Fuel Subsidy Slash Set to Spark Voter Backlash: Anwar’s Reform Risks in 2025

The federal government’s planned removal of the RON95 petrol subsidy in mid-2025 risks fueling discontent among voters, warned BMI, a Fitch Solutions subsidiary. While Prime Minister Anwar Ibrahim’s administration pushes forward with critical economic reforms, the move could exacerbate concerns over the rising cost of living.

BMI noted that Anwar’s approval rating, which stood at 54% at the end of 2024, reflects a divided opinion on his economic policies. The decision to phase out the RON95 subsidy, following the removal of diesel subsidies in 2024, is expected to drive a temporary spike in inflation. However, the increased financial burden on households could alienate voters accustomed to government support.

The subsidy rationalization, part of measures aimed at narrowing the fiscal deficit to 3.8% of GDP by 2025, comes alongside other fiscal reforms like expanding the sales and services tax (SST). Despite its long-term economic benefits, BMI highlighted that the move poses significant political risks, leaving the ruling coalition with just two years to rebuild voter confidence before the next general election.

Discontent over rising costs may also deepen existing fractures within the coalition, potentially undermining momentum for other reforms, such as the government’s anti-corruption agenda, which has seen limited progress in recent years.

Our analysis: Fuel Subsidy Backlash

The planned removal of the RON95 petrol subsidy in Malaysia, set for mid-2025, has indeed sparked considerable discussion online, reflecting various sentiments in the public domain. Here’s an analysis based on posts found on X:

Public Sentiment on Subsidy Removal

• There is a mix of reactions on X regarding the subsidy removal. Some users express frustration over the policy, citing the potential increase in the cost of living as a major concern. This aligns with the warning from BMI, suggesting that the removal of subsidies could fuel discontent among voters due to the direct impact on their daily expenses.
• A sentiment of surprise or criticism towards the government’s approach to policy communication has been noted. Users have shared concerns about the lack of transparent or advance notice, which could lead to public backlash similar to past experiences with diesel subsidy reforms.
• There’s an acknowledgment of the economic rationale behind the move, with some posts indicating that the savings from subsidy rationalization are intended for reinvestment into public services like healthcare and education. However, the immediate impact on personal finances seems to be the dominant concern.

Impact on Anwar Ibrahim’s Popularity

• Anwar Ibrahim’s popularity has been a subject of debate on X, with some users suggesting that this policy could further damage his standing among the electorate. His administration’s push for economic reforms, while necessary, might not be well-received if it directly impacts the cost of living without visible benefits.
• The narrative around Anwar’s policies often includes discussions on how these reforms might alienate the middle class, a crucial voting bloc. There’s speculation on whether this move could lead to a decline in support, especially if inflation rises without compensatory measures to offset the cost for the average citizen.
• However, it’s also recognized that Anwar’s government aims to redirect savings to benefit a broader segment of the population, which could, in theory, mitigate some of the backlash if these benefits are tangible and quickly realized.

Overall

• The removal of the RON95 petrol subsidy has become a focal point for discussions on economic policy, cost of living, and political strategy on X. While some see the long-term benefits of fiscal responsibility, the immediate reaction tends to focus on the increased financial burden on ordinary Malaysians.
• The sentiment on X suggests that while not all reactions are negative, there’s a significant portion of the public concerned about the economic implications. This could indeed challenge Anwar’s popularity if not managed with clear communication and effective mitigation strategies.

Given the dynamic nature of social media and public opinion, these insights are based on current sentiments but are subject to change as more information becomes available or as the policy’s effects start to manifest.

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