Kuala Lumpur: Anwar Ibrahim announces subsidies to appease discontent

The Malaysian prime minister has launched a 15 billion ringgit package of measures to support low-income families in response to growing discontent over the high cost of living. A reduction in fuel prices is also planned. But for the opposition and part of civil society, these are ‘populist gestures’ just days before a mass protest is due to take place in Kuala Lumpur.

Kuala Lumpur (AsiaNews) - Malaysian Prime Minister Anwar Ibrahim announced last night a series of economic measures to counter growing popular discontent linked to the rising cost of living and the apparent stalling of promised reforms.

The announcement came live on television, just days before a large demonstration called for Saturday in Kuala Lumpur, in which thousands of people will demand the prime minister's resignation.

‘I recognise the grievances of the people and accept that the cost of living is still a challenge, even though inflation has fallen to a four-year low,’ Anwar said. ‘We are launching immediate measures to ease the economic burden, especially for low-income citizens.’

Subsidies for all, but only in digital form

The main measure is a one-off payment of 100 ringgit (about £23) for all Malaysian citizens over the age of 18. However, the measure, which will be in place between 31 August and 31 December, stipulates that the digital credit must be used at over 4,100 participating outlets, such as supermarkets and grocery stores. Unused funds will be redirected in 2026 to support programmes for the most vulnerable groups.

The measure is part of a broader 15 billion ringgit package for 2025, up from the 13 billion initially planned.

Anwar also promised an official announcement by the end of September on the long-awaited fuel price reform, with petrol falling from 2.05 to 1.99 ringgit per litre for Malaysian citizens. Foreigners will continue to pay the market price, but no details have been provided on the system that will ensure dual pricing.

Criticism: “Pre-election populism”

However, the announcement has raised serious concerns, even among long-standing figures in Malaysian politics. Former minister Rafidah Aziz warned that “you should not try to 'buy” citizens' votes with populist gestures. Leaders should simply do their duty with integrity, as expected of them,' she told the Malaysiakini news portal.

Economists and political analysts share this scepticism: while the new aid could temporarily ease pressure on consumption, it risks undermining long-term fiscal consolidation goals. ‘These are necessary measures in a difficult context,’ commented Muhammad Saifuddin Sapuan of Kenanga Bank, ‘but they raise legitimate questions about sustainability and financing.’

Kathleen Chen, an analyst at Fitch Ratings, also warned of the possible negative impact of delays in subsidy reform: ‘Partial or ineffective implementation could hamper Malaysia's goal of reducing the deficit to 3% of GDP by 2028.’ Meanwhile, public debt stands at around 76.5% of GDP and is expected to remain high in 2025.

Failed reforms and Saturday's protest

Since coming to power in late 2022, Anwar has introduced several economic measures – including increases in the minimum wage, VAT and electricity tariffs for large consumers – presented as progressive measures targeting the wealthiest. But many believe that, in fact, the costs have also been passed on to the most vulnerable groups.

The protest announced by the opposition for Saturday will be a crucial test of public confidence in Anwar's ability to deliver on his reform agenda. In a climate of growing economic anxiety and political fatigue, the new aid risks being perceived more as a defensive manoeuvre than a real solution.