23rd May 2022 - 2 min read
Senior Minister and International Trade and Industry (MITI) Minister Datuk Seri Mohamed Azmin Ali has reiterated that the government is currently looking for a suitable mechanism in its bid to adopt a targeted fuel subsidy. This is to ensure that the benefit will be provided to deserving groups, especially the lower-income group.
“We (the government representatives) talked about the review in a special retreat recently; it has to be more targeted for the deserving. Those with BMWs cannot enjoy the same subsidies as those with Kancil,” stressed Datuk Seri Mohamed Azmin.
Additionally, Datuk Seri Mohamed Azmin highlighted that the targeted fuel subsidy is in need as rising crude oil prices are also putting a strain on the government’s budget. He noted that the fuel subsidy is expected to balloon up to RM28 billion this year, surpassing the RM11 billion borne in 2021.
To date, Datuk Seri Mohamed Azmin is not the only minister to bring up this possible switch from a blanket fuel subsidy to a targeted subsidy. Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz had also recently stated that the government will work with relevant stakeholders to review this issue. He further noted that a large portion of government subsidies is currently being enjoyed by the T20 group, instead of the financially vulnerable group.
Similarly, Minister in the Prime Minister’s Department for Economic Affairs Datuk Seri Mustapa Mohamed also mentioned before that the government is working on a suitable targeted fuel subsidy mechanism. While there were no specific details, he stated that the structure is expected to be completed in the near future.
For context, the government had previously attempted to introduce a few variations of targeted fuel subsidy. In 2008, the government provided a one-off fuel subsidy of RM625 for owners of private vehicles with engine capacities of up to 2,000cc (up to a maximum of five vehicles per user).
Meanwhile, in 2014, the government mooted a three-tiered fuel subsidy mechanism. Specifically, vehicle owners earning less than RM5,000 a month would be entitled to a full subsidy, while those with a salary between RM5,000 and RM10,000 would receive partial subsidy. Those earning above RM10,000, meanwhile, would not be eligible for any fuel subsidy. However, the proposal never came to fruition.
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