In a Facebook post, he said that the government should not introduce major economic policy changes at a time when inflation forecasts are still high, stating that such a move would “shock the system” and create a “chaotic” domestic market.
“This is because forecasts of higher inflation will actually lead to a higher inflation rate,” he said.
“The expectation of inflation will lead to inflation. It is a self-fulfilling prophecy.”
He noted that when he was prime minister, the Barisan Nasional (BN) government abolished blanket subsidies in November 2014 to switch to giving cash directly to targeted groups – especially for diesel, which had an impact on the cost of transporting goods.
He said November 2014 was chosen because, at that time, world oil prices were very low and on a downward trend.
“That’s why when we abolished the subsidy and fixed the price of RON95 petrol, its price dropped from RM1.90 to RM1.60,” he said.
“And if it increased again, it would be in a gradual way so as to have the least impact on the inflation rate.
“But at this (current) time when world oil prices are high, the abolition of petrol subsidies to move towards a targeted subsidy system cannot be done unless we want inflation to increase and the domestic market to become chaotic.”
Najib stressed that he was not a fan of blanket subsidies because it leads to wastage, large-scale smuggling, and traffic congestion and also does not encourage users to switch to electric or energy-efficient cars.
“Also, the group that will benefit more from it is the T20 group and not the B40 and M40 groups.”
He added that the government should only implement targeted fuel subsidies when the inflation rate has decreased and “is under control”.
In April, economic affairs minister Mustapa Mohamed told Bernama TV that the government is likely to introduce a targeted fuel subsidy mechanism, especially for the lower income group, to cushion the impact of rising crude oil prices.
He said the government was working on a suitable structure and expected it to be completed soon.