Kota Kinabalu: Sabah Democratic Action Party Chairman and Senator Phoong Jin Zhe said the Federal Government’s plan to remove RON95 fuel subsidy for T15 and T20 income groups could worsen cost pressures, distort implementation and backfire on the wider economy.
“The proposal risks triggering a chain reaction across key economic sectors, from logistics and transport to retail and manufacturing,” he told Daily Express.
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Phoong was commenting on Prime Minister Anwar Ibrahim’s statement that the Government had in principle agreed to withdraw RON95 subsidy for high-income groups.
He said any policy decision must be weighed against its broader economic and social consequences.
Phoong warned that fuel price increases would not remain confined to so-called high-income motorists.
He said small and medium enterprises within the T15 and T20 brackets would be directly affected through higher operating costs.
He added that these costs would inevitably be passed down the supply chain and ultimately borne by consumers.
Phoong said this could fuel inflationary pressure at a time when households were already facing rising living costs.
He said many individuals classified under T15 and T20 were not ultra-wealthy, but included SME owners, professionals, entrepreneurs and dual-income families.
He stressed that the assumption of uniform wealth within these categories was inaccurate and overly simplistic.
Phoong also questioned the basis for defining T15 and T20, saying income thresholds alone could lead to misclassification of households under financial strain.
He pointed out that many urban families earning above RM10,000 a month still faced heavy commitments such as housing loans, vehicle repayments, education costs and parental support.
He said such cases were common in Kota Kinabalu, where high living costs significantly reduced disposable income.
Phoong said businesses and the middle class were already under pressure from recent fiscal and regulatory measures, including the expanded Sales and Service Tax, e-invoicing rollout, minimum wage adjustments and rising operating costs.
He said the proposed fuel subsidy withdrawal would add further strain to an already pressured economic environment.
Phoong said high-income earners and business owners were key contributors to national growth, including job creation, investment and tax revenue.
He warned that weakening their capacity could slow consumption, reduce investment appetite and dampen economic momentum.
Phoong also raised concerns over implementation, including the use of identity verification systems and dual pricing mechanisms at petrol stations.
He said such arrangements could create confusion, inefficiencies and potential opportunities for abuse.
He added that previous targeted subsidy schemes had faced enforcement difficulties and system loopholes.
Phoong said the Government should prioritise expanding economic capacity rather than tightening pressure on productive sectors.
He cautioned that sustained policy pressure on businesses and upper-income groups could undermine growth, investment confidence and employment stability.
