9th August 2022 - 2 min read
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has said that the government will only decide on introducing targeted subsidies when the country’s economic situation permits it. This will depend on several factors, including the country’s economic growth and inflation rate, as well as global geopolitical situations.
According to Tengku Zafrul, it is inappropriate to implement targeted subsidies in the current economic environment where inflation is rising around the world. As such, he remarked that it is too early for the government to decide on whether it should introduce targeted subsidies in the upcoming Budget 2023.
“We are still in the recovery process, and this matter needs to be discussed in the Cabinet as to whether targeted subsidies will be introduced in Budget 2023,” Tengku Zafrul said.
Nevertheless, Tengku Zafrul stressed that the current blanket subsidy approach is not sustainable in the long term, and will take a toll on the country’s economy. Therefore, if the government finds the economic environment in 2023 to be suitable, it will implement structural reforms, particularly to help the financially vulnerable groups. “Through these structural reforms, we will introduce new policies to help those who are really in need, and not via blanket (subsidies),” he added.
For several months now, the government has been consistently stating its intention to replace the current blanket subsidy with a targeted mechanism in a bid to curb leakages and to provide subsidies to deserving groups. In line with this, Prime Minister Datuk Seri Ismail Sabri Yaakob shared last month that the government is already in the midst of formulating a suitable mechanism for its targeted subsidy approach.
As of now, the government is testing the mechanism for a targeted petrol subsidy, which may be studied for up to six months before it is ready for implementation. Meanwhile, the government is also looking to rationalise other existing blanket subsidies while it improves direct assistance for low-income earners.
(Source: The Edge Markets)
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