Fuel subsidy for big cars to end
Published on: Saturday, May 20, 2023
In 2021, Putrajaya then capped the retail price for RON95 at RM2.05 per litre and RM2.15 per litre for diesel in an effort to protect users here from the global price hike, compared to RM2.08 and RM2.18 respectively in 2019.
PONTIAN: Datuk Seri Ahmad Maslan said Malaysia’s top 20 per cent (T20) households will have to pay more for RON95 petrol and diesel fuel starting next year.The deputy Finance Minister said Putrajaya is moving towards a more targeted subsidy approach, and the T20 group will no longer enjoy subsidised retail prices for their fuel.
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“There is an urgent need to replace the current subsidy scheme for RON 95 petrol, diesel and gas in an effort to turn it into targeted subsidies. We don’t want a situation where the rich receive more subsidies than the poor,” said Ahmad to reporters.
Ahmad claimed that “the rich” with their “big cars and high incomes” are the “biggest beneficiaries” of the current subsidy scheme which sees the ceiling price of RON95 petrol fixed at RM2.05 per litre.
He explained that T20 households can pay more for their petrol compared to those in the middle 40 per cent (M40) and bottom 40 per cent (B40) households, which he claimed use smaller cars and motorcycles.
The T20 is defined by the Department of Statistics as a household with a combined income of at least RM10,960 a month. Data in 2020 showed that the median income of households in Malaysia RM5,209 while the mean is RM7,089.
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The mean income of households in the Federal Territories of Putrajaya and Kuala Lumpur exceeded the T20 bracket (RM12,322 and RM11,720 respectively).
Ahmad, who is also the Pontian MP, said that more than RM50 billion was spent on subsiding fuel prices for RON95 petrol, diesel and gas that is enjoyed by all Malaysians.
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“The present situation is more of a ‘mistargeted’ subsidy scheme that does not benefit the low and middle-income groups. In the end, it is the Finance Ministry that has to pay for the subsidy’s cost worth billions to the oil companies,” he said.
Ahmad added the government’s hope is that by exempting the T20 from subsidised fuel, billions of ringgit can be saved to be channelled back to development and curbing the hardcore poor.
“The T20s can still continue with their lives without the fuel subsidies as they can afford the unsubsidised rates,” he claimed. Ahmad said when the government pulled back the electricity subsidy to companies and corporations, they were able to save RM4 billion between January and July last year.
On Monday, Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, said the government will be implementing a subsidy targeting programme in stages starting in January next year.
In 2021, Putrajaya then capped the retail price for RON95 at RM2.05 per litre and RM2.15 per litre for diesel in an effort to protect users here from the global price hike, compared to RM2.08 and RM2.18 respectively in 2019.
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