Global energy crisis: Moderation, public prudence key to national resilience

PUTRAJAYA - Amid global economic uncertainty driven by geopolitical tensions and volatile crude oil prices, the key question is no longer only how effectively governments can manage the crisis, but how far the public is prepared to help limit its impact.

As concerns over supply and rising prices intensify, early consumer responses, such as stocking up on essentials, are understandable. However, such actions must remain measured to avoid triggering wider market distortions.

Moderate steps, including reducing daily travel, planning purchases carefully and curbing waste, can have a direct impact on national fuel consumption.

Collective restraint would not only help the government contain rising subsidy costs but could also extend the availability of supply over a longer period.

While such measures may appear minor at the individual level, they can generate a significant impact when adopted widely across society.

This is particularly pertinent after Prime Minister Datuk Seri Anwar Ibrahim said recently that Malaysia’s fuel supply is expected to remain stable at least until June, following the crisis in West Asia.

At the same time, Anwar, who is also Finance Minister, said the government is not relying solely on that assurance and has already moved early to secure alternative sources.

Fiscal strain and budget recalibration

Rising subsidy costs remain a central concern, particularly if crude oil prices stay elevated while the government maintains the RON95 price at RM1.99 per litre despite mounting fiscal pressure.

Finance Minister II Amir Hamzah Azizan said on Friday that fuel subsidies for petrol and diesel have surged to RM6 billion, from RM700 million prior to the United States-Iran conflict.

Chief economist at Bank Muamalat Malaysia Bhd, Dr Mohd Afzanizam Abdul Rashid, told Bernama that if Brent crude averages between US$105 and US$120 per barrel over a sustained period, the government may need to recalibrate Budget 2026 to accommodate higher spending.

"In such a scenario, the fiscal deficit is expected to exceed four per cent of gross domestic product, compared with the earlier target of around 3.5 per cent,” he said.

He noted, however, that policymakers still have room to adjust without undermining overall economic stability. Lessons from the COVID-19 pandemic showed fiscal flexibility, with the deficit rising to about 6.1 per cent in 2020 and 6.4 per cent in 2021 before returning to a consolidation path.

"This indicates there is still room to manoeuvre, but any adjustment must be carefully calibrated and targeted,” he said.

Mohd Afzanizam added that earlier budget assumptions were based on crude prices of around US$60-US$65 per barrel, well below current levels.

One policy option is to refine the subsidy mechanism to make it more targeted. At present, a large share of fuel subsidies benefits higher-income groups, who tend to consume more.

"Restructuring subsidies by reducing benefits for the T10 group and reallocating them to the B40 and M40 could help sustain subsidised prices without increasing fiscal burdens,” he said.

Such an approach is seen as more effective than across-the-board consumption limits, which risk fuelling public discontent.

Support for businesses and SMEs

Beyond households, businesses particularly small and medium enterprises (SMEs), face rising operating costs that threaten profit margins.

Targeted government support, including concessional financing, loan restructuring and improved access to credit, is critical to ensure business continuity.

"If costs rise and margins shrink, firms may be forced to cut jobs. That must be avoided,” he said, adding that in a potentially slowing economy, fiscal support such as cash assistance could help stimulate domestic demand.

He also proposed expanding aid schemes such as Sumbangan Asas Rahmah (SARA), including allowing broader usage and channelling disbursements through digital payment methods such as QR codes.

Such measures would not only support households but also keep liquidity circulating within the domestic economy, particularly benefiting small traders.

Ultimately, Malaysia’s ability to weather the uncertainty hinges on a coordinated response involving government, businesses and the public.

"Beyond responsive fiscal and monetary policies, collective public action-prudent consumption, reduced travel and disciplined spending-is essential to maintaining economic stability.

"The current situation calls for rational, well-informed decisions, not panic-driven behaviour,” he added. - BERNAMA