Malaysia is moving forward with targeted subsidy reforms that are designed to save billions of ringgit a year, said Deputy Finance Minister 1 Datuk Seri Ahmad Maslan.
He reiterated that the implementation framework for targeted subsidies is currently 75 per cent complete.
Ahmad Maslan said that the framework for subsidy restructuring may be revealed this year when the 2024 Budget is presented.
"One key challenge will be to formulate a foolproof and effective subsidy mechanism. Another is to plug weaknesses in the proposed subsidy mechanism to prevent leakages and corruption," he said in his speech at the Malaysian Institute of Accountants international accountants conference 2023 today.
Ahmad Maslan said the finance ministry would research international best practises and look at how developed nations handle this issue in order to accomplish this.
He said in order to increase adaptability, flexibility, and capacity to resist crises, fiscal policy must work hand in hand with government initiatives to promote sound financial management, cost reductions, leakage plugging, and structural and institutional changes.
"Importantly, the government must also do a better job of communicating with our stakeholders to enhance credibility, build confidence, and build trust with the business community and the people," he said.
Ahmad Maslan said last month that high earners in the T20 category will no longer be eligible for government fuel subsidies on RON95 petrol and diesel in 2019.
He said that the government spends more than RM50 billion on gasoline and petrol subsidies, which are available to all Malaysians, even the wealthy.
Meanwhile, Ahmad Maslan said that the yearly debt to gross domestic product (GDP) ratio, which takes into account general government debt and contingent liabilities, is predicted to increase from 81 to 109 per cent and from 116 to 116 per cent in 2022 to 2025 and 2026, respectively.
He said that rising contingent liabilities, a decline in the federal government's tax-to-GDP ratio since 2012, and rising federal government spending on subsidies, emoluments, and development since 2017 are the main causes of the rising debt-to-GDP ratio.
"It is imperative for the government to propose and implement expenditure reduction policies and revenue generation ideas by 2024 to better manage debt," he said.
Ahmad Maslan said that the government's top priority today is to manage the country's debt, which has surpassed one trillion ringgit.