MOF To Consider Using Technology Application To Implement Targeted Subsidy

Nur Adilah Ramli

7th September 2022 - 2 min read

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has said that the Ministry of Finance (MOF) will consider using technology application for its targeted subsidy mechanism. This is in a bid to better channel government subsidies to targeted groups in an efficient manner.

Tengku Zafrul reiterated, however, that the present is still not the right time to shift from the current blanket subsidy to a targeted subsidy as the country’s economy is still recovering. It is also not suitable to do so now given the rise in the country’s inflation, despite remaining relatively lower than inflation in other countries.

Additionally, the finance minister remarked that the government does not want a situation where the targeted subsidy is not executed properly. This echoes his comment from last month, where he also said that the government will only decide on introducing a targeted subsidy when the country’s economic situation permits it.

On the implementation of the targeted petrol subsidy, Tengku Zafrul commented specifically that the government is still reviewing the approach that will be adopted for the initiative. To date, the government has already considered the use of e-wallets as a possible approach. That said, he also noted that the necessity for a targeted petrol subsidy mechanism may change in the future, depending on the overall economic conditions and crude oil prices.

“If the (market) price of oil at that time (in the future) is low, maybe, there is no need for [a] targeted [petrol] subsidy as the government can continue to give the subsidy,” Tengku Zafrul said. To note, the finance minister revealed in late June that the government subsidies are expected to hit close to RM80 billion this year. These include the subsidies for petrol, diesel, liquefied petroleum gas (LPG), and electricity.

The government has been consistent in highlighting its intention to move to a targeted subsidy, noting that the current approach is not sustainable in a long run. Last month, the government also ran a survey to seek people’s opinions on the implementation of targeted subsidies for a number of items, including the RON95 petrol, diesel, cooking oil in 1kg polybag packaging, and electricity.

(Sources: The Edge Markets, Free Malaysia Today)

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