COMMENT | In 1972, then-US president Richard Nixon announced a seismic shift in the global economic order. With a simple televised address, he severed the link between the US dollar and gold, replacing it with a new anchor: oil.

Thus was born the petrodollar system, tying the fortunes of the world’s currencies to the ebb and flow of oil prices. For Malaysia, an oil-exporting nation, this moment ushered in decades of dependency - a dependency made worse by the introduction of petroleum subsidies.

The subsidy policy, Automatic Price Mechanism (APM), was formally introduced in 1983 under then-prime minister Mahathir Mohamad. Mahathir’s vision of industrialising Malaysia relied heavily on affordable energy to keep production and transportation costs low, fostering economic activity and improving access to essential goods and services.

Politically, the subsidies helped maintain public support during a period of rapid urbanisation and economic transformation. However, it laid the foundation for ...