gvg777 Petrol subsidy cuts for top 15% of income earners, increased minimum wage as Malaysia unveils record US$97.8 billion Budget
KUALA LUMPUR: Top-earning Malaysians can expect to be hit with higher expenses next year - among them increased costs for RON95 petrol as well as for education and healthcare - as the government seeks to roll back subsidies for this segment of society in a bid to free up monies for other purposes. gvg777
The announcement came as Prime Minister Anwar Ibrahim unveiled a larger RM421 billion (US$97.8 billion) budget for 2025 on Friday (Oct 18).
Consumer prices are expected to creep up next year as the Malaysian government seeks to trim its hefty subsidy and social assistance bill by removing blanket RON95 petrol subsidies, an unpopular move that it initially held off but ultimately deemed necessary to ease pressure on its coffers amid plans to spend more.
The larger budget will fund higher civil servant salaries taking effect in December.
Mr Anwar on Friday also committed to raising the country's minimum wage to RM1,700, up from the current RM1,500, in February next year.
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Petrol subsidy cuts, new taxes and wage increases to be focus of Malaysia’s 2025 Budget: Analysts 
Commentary: The politics at play in Malaysia’s upcoming budget Government revenue is projected to grow by 5.5 per cent to RM339.7 billion, driven by higher direct and indirect tax collections.
The country is targeting a further fiscal deficit reduction to 3.8 per cent of gross domestic product (GDP) next year, down from the current target of 4.3 per cent this year.
Mr Anwar also said the government will expand the scope of its Sales and Service Tax (SST) to include commercial services, and introduce a 2 per cent tax on dividend income.
The RM421 billion budget for 2025 is an increase from the expansionary 2024 budget of RM393.8 billion last year, which was the largest-ever recorded then. That figure has since been revised to RM407.5 billion, according to the Finance Ministry.
Development expenditure accounts for RM86 billion of the 2025 spending while the remaining RM335 billion is for the government’s operating expenditure.
Analysts told CNA the moves to increase revenue and cut spending will help Malaysia achieve its new fiscal deficit target, but should this not come to pass, the government should be open to implement further measures.
These include bringing back the Goods and Services Tax (GST) and fully removing petrol subsidies, they said, noting that the ultra-rich do not form the bulk of consumers of public healthcare and education, and thus might not yield the government substantial savings through subsidy rationalisation in these areas.
PETROL SUBSIDIESMr Anwar, who is also Finance Minister, invoked Confucius when talking about Malaysia's subsidy bill, quoting the Chinese philosopher about the perils of not correcting a mistake.
"The principle of subsidies, like welfare benefits, is that it should not benefit the ultra-rich," he said, noting that the country has a longstanding policy of blanket subsidies for things like petrol, electricity, water, education, healthcare, and food items like chicken.
"Surelygvg777, this approach is not reasonable as the the country is burdened by debt and low revenue."
A pump attendant fills up a motorcycle at a petrol station in Johor Bahru on Oct 17, 2024. (Photo: CNA/Zamzahuri Abas)