KUALA LUMPUR, May 22 -- Universal fuel subsidies have long helped Malaysians cope with the rising cost of living, but economists now warn that blanket subsidies may be doing more harm than good.

While they reduce costs for consumers, such subsidies often lead to overconsumption, smuggling, and a disproportionate benefit to higher-income groups.

"There is a tipping point, and we are already beyond that point," economist Geoffrey Williams, who supports a move towards targeted subsidies, said in a Free Malaysia Today report.

He said this occurs when inequality grows and the cost of subsidies outweighs their intended social impact.

Economist Madeline Berma said subsidies are not inherently flawed but often miss their intended targets, wit...