More details on targeted RON95 petrol subsidy needed

PETALING JAYA: The move to implement a targeted subsidy for the RON95 petrol fuel is welcomed, but the mechanics of its execution must be clearer.Several experts and consumers expressed their support for the move announced by Prime Minister Datuk Seri Anwar Ibrahim in his Budget 2025 speech.

He said the government had been subsidising the purchase of RON95 petrol up to RM20bil until 2023 and is aware that foreigners and the upper 15% of the superrich are enjoying the current 40% subsidy.

Economist and Centre for Market Education chief executive Dr Carmelo Ferlito said while he agreed with the spirit of targeted subsidy, its implementation must be practical.

“The practical way in which they will be designed needs to be the result of a sound trade-off analysis or the gain must be bigger than the pain, and its implementation must be gradual.

“Furthermore, any ideological tone, meaning the rich versus the poor or big versus small enterprises, should be abandoned. The proposed solution must be forward-looking, inspired by a long-term perspective,” he said.

He said it must be made clear that the recipients should be individuals and not enterprises to prevent market distortion.

“The case of purpose vouchers can also be applied here. The scenario will become thornier if the subsidy beneficiaries are enterprises rather than individuals.

“This is the most obvious example of how the provision of subsidised goods has distorted the market to the point where any possible solution is difficult and imperfect,” Ferlito said.

The implementation of the targeted subsidy will be understandably difficult since the government needs to identify the recipients carefully to prevent leakages, Federation of Consumers Association president Datuk Dr Marimuthu Nadason said.

“Hopefully, there is a comprehensive system for the government to check on the eligibility of subsidy recipients to prevent leakages. But we know it is not a simple thing to do.

“There are various mechanics to identify the correct target group or recipients such as the use of databases,” he said.

However, he described the move as “thoughtful” since many of those who need such subsidy rely on the use of their personal transport daily for work.

Businessman Mohd Azrai Kasim, 43, said he is unsure of the eligibility criteria.

“This is good but I need to know the specifics. I’m from the M40 group. I run a business. I pay a lot of taxes. Will I be eligible for the subsidy due to my income group?

“There are variations or spectrums even within an income group classification,” he said.

Sales executive Karen Loh, 25, said a targeted subsidy should benefit consumers like her and hopes it will be a substantial amount to offset her fuel expenditure.

“I travel a lot daily to meet clients and spend over RM400 a month on fuel alone, but I can only claim about RM250 from my company. If the government can allocate more subsidy to people like me, it will be a boon,” she said.