Maintain the existing fuel subsidy, experts say
The government is urged not to exclude the M40 and T20 groups in providing fuel subsidies
SHAH ALAM - The government is advised not to exclude the middle-income group (M40) and high-income group (T20) in the provision of targeted fuel subsidy mechanism that may be implemented in the future.
International Islamic Financial Education Center Economic Analyst Associate Professor Dr Baharom Abdul Hamid said that those who paid road tax and income tax in large amounts were also affected by the increase in fuel prices in the market.
“Fuel subsidies are too complex and difficult for the government to implement because no perfect mechanism can be used.
"If the government wants to provide fuel subsidies according to the type and capacity of vehicles, it is definitely difficult to manage because luxury cars such as Mercedes-Benz and BMW already have 1800cc and 2000cc engine capacity.
“Therefore, it is not fair to the low-income group (B40) who have Nazaria vehicles with a capacity of 2500cc. So how does the government want to ensure that those who deserve it get subsidies according to their capacity and type of vehicle,” he said when contacted by Sinar Harian.
Earlier, International Trade and Industry Senior Minister Datuk Seri Mohamed Azmin Ali was reported to have said that the government is likely to introduce a targeted fuel mechanism to reduce the impact of rising crude oil prices, especially for the low-income group.
He said the government is still working on a suitable structure following a significant jump in the fuel subsidy projection for 2022 to RM28 billion from RM11 billion in 2021.
Currently, the subsidised RON95 price in Malaysia is among the lowest in the region.
Meanwhile, Baharom suggested the government maintain the fuel subsidy to the people based on vehicle registration plates as implemented today.
He said the mechanism was able to prevent arbitrage practices among those who received subsidy privileges.
"This arbitrage is to take advantage of the difference between the price of subsidised and non-subsidised petrol by selling it to other parties to make a profit," he explained.
Universiti Teknologi Mara economic analyst Dr Baayah Baba also suggested that the government maintain the existing blanket fuel subsidy for all Malaysians.
“Right now, the RON95 is subsidised to all consumers and the government needs to maintain it because it is the best mechanism.
“The T20 group is also affected when there is an increase in the price of other essential goods in the market, so what is wrong with the government maintaining the RON95 subsidy for all.
“If they (T20) want to use RON97, which is more expensive, it is up to them. What has been implemented now is good enough," she said.
