Analysts say reversing fuel subsidy quotas may win short-term support but risks weakening fiscal discipline, reopening leakages and making future reforms harder.
They said politicians should be careful when offering policy advice, particularly during a campaign period, and should consider broader factors such as fiscal sustainability.
Azmi Hassan of Akademi Nusantara said he was puzzled by Onn Hafiz’s remarks on the subsidy quotas ahead of the Johor state election, as the matter involved federal policy and Onn Hafiz’s party was part of the government.
“I think the menteri besar of Johor has no business commenting or trying to be involved in policy that was made at the federal level.
“It is very odd for the menteri besar to say that, since the president of Umno is the deputy prime minister in this case and part of the Cabinet that made this decision,” he told FMT.
Azmi said although removing the quota may appeal to popular sentiment, politicians should not overlook the reason why the quota was introduced in the first place.
Earlier, Onn Hafiz urged Putrajaya to abolish the monthly fuel subsidy quotas as global oil prices had stabilised. He said the fuel quota in place was insufficient for consumers and businesses in Johor, adding that it had pushed up operating costs which are now being passed on to consumers.
Meanwhile, Syaza Shukri of the International Islamic University Malaysia said Onn Hafiz’s move shows how most politicians tend to prioritise political survival, focusing on short-term gains.
She said populism often prevails in democracies, hindering the emergence of statesmen prepared to make hard choices for the country’s long-term good.
Syaza warned that a government U-turn would set an unhealthy precedent, creating the expectation that reforms are merely temporary measures put in place during a crisis.
“If they backtrack now, any future attempt would be doubly hard. It’s like the GST. After scrapping it, trying to restart it becomes politically challenging even if it might have more benefits,” she told FMT.
Economists warn against reversing reform
CEO of the Center for Market Education, Carmelo Ferlito, said temporary price stability was not a reason to return to open-ended subsidies, as the fiscal burden would balloon immediately when fuel prices rise again.
He said removing quotas without broader reform would restore the old problem of uncontrolled subsidy exposure, increase leakage, and benefit heavy fuel users more than those who actually need it.
Ferlito said Malaysia should move towards a single market price for fuel, supported by purpose-specific vouchers for vulnerable households and transport-dependent businesses.
“The main lesson is that subsidies look affordable only when prices are calm. When global prices move, the bill can surge very quickly, and taxpayers absorb the difference,” Ferlito said.
He likened the public attachment to cheap fuel to a long addiction, saying the adjustment would be painful but unavoidable if Malaysia wanted to move towards a more sustainable system.
Meanwhile, Tan Peck Leong of Universiti Teknologi Mara said scrapping the quota could discourage behavioural change, including fuel efficiency alternatives, car-pooling, public transport use and better urban mobility planning.
He said fewer than 1% of BUDI95 users consumed more than the 200-litre monthly quota, while earlier data showed nearly 99% of users stayed below the previous 300-litre limit.
Tan said, thus, the quota system should remain in place, with savings invested in public transport, first- and last-mile connectivity, targeted cash aid, healthcare, education and rural infrastructure.
“Malaysia must not confuse temporary price stability with permanent fiscal safety,” he added. - FMT
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