Govt To Review Subsidy Policies For Economic Strength, Fiscal Sustainability – MoF

KUALA LUMPUR, Oct 18 (Bernama) -- The government will continue to review and determine appropriate policy changes for subsidy retargeting as part of its ongoing efforts to strengthen the national economy and ensure sustainable fiscal management.

The Ministry of Finance (MoF) said the targeted subsidy would be implemented in a structured and phased approach while minimising potential disruptions to business sectors and the rakyat.

“While this approach is necessary to protect vulnerable groups by redirecting a part of the savings towards targeted assistance programmes, it is equally important for the government to balance between ensuring long-term fiscal sustainability and allocating resources more effectively,” the MoF said in its 2025 Fiscal Outlook and Federal Government Revenue Estimates report released today.

The MoF said that, recognising the need for an efficient subsidy retargeting mechanism, the government is prioritising the use of big data initiatives to minimise both exclusion and inclusion errors while safeguarding the well-being of the rakyat.

A key development in this effort, it said, is the establishment of the Central Database Hub (PADU), designed to create a centralised and accurate database that strengthens the link between targeted subsidies and their intended recipients.

In addition, the data in PADU will be leveraged to identify the level of socioeconomic development in the country and to assist in building scenarios for public programmes.

“This will further improve policy implementation and enhance the social welfare of the vulnerable groups as well as the nation as a whole,” the ministry said.

From a macro perspective, MoF said the government must pursue further structural reforms to enhance the rakyat's overall productivity and income levels, thereby minimising subsidy intervention policies.

This mainly involves investing in human capital and capacity building through enhanced education and workforce development to create a pool of more skilled and agile talent.

To this end, the government has been intensifying efforts to promote upskilling initiatives through technical and vocational education and training (TVET) and entrepreneurship to enable the rakyat, particularly the lower-income group, to obtain decent earnings and subsequently increase their purchasing capacity.

“The government is also constantly reviewing the minimum wage, promoting a healthy and appropriate wage level to support poverty reduction and fair labour practices without compromising economic and employment growth,” the MoF added.

-- BERNAMA