85% of M'sians won't be impacted by RON95 subsidy rationalisation, Dewan Rakyat told

KUALA LUMPUR: The RON95 subsidy rationalisation, which is expected to be implemented in the middle of next year will not impact 85% of Malaysians, says Datuk Seri Amir Hamzah Azizan.

“We hope to implement the subsidy rationalisation with a mechanism that uses the MyKad and e-wallet,” the Finance Minister II said during Minister's Question Time in the Dewan Rakyat on Tuesday (Nov5).

"This will help determine those who are eligible to receive (aid) and those who are not eligible so that the savings from this can be used to strengthen the economy by reducing debt and ploughing this funds for hospitals, schools and others,” he added.

He said the government is still determining the criteria for the T15 category.

Amir Hamzah said the government will not solely rely on the data from the Statistics Department of Malaysia’s Household Income Survey to determine the criteria for the T15 category.

“We will take into account all views while determining the T15 category,” he said.

Amir said the RON95 subsidy rationalisation will involve tiered pricing like diesel and electricity.

“For electricity users who have a high usage, they will be subjected to higher tariffs. As for diesel subsidies, the unsubsidised prices at petrol pumps are RM2.95 per litre but vehicles in the logistics sectors who are eligible for fleet cards can buy diesel at a subsidised price of RM2.15 per litre,” he said.

“The rationalisation of RON95 had to be done due to the huge difference in prices that has led to leakages in petrol subsidies and have been used by ineligible groups,” he added.

“It is estimated that the use of petrol by non-citizens, the commercial sector and smuggling activities is at about 40% of the total usage,” he said.

He said RON95 subsidies costs the government around RM20bil a year.

“If the leakages to foreigners, businesses and the rich can be curbed, it will generate savings of RM8bil a year,” he said.

He said targeted subsidies will require a proper mechanism and the government is still in the process of studying it.

As for the diesel subsidies, he said the rationalisation generates a savings of about RM600mil a month.

He was responding to a question by Aminolhuda Hassan (PH-Sri Gading) on how the T15 criteria will be determined.