Targeted fuel subsidy for poor 'complex, complicated', says expert

SHAH ALAM - The government's proposal to introduce targeted fuel subsidy for the lower income group is "complex and complicated" and may not be easily implemented, said an expert.

International Centre for Education in Islamic Finance (INCEIF) Prof Baharom Abdul Hamid said some below 40 percent income earners may have large family members and need large-capacity vehicles, and it could also be a second-hand car.

“There are also top 20 income earners with low-capacity cars. Those who have a large capacity vehicles or own luxury cars are already paying higher road taxes.

“That is why I say, the implementation is complicated, which is almost impossible to implement,”he told Sinar Harian.

Economic Affairs Minister Datuk Seri Mustapa Mohamed had said the government will most likely introduce targeted oil subsidy mechanisms to offset rising crude oil prices, especially for low-income groups

Baharom said targeted subsidies involves a higher cost with lower returns. “Other constraints are (verification of) income or type of vehicle?” he added.

He added discussions over targeted fuel subsidy are often highlighted when crude oil prices rises and return ‘cold’ when prices stablises.

This comes as crude oil prices hits over USD100 per barrel.