PETALING JAYA: Malaysia’s fuel subsidy reform shows that even politically sensitive policies can gain public acceptance if they are carefully planned and implemented in phases, says Finance Minister II Datuk Seri Amir Hamzah Azizan (pic).
He said the removal of blanket fuel subsidies required a “serious change in management”, but stressed that reforms should not be abandoned simply because they are challenging.
“People may not like difficult reforms, but if it is well planned, properly structured and managed in phases, acceptance will come,” he said in a LinkedIn post after speaking at a panel discussion on the future of economic integration at the World Bank/IMF Spring Meetings on April 18.
Amir Hamzah said Malaysia has been recalibrating its subsidy framework as part of broader fiscal reforms aimed at strengthening public finances and ensuring that targeted assistance reaches those who need it most.
“Build buffers during normal times. Fiscal discipline in peacetime gives you the luxury of deploying fiscal space when a crisis hits.
“Malaysia’s experience proves this. We brought our deficit down from 6.4% in 2021 to around 3.7% now.
“When oil prices spiked due to the Middle East conflict, we had room to absorb the shock,” he added.
He said political will is crucial in driving reforms, but must be supported by social cohesion.
“This does not mean policies that simply make people happy and passive. It is about ensuring we can raise the floor for people and bring them along in growth. That builds collective resilience for tougher times,” he said.
Amir Hamzah also cautioned policymakers against reversing reforms when external shocks occur, saying crises often test the durability of policy decisions.
“When shocks hit, the instinct is to panic and reverse course. That is exactly the wrong response.
“We should instead double down and not abandon the plan when it is being tested – that is when it proves its worth,” he said.
Amir Hamzah added that Malaysia’s fiscal consolidation efforts, including reducing the deficit in recent years, have strengthened its ability to withstand volatility, including fluctuations in global oil prices and geopolitical tensions.
“The world has shifted from ‘just in time’ to ‘just in case’. Diversification matters, buffers matter and agility matters. The difficult work must be done now, not later,” he said.
