Direct debit to recipients’ bank accounts will save govt and petrol station operators from incurring transaction costs

by AZREEN HANI / pic by HUSSEIN SHAHARUDDIN

PETROL dealers associations applaud the government’s proposal to deposit fuel subsidy directly into recipients’ accounts as it is a win-win solution for all.

The dealers said the direct debit method to recipients’ bank accounts would save the government and petrol station operators from having to incur transaction costs, while promoting a systematic and seamless disbursement of funds.

Petrol Dealers Association of Malaysia president Datuk Khairul Annuar Abdul Aziz told The Malaysian Reserve (TMR) that the mechanism, should it be implemented, would allay concerns of additional cost, backlog and congestion issues among users and dealers at the petrol stations.

“I think the direct debit method is a win-win solution, for the government, oil companies, operators and of course, recipients. Introducing coupons or cards at the petrol stations might complicate our operations and pose more hassle to subsidy recipients.

“It may defeat the government’s aspiration to make the process easy for the people and all parties involved, so I look forward to this proposal to be rolled out as planned,” he told TMR yesterday.

In January, TMR reported that stakeholders suggested to the government on using direct cash handout for fuel subsidies instead of the proposed petrol card mechanism.

They argued that the move would eliminate tedious administrative and system costs for the government and petrol dealers.

Economist Dr Muhammed Abdul Khalid said in the same report that the proposed programme should be tweaked where it must be based on income, and use existing system such as Bantuan Sara Hidup (BSH) for subsidy distribution.

Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail told the Dewan Rakyat that the government will likely opt to transfer the fuel subsidy for B40 (bottom 40% income group) motorists into their bank accounts, similar to the disbursement of its BSH cash aid scheme.

Saifuddin Nasution said so far, 90% of BSH recipients, who are also eligible for fuel subsidy, have the financial aid deposited directly into their bank accounts.

“For the remaining 10% that live in the provinces, we would request for the bank’s assistance to help open bank

accounts for them so that 100% of our BSH recipients will have it,” Saifuddin Nasution said in response to a supplementary question from Datuk Seri Ismail Sabri Yaakob (Bera-Barisan Nasional).

“So, when we implement the targeted subsidy, we will bank into the eligible recipients,” Saifuddin Nasution said, adding that the government will utilise the BSH data on the B40 group to identify targeted fuel subsidy recipients.

“The principle is we do not want chaos on the launch date of the subsidy programme,” he said.

Saifuddin Nasution added that another alternative would be using card to identify recipients and to study consumer spending pattern.

He said the information would be useful for government if it decides to extend a targeted subsidy for other consumer goods in the future.

Shell Petroleum Dealers Association Malaysia president Datuk Abdul Wahid Bidin said the direct-deposit bank transfer can save the government up to 2.5% transaction cost, and 1% cost for oil companies.

“With this plan, I think it will benefit the government, oil companies and the people. No more additional charge or ‘messy’ system when it should be for the greater good,” he told TMR.

The fuel subsidy programme for the B40 group, announced during the tabling of the 2019 budget, is expected to be rolled out by the second quarter of this year.