Targeted subsidy for RON95 petrol necessary to address leakage
Bernama
05/11/2024
Deputy Finance Minister II Amir Hamzah Azizan says, according to preliminary data, the targeted diesel subsidy has generated savings of around RM600 million per month to date. - BERNAMA
KUALA LUMPUR: The targeted subsidy for RON95 petrol is essential to mitigate leakage involving usage by individuals who should not benefit from it, said Deputy Finance Minister II Amir Hamzah Azizan.
Non-citizens, commercial use, and smuggling make up 40 per cent of petrol usage.
MyBUDI subsidy reduces smuggling, saving RM600 million monthly by shifting diesel sales to the industrial sector.
Government is revising subsidy criteria to better support the B40 group and reassess RON95 eligibility.
He said current data estimates that petrol consumption by non-citizens, the commercial sector, and smuggling activities accounts for about 40 per cent of total petrol usage.
"Considering that the RON95 petrol subsidy amounts to around RM20 billion annually, addressing leakage to foreign nationals, the commercial sector, and affluent individuals could result in savings of up to RM8 billion each year," he said during the Minister's Question Time in the Dewan Rakyat today.
Amir Hamzah was responding to a supplementary question from Aminolhuda Hassan (PH-Sri Gading) regarding the government's strategies to tackle petrol subsidy leakage to non-citizens and the T15 group, while ensuring that the B40 group can access targeted subsidies for RON95 petrol in the future.
In response to Aminolhuda's original question about the effectiveness of the targeted diesel subsidy under the MyBUDI initiative, Amir Hamzah indicated that recent data reveals a significant decline in diesel sales at petrol stations, which reflects a reduction in smuggling activities involving that fuel.
He added that diesel sales at petrol stations have decreased by about 25 per cent, equating to nearly seven million litres per day, while commercial diesel sales have increased by nearly 50 per cent, or four million liters per day. This indicates that the industrial sector has ceased purchasing subsidised diesel.
"According to preliminary data, the targeted diesel subsidy has generated savings of around RM600 million per month to date.
"Simultaneously, the inflation rate remains under control, with a recent decline reflected in the Consumer Price Index (CPI), which increased by 2.0 per cent in July 2024, 1.9 per cent in August, and 1.8 per cent in September," he said.
With regard to the MyBUDI initiative, Amir Hamzah reported that as of Oct 31, over 140,000 individual BUDI recipients and 65,000 agribusiness BUDI recipients have been approved within five months of its implementation, which began in June 2024, amounting to total payments of RM160 million.
He said through this initiative, cash assistance under BUDI MADANI of RM200 per month, or RM2,400 per year, is provided to farmers, smallholders, and private diesel vehicle owners based on established eligibility criteria.
Regarding the determination of household income eligible for subsidised RON95 pricing, Amir Hamzah clarified that this is not solely based on household income levels from the Household Income Survey (HIS) conducted by the Department of Statistics Malaysia (DOSM).
The government is currently reviewing the approach to define the T15 group for the targeted RON95 subsidy and will not be directly bound by the HIS definition.
"The government will consider this matter further before finalising the criteria, incorporating additional factors beyond income," he said.
-- BERNAMA
