Targeted fuel subsidy mechanism still under study


The government is still evaluating proposals to implement the targeted fuel subsidy for the bottom 40% of Malaysian households (B40), with months left to meet the deadline announced in Budget 2019.

Deputy Domestic Trade and Consumer Affairs Minister Chong Chieng Jen (picture) said the ministry remains open to “new ideas” on how the scheme can be implemented, in contrast to the second quarter of 2019 timeline announced by Finance Minister Lim Guan Eng during the budget tabling last year.

Chong said among the factors that the government has to consider is whether the proposed scheme will benefit Malaysians in remote areas.

“The government has not made any final decision on whether the subsidy will be given out in cash or rebates.

“We still have to consider populations living inland, especially in Sabah and Sarawak, where boats are the main form of transportation.

“People living in longhouses also use diesel to generate electricity, so we are taking all this into consideration in the targeted subsidy plan,” Chong told reporters at the Parliament lobby yesterday.

Earlier in Dewan Rakyat, Chong explained that the targeted fuel subsidy would only be applicable for those who owned one car.

“The privilege will be revoked if the person gets another car, even if he is from the B40 group,” he said, in response to an oral question from Jempol MP Datuk Mohd Salim Mohd Sharif.

A targeted fuel subsidy for B40 Malaysians was among announcements made by Lim during Pakatan Harapan’s maiden federal budget last year.

Since then, numerous proposals on its implementation have been speculated, including the use of a petrol card to purchase subsidised fuel. However, no detail has been confirmed to date.

Calls for proposals from related parties on the fuel subsidy mechanism have been issued as early as Nov 19, 2018, by the Finance Ministry, after the tabling of Budget 2019. The federal budget has allocated RM2 billion in subsidy expenses in 2019 for motorcycle users with an engine capacity of 125cc or less, and car owners with an engine capacity of 1,500cc and below.

Initially, the government’s plan was to utilise existing e-Kasih data to identify eligible recipients for the targeted subsidy in accordance with household incomes.

Critics have said beneficiaries should be identified based on income, and not engine capacity.

Currently, the government offers a blanket subsidy for RON95 petrol and diesel, with the majority-used RON95 pump price capped at RM2.08 per litre.

Lim previously revealed that subsidies for RON95 and diesel between January and November 2018 amounted to RM4.89 billion.