Kota Kinabalu: Malaysia should move towards targeted subsidies instead of blanket assistance, as broad-based subsidies risk creating long-term dependency and place an unsustainable burden on government finances, says Datuk Seri Mohd Shafie Apdal (pic).
Speaking on the TV Teh Tarik YouTube channel’s podcast, “Sabah’s Economy at a Crossroads: Challenges, Opportunities and the Way Forward with Datuk Seri Shafie Apdal (Part 1), ” the Parti Warisan president said subsidies remained an important tool to cushion the impact of rising living costs, but should be directed only to those who genuinely need assistance.
“Subsidies have their place, but there must be limits. That is why there should be selective or targeted subsidies.
“If we do not target subsidies, we are creating a society that becomes very dependent, ” he said.
Drawing from his experience as a former Domestic Trade and Consumer Affairs Minister, Shafie said blanket subsidies often resulted in leakages and enforcement challenges, including the smuggling of subsidised goods across borders.
He said policymakers must strike a careful balance between helping consumers cope with rising costs and ensuring government spending remains sustainable.
“As a government, we naturally think about remaining in power. The question is how do you balance that while maintaining a competitive economy? It is a very delicate matter, ” he said.
Shafie also questioned whether direct cash transfers alone could effectively address cost-of-living pressures, saying governments should look at reducing production costs faced by businesses instead.
He said lower operating costs for manufacturers and service providers, including electricity tariffs, fuel and taxes, could help prevent businesses from passing rising costs on to consumers.
“We need to look at how we can help companies and factories remain viable.
“How can we reduce electricity costs, taxes imposed on companies and fuel costs faced by businesses?” he said.
According to Shafie, a broader approach was needed to keep prices affordable, including strengthening industries, creating employment opportunities and boosting purchasing power.
He said economic development should focus on improving productivity and skills rather than relying indefinitely on government aid.
“Human capital is one of the key factors that allows a nation to progress and move forward, ” he said.
On government spending, Shafie said any budget cuts should be carefully targeted to avoid affecting critical sectors such as healthcare and education.
While acknowledging the need for fiscal discipline, he stressed that governments should prioritise essential services and reduce leakages before trimming expenditure in key areas.
Shafie also proposed expanding local industries in Sabah, including the production of generic medicines, saying greater domestic manufacturing could help reduce transportation costs, improve supply security and lower prices for consumers in the long run.
He noted that Sabah’s dependence on imports for many essential goods contributed to higher costs and said local production could strengthen the state’s resilience against future economic disruptions.
