KUALA LUMPUR — Malaysia should prepare for a potential “energy emergency” caused by ongoing geopolitical conflict over Iran by accelerating its transition to renewable energy, while further targeting fuel subsidies to the truly needy, an economic expert has warned.
Distinguished Professor of Economics, Datuk Dr Rajah Rasiah, at Universiti Malaya (UM) told Bernama renewable sources of energy currently account for only 20 per cent of the country’s energy supply.
Just two per cent is from solar and wind, and 18 per cent from hydropower, the executive director of UM’s Asia-Europe Institute said.
“Efforts to reduce dependence on fossil fuels in Malaysia are progressing too slowly.
“We need to shift towards renewable energy such as solar and wind, as seen in developed countries and Indonesia,” he said on Bernama TV’s Apa Khabar Malaysia programme today.
Efforts to accelerate the green transition must be intensified in line with global commitments to cut carbon emissions and achieve carbon neutrality by 2050, he added.
Rajah also did not rule out the possibility that ongoing geopolitical tensions over Iran could trigger an “energy emergency”.
He said the situation is becoming more apparent as crude oil prices have surged to around USD100 per barrel, up from about USD50 previously, increasing the government’s subsidy burden.
“As a net oil importer, we face challenges when crude oil prices spike to USD100 per barrel. Malaysia consumes about 700,000 barrels of oil daily,” he said.
To protect lower-income groups, Rajah said subsidy mechanisms must reach those who need it most.
“The issue now is that all Malaysians enjoy the same subsidised price at petrol stations regardless of income. This needs to be reconsidered. We must protect the poor, rather than provide blanket subsidies for all,” he said.
The professor said Malaysia’sreliance on imported oil has reached about 50 per cent of domestic demand, forcing the government to bear high costs to maintain subsidised fuel prices, including RON95 at RM1.99 per litre.
The US-Israel war on Iran, which began in late February, has seen Malaysia’s subsidy bill increase drastically.
Earlier today, Prime Minister Datuk Seri Anwar Ibrahim said Putrajaya was now spending RM5 billion a month on fuel subsidies, when it was only spending RM700 million in January. – May 4, 2026