SAME KIND OF PROBLEMS THAT PLAGUED THOSE SUBSIDIES IN THE FIRST PLACE, EG CORRUPTION, MISUSE, WASTAGE ETC?? And investing in infrastructure won't guarantee an economic return or benefit to both the government and the people anyways!

[looooool]

The Malaysian government are purposely stopping giving out subsidies due to following guidelines by the IMF. The subsidies we are talking about here is not unhealthy subsidy like sugar, but instead gas and healthcare. It's all under the guise of climate change and sustainability, even though it's the normal citizens that will suffer. The Malaysian government is also playing race and class card, saying that the poor and middle class don't pay taxes, and only the rich contributes to 80% of the economy which is ridiculous. The Malaysian government has been drying of money ever since the started following IMF guidelines, so by reducing subsidy (which actually benefits the people directly) according to IMF, is the only way to increase the government money and that's partly true if you don't consider the consequences.

[sianu]

Better take care if your UK economy. Rather that worry about other countries economy.

[wk]

Too large portion of population on state support and subsidies. Too small a tax base. Most are exempted from paying tax.

[lillianphua]

Subsidies is not good? So remove...but where d money goes to? After removal of subsidies, govt still need to increase this tax and that taxes...
Where is the saving from the removal of subsidies? Govt had over the years reduced or totally removed subsidies of
- sugar
- flour
- cooking oil
- petrol and diesel
- rice
- whatelse ?
Everytime govt cut each subsidy, it said will save billions of ringgit each year... WHERE DO THE MONEY TENS OF BILLIONS (each year) GOES. WHY INFLATION AND HIGHER TAXES year after year?
So govt reduce subsidies but bigger and bigger mis-management, corruptions, scandal continues? More ringgit into their pockets?
In Msia, the govt is not transparent.. what can we find out? 😢😢😢

[saiful]

Malaysia pampered its citizens too much by giving susidies here and there.... they should learn to live the hard way...

[captainmee]

tax and subsidies is compliance each others... reduce subsidies but keep tax at same time would make rage ... but country need tax to maintain as country ...

[tanchye]

Sinking.
Subsidy is liken to drug addiction & laziness. The money could use for infrastructure construction, etc.

[MelvinStaRita-ybfm]

In general, subsidies are bad. It's only warranted when there's short-term political objectives. Giving subsidies indefinitely will always bleed any government dry. This is true for oil, rice, energy or whatnot.

The Philippines should take Malaysia as a cautionary tale.