KUCHING: The Malaysian government’s decision to gradually phase out the blanket subsidy on eggs brings long-term benefits for the nation’s economic stability and efficiency.
In support of the move, Universiti Malaysia Sarawak (UNIMAS) Senior Lecturer, Dr Dzul Hadzwan Husaini, stressed that the removal of blanket subsidies is a crucial step toward strengthening the country’s fiscal sustainability.
“Sustaining subsidies on essential items like eggs over a long period, without targeting, places a significant strain on public finances.
“In the current global and domestic economic environment, where fiscal space is limited, it is vital that the government redirects its resources toward more impactful and equitable programmes,” he told Sarawak Tribune.
He further pointed out that the current subsidy structure disproportionately benefits the wrong groups.
“Egg subsidies, as they are currently designed, are applied universally. This means all consumers, regardless of income level, receive the same benefit.
“The high-income group, who consume more and need it the least, end up benefiting the most. Similarly, producers in dominant positions may also gain indirectly.
“As a result, the intended benefit for lower-income households becomes diluted. This is contrary to the very aim of a subsidy policy, which should focus on protecting the most vulnerable groups in society,” he explained.
Dzul also agreed with the government’s stance that blanket subsidies are ineffective in the long run.
“While subsidies can ease cost pressures temporarily, they do not address the root causes of price increases, which often lie in market dynamics such as supply shocks, input costs and distribution inefficiencies.
“Likewise, price control mechanisms, while well-intentioned, can create market distortions. If prices are kept artificially low for too long, producers may reduce supply or lower product quality, leading to shortages.
“Over time, this causes more harm than good to consumers,” he explained.
In light of this, Dzul also raised concerns about the market structure in Malaysia, noting that key sectors such as the egg, chicken and rice markets are dominated by a few large producers.
“These sectors are not perfectly competitive, and when a handful of players can influence prices, government policies like subsidies and price controls may fall short.
“These dominant firms can adjust their supply or pricing strategies in ways that circumvent regulations, making enforcement difficult,” he said.
Instead of continuing with broad-based subsidies, he called for a more targeted approach.
“The government should focus on providing targeted assistance to low-income households, and implementing reforms to improve market transparency and competition.
“At the same time, consumers should be protected through safety nets and programmes such as Agro MADANI and Rahmah Sales, which offer basic goods at affordable prices.
“This approach not only supports those who truly need help but also ensures that public funds are used more effectively to build a more resilient and fair economic system in the long run,” he said.
