KUALA LUMPUR: Malaysia and Thailand have adopted fundamentally different approaches to fuel subsidies, reflecting distinct policy priorities and strategies for managing consumer usage, as both countries strive to balance economic stability with social welfare.
Malaysia’s subsidy system is anchored by the Automatic Pricing Mechanism, where retail fuel prices broadly track global benchmarks, with targeted subsidies applied to selected sectors to manage cost pressures.
Thailand, in contrast, relies on its Oil Fuel Fund to cushion domestic prices, allowing retail prices to move with the market while partially offsetting increases through subsidies drawn from the fund.
Rystad Energy senior analyst Girish Sen said, “In a prolonged conflict scenario, Malaysia’s revenue-based model is more resilient. It is budget-funded, citizen-targeted, and quota-controlled, giving policymakers levers to manage exposure without accumulating structural debt.
“Thailand’s fund carries borrowings to be cleared, and that assumes crude stays within the US$60-US$70 per barrel range.”
Malaysia has moved towards a more targeted subsidy framework, allowing cost pressures to be managed more gradually while containing fiscal exposure, he said. — Bernama
