He said while the nation had benefitted from trade and economic growth through emission-heavy industries, the government was now focussing on higher-value services that would eventually support efforts to achieve environmental and decarbonisation goals.

“That’s why the government has made some tough decisions and started moving away from blanket subsidies, (a decision) that is understandably unpopular.

“I’ve had billion-ringgit companies coming to see me, claiming that the tariff increases would be disastrous, to which I said you’ve enjoyed incredibly cheap rates for a long time, this adjustment is overdue,” he said at the National Climate Governance Summit at Sasana Kijang today.

Nik Nazmi said the shift towards rationalising utilities was not only an economic necessity but also an environmental imperative.

“We’ve long modelled our development on town planning, highways and even the establishment of a national car brand, but for decades we under-invested in key areas like rail, buses, and public transport.

“Only recently have we started to realise the importance of these systems and how they can help move the country up the value chain, prompting a shift in our focus towards them,” he said.

He said countries like Japan, South Korea, China, and Singapore started as low-cost economies but moved up the value chain by competing on innovation and value-added services while Malaysia lagged behind.

“Malaysia became addicted to cheap utilities and low-wage labour but this model is no longer sustainable and we need to bite the bullet,” he said.

The government has introduced significant reforms to its utilities subsidy system to improve fiscal sustainability.

Last year, Prime Minister Anwar Ibrahim announced plans to implement a targeted RON95 petrol subsidy by mid-2025.

In July 2025, Tenaga Nasional Bhd will increase the base electricity tariff in Peninsular Malaysia by 14.2% to 45.62 sen per kilowatt-hour to defray higher fuel costs while meeting growing demand, particularly from data centres.