Malaysian government still collecting data for targeted fuel subsidy
The targeted petrol subsidy scheme, which will be rolled out latest by next month, is currently in data collection stage, according to prime minister Tun Dr Mahathir Mohamad. "We are still collecting data," the PM told the press after chairing the third Economic Action Council meeting in Putrajaya today, Malay Mail reported.
In March, domestic trade and consumer affairs minister Datuk Seri Saifuddin Nasution Ismail said that the targeted fuel subsidy scheme for the low-income (B40) group will be ready by July 2019, at the latest. Before that, the timeline of Q2 2019 was given.
"When the MoF (ministry of finance) has chosen the vendors, they will inform our ministry, enabling both ministries to work together to update the related issues. This is because we want to make sure the programme runs smoothly. The most important component is to ensure that the list of beneficiaries is reliable," the KPDNHEP minister said then.
"The list is being prepared by 17 agencies, not only the Inland Revenue Board, the Registration Department and the Road Transport Department, but also other agencies as well. We want to do a crosscheck to ensure that the recipients are really qualified and we need a bit more time for that," he added.
In April, Saifuddin said that planning for the scheme was in the final stages, and that all related matters had been finalised, except for the recipient data, which was in the process of being updated. It's likely that pump prices would be the same for everyone, but the B40 group will get the subsidies via cash transfer into their bank accounts.
The plan to move from the current blanket fuel subsidy to targeted subsidies for the B40 group was announced by finance minister Lim Guan Eng in Budget 2019. The originally mooted plan was to offer subsidy of 30 sen per litre up to 100 litres a month, for cars with engines below 1.5 litres. Motorcycles with engines below 125cc will get 40 litres of RON 95 a month at the same rate. Owners of multiple and "luxury cars" will not be eligible.
A sum of RM2 billion has been allocated for the new initiative, which is expected to benefit more than four million car owners and 2.6 million motorcycle owners. As for those who won't be eligible, the government has said that it will ensure that the increase in RON 95 petrol prices will be gradual, once the price is floated.
The Malay Mail points out that the issue of petrol subsidies is often a politically-charged one. The previous Barisan Nasional government had tried to gradually remove subsidies, only to reinstate it following public backlash over the increased cost of living. Putrajaya spent MYR 4.9 billion (US$ 1.17 billion) on fuel subsidies alone from January to November 2018. Experts including economists and rating agencies have warned that petrol subsidies are unsustainable in the long run.
Currently, the RON 95 petrol price is being capped at MYR 2.08 per litre, while RON 97 is sold for MYR 2.63 per litre. Like the mass market petrol grade, diesel is also at its maximum capped price of MYR 2.18 per litre.