The government will implement targeted fuel subsidy for B40 to replace the existing blankets, a

Rising crude oil prices boost Malaysia’s current blanket fuel subsidy – destabilizing RON 95 petrol at RM2.05 per liter. Although we are an oil producing country and global oil prices rise, revenue increases, the size of the subsidy bill is such that every US $ 1 crude price increase removes RM410 million from the country’s treasury.

More targeted approaches to fuel subsidies will reduce subsidy bills as well as reduce the impact for those who need help. It’s no secret that the government wants to replace the current blanket style – ‘Targeted’ has been mentioned before, and is now being repeated by the Prime Minister’s Office (Economics) Minister Datuk Seri Mustafa Mohammed.

The veteran minister, known as Tok Pa, said the government was still working on a suitable structure and hoped it would be completed soon. For now, there will be subsidized RON95 and diesel prices, but he made it clear that the system will be changed – it’s a matter of time.

“Those who can afford it should be paid more and those who do not deserve (subsidy) should not be subsidized at all. Subsidies for poor people, especially for B40 (below 40% income group). Time will tell when it will be implemented, “said Mustafa Name TV Today.

He said energy subsidies have played an important role in controlling inflation in Malaysia and the government has been able to maintain inflation between 2% and 3% for the last 10 to 20 years. “However, it will be a big pressure on the budget. When we outlined our budget last year, the estimate was about RM5 billion in subsidies. It is now estimated at around RM30 billion, representing a sixfold increase in subsidies, ”he said.

So, if the blanket is paving the way for the target, what could be a better way to implement a fuel subsidy that would benefit the intended recipients with minimal leakage? Discuss more about the high price of crude oil and fuel subsidies here.

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