Prime Minister Anwar Considers Cabinet Pay Cuts as Middle East Conflict Strains Malaysian Economy

Prime Minister Anwar Ibrahim states Malaysia may cut ministerial salaries if the Middle East crisis worsens, alongside reviews of EV investment policies.

By: AXL Media

Published: Apr 18, 2026, 7:49 AM EDT

Source: Information for this report was sourced from The Straits Times

Fiscal Contingency Plans Amid Regional Instability

The Malaysian government is signaling its readiness to adopt austerity measures at the highest levels of leadership in response to the escalating Middle East conflict. Prime Minister Anwar Ibrahim stated that while ministers have a right to their salaries provided they perform well, Putrajaya is willing to consider pay reductions as a symbolic and fiscal necessity. Speaking in Cyberjaya on April 17, Anwar noted that he already serves without a salary and suggested that his cabinet would follow suit if the economic climate worsened significantly. This stance follows a similar proposal from Indonesia, where officials have considered salary cuts to manage broader fiscal tightening.

Economic Pressures and Ministerial Performance

According to Anwar, the primary focus remains on the quality of service provided by his cabinet members during this critical period. He argued that current ministerial salaries in Malaysia are not excessively high, yet he maintained that there is no obstacle to reducing them if the national interest demands it. The Prime Minister's comments come as the country navigates a complex economic landscape characterized by early signs of fallout from the Iran war, which has already begun to impact inflation and growth projections across Southeast Asia.

Revisiting Investment Frameworks for Electric Vehicles

Parallel to discussions on fiscal austerity, the Prime Minister is addressing calls to re,evaluate the country's manufacturing policies. Anwar announced plans to meet with the Investment, Trade, and Industry Ministry to discuss the conditions imposed on foreign electric vehicle manufacturers. This move follows concerns raised by state officials in Perak, who warned that restrictive policies could undermine investor confidence. Specifically, the government is looking at whether stringent conditions might jeopardize major projects, such as Chinese manufacturer BYD’s planned investment in a Tanjung Malim production plant.