Address RON95 subsidy cut before carbon tax, says Amir Hamzah

Free Malaysia Today

17-06-2025

Finance minister II Amir Hamzah Azizan said Malaysia must address the issue of fuel subsidies, particularly involving the energy sector.
PETALING JAYA : The government will prioritise the rationalisation of RON95 petrol subsidies this year before introducing a carbon tax in 2026, says finance minister II Amir Hamzah Azizan.
Speaking at a forum today, he said Malaysia must first address the issue of fuel subsidies, particularly involving the energy sector.
'We must ensure that no unintended consequences are embedded in our system. While (the carbon tax) is scheduled for rollout by 2026, there are important precursor steps we must take.
'A key objective now is to begin scaling back subsidies (to the energy sector). It doesn't make sense to impose taxes on one side and simultaneously provide subsidies for petrol, diesel, and other fuels,' Bernama reported him as saying.
Amir Hamzah was speaking at a session titled 'Delivering Malaysia's Energy Transition' where he was a panellist alongside deputy energy transition and water transformation minister Akmal Nasrullah Nasir.
The session was chaired by Abdul Wahid Omar, a senior independent and non-executive director of IOI Corporation Bhd.
The government previously announced plans to roll out a carbon tax targeting the iron, steel, and energy industries by 2026, as outlined in Budget 2025.
Amir Hamzah also emphasised that subsidy rationalisation is a critical step toward establishing a strong foundation for building sustainable mechanisms and policy frameworks.
'As a result, we can expect the introduction of structured measures, including climate action frameworks, robust measurement tools and ultimately the implementation of a carbon tax to support these initiatives.
'If we want this transition to be sustainable and impactful, the entire system must respond. It cannot be driven by isolated announcements or standalone policies. The challenge for the government is to tie everything together coherently and effectively,' he said.
Yesterday, Prime Minister Anwar Ibrahim said adjustments to the price of RON95 petrol would not affect 85% to 90% of the population.
He said the government's move towards subsidy rationalisation is a critical step to ensure national resources are channelled effectively to benefit the lower-income group.