Malaysian Prime Minister Anwar Ibrahim announced Wednesday that the government will reduce energy subsidies to large companies and multinational corporations in an attempt to divert such funds to small producers and ordinary citizens.
«The decision is clear: we will not tax the people,» stressed the Malaysian prime minister, who clarified that small and medium-sized companies in the agricultural and food sector will not be affected by this measure.
Anwar explained that this reduction will be «very gradual» and «reasonable» to prevent these large companies from seeing their operations interrupted. The measure, he says, will result in savings of 30 billion ringgit (about 6.5 billion euros) that can be allocated to other items.
The prime minister’s announcement is in line with his pledge to reduce the tax burden that the price hikes have placed on the lower-income population. Anwar stressed that these subsidies should be directed towards the most needy and asked his ministers two weeks ago when he took office to propose measures to address the rising cost of living.
The government’s decision is motivated by the sharp fiscal deficit it has to face, the largest in Southeast Asia after the Philippines, after it decided to keep commodities at below-market prices.
The government expects to reduce subsidies to large companies to a record 80 billion ringgit ($17.1 billion) this year, which in fuel and cooking gas concessions alone will amount to about half of that amount, according to Bloomberg.
Anwar, whose unity government has the support of four political groups, is confident of surviving next week’s confidence motion, when Parliament will meet for two days from December 19.
