Subsidies may touch RM71 billion in 2022, inflation contained, says Tengku Zafrul

Malaysia is expected to fork out more total subsidies in 2022, to the tune of RM71 billion, while petrol subsidies alone will touch RM30 billion amid the rise in crude oil prices.

Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, Finance Minister Tengku Zafrul Aziz said the higher subsidies had resulted in a lower core inflation rate of 2.3%.

Although inflation was on the rise, he said Malaysia was lucky as it had commodity resources, unlike other countries in the region which do not have the opportunity to create revenue from the increase in commodity prices to cushion the impact of fuel prices.

Tengku Zafrul was one of the panellists at a session titled “Global Risks in an Era of Turbulence”.

Asked whether Asian governments were able to maintain or support the price of rice for the people, Tengku Zafrul said there was a lot of government assistance to ensure that supply is secured, adding that large amounts of subsidies were being allocated so that the price could be maintained given the importance of rice to Malaysians.

On China’s threat to the South China Sea, the finance minister said that as China is Malaysia’s largest trading partner, Malaysia would continue to engage with China rather than not.

“We are also hoping that what is happening in China, especially the lockdown, will not disrupt the supply chain too much,” he added.

Tengku Zafrul said the current lockdown in China had had an impact on all of its trading partners.

“The lockdown has been more severe than before and longer than what we anticipated, although there will be a positive impact once it is lifted.

“If you are talking about the spillover once China starts to lift the lockdown, I think it will be positive and manageable,” he added.