No plans to cut subsidies for now despite Middle East war concerns

No plans to cut subsidies for now despite Middle East war concerns

KUALA LUMPUR: The government currently has no plans to reduce subsidies, despite growing concerns about the potential economic impact of the ongoing conflict in the Middle East.

Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said the government is monitoring the situation closely and assessing how long the impact may last before making any decision.

“For now, there is no decision to cut subsidies because we believe the impact is significant, but what we need to see is how long it will last. However, Johari said the Finance Ministry will provide updates from time to time.

“If it is only for the next two or three months, I believe the government can still survive (the pressure). However, this war has raised concerns among many countries,” he said.

He was speaking to reporters after attending a dialogue session organised by Persatuan Peniaga Bundle Malaysia in collaboration with Majlis Belia Titiwangsa, here today.

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Johari said ongoing tensions have created widespread concern globally, affecting not only countries in the Middle East but also Asean economies and Europe.

He said geopolitical uncertainty typically leads to two major economic consequences — reduced consumer spending and higher costs driven by rising energy prices.

“When there is uncertainty in the economy, people tend to hold back on spending because they are unsure (about what may happen in the future).

“Second, if oil prices rise, the impact is not limited to oil alone but will have a major effect on industries that rely heavily on energy.

“So if you ask me about the impact of the current situation, for now the government can still hold out for the next two or three months. We will have to see how the situation develops,” he said.

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The developments come amid escalating tensions in Middle East, following large-scale attacks by the United States and Israel on Iran since Feb 28, reportedly killing more than 1,200 people, including Supreme Leader Ayatollah Ali Khamenei.

Iran’s new supreme leader, Mojtaba Khamenei, has ordered the vital Strait of Hormuz oil shipping lane to remain closed and called on Middle East countries to expel US bases.