13th June 2022 - 3 min read
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has remarked that the government is financially capable of continuing the fuel subsidy, and will continue to do so for the people despite rising global crude oil prices. This is especially to support the people’s livelihood, particularly for those from vulnerable groups.
“As the government has said before, the subsidies for this year will reach RM70 billion, meaning that the fuel subsidy will reach RM30 billion. We have made a projection based on Brent oil price. Last month (May), it (fuel subsidy) already reached RM5 billion a month. However, at this moment, the government will continue to allocate for the subsidy. We are still able to help the people through the subsidy, so we will continue,” Tengku Zafrul said, adding that the government will continue to monitor the global oil prices.
The minister also explained that the government is still capable of providing the subsidy because Malaysia’s inflation target for 2022 is still within the projected figure. To note, Malaysia’s headline inflation is projected to average between 2.2% to 3.2% in 2022, as per the forecast by Bank Negara Malaysia (BNM).
That said, Tengku Zafrul reiterated that the government is also in the midst of looking for long-term measures to help it cope with the burgeoning cost of providing subsidies. One of the various methods being explored is the implementation of a targeted subsidy system.
To date, several ministers have already highlighted the possibility of a switch from the current blanket fuel subsidy to a targeted subsidy. This includes the International Trade and Industry Minister, Datuk Seri Mohamed Azmin Ali, who stressed that those driving BMWs cannot enjoy the same subsidies as those with Kancil. Similarly, Minister in the Prime Minister’s Department (Economic Affairs), Datuk Seri Mustapa Mohamed also noted that the government is already exploring a suitable targeted fuel subsidy mechanism.
Aside from noting the possibility of implementing a targeted subsidy system, Tengku Zafrul also shared that the government does not plan to ask Petronas for additional dividend to bear the cost of the subsidy.
“We will see all (options). The government revenue is increasing as our revenue depends on commodity prices. Companies like Petronas have also announced strong financial positions (but) whether we will ask for more dividend from them or anything, has not yet been discussed. The government’s revenue has also increased, although the increase is not as high as the (increase in) subsidy. We will continue to monitor as this is not only a phenomenon in Malaysia, but also at the global level,” said Tengku Zafrul.
(Source: The Star)
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