Govt introduces RM200/month diesel subsidy aid programme. Template for RON95 targeted subsidy?

With the lifting of a blanket fuel subsidy slowly being lifted starting with diesel, the government has announced a new subsidy aid programme that would see a monthly allocation of RM200 deposited to eligible individuals and commodity smallholders.

Called Program Bantuan Subsidi Madani, it allows owners of diesel vehicles, including small farmers and plantation smallholders, can apply through its website (https://budimadani.gov.my/) starting today - May 28th, 2024 - based on a set of criteria under the BUDI Individu category or the BUDI Agri-Komoditi category.

For the BUDI Individu category, these criteria include:

• Applicant must be Malaysian;
• Applicant owns diesel-based personal vehicles as registered with the JPJ that are not luxury vehicles under 10 years of age;
• The vehicles must have an active road tax;
• Annual individual or joint income of RM100,000 and below.

For the BUDI Agri-Komoditi category, these criteria include:

• Applicant must already be registered as a farmer or a smallholder with the relevant agency under the appropriate ministries specifically Ministry of Agriculture & Food Security (KPKM), or Ministry of Plantation & Commodities (KPK).
• Applicant must be an active agriculture or commodity smallholder, defined as generating an annual turnover of between RM50,000 and RM300,000.

Application responses will be cross-referenced with documents and data already collected by the Inland Revenue Board (IRB) to exclude luxury vehicles that are less than 10 years old, as well as individuals that fall into the nation’s top 20 percentile of earners (T20).

Though BUDI Madani applications will be open throughout the year, approved applicants that have applied by 3rd June will receive their cash assistance by mid-June 2024 deposited into their a bank account they nominate.

For those without bank accounts, they will be able to collect their BUDI Individu cash assistance at any Bank Simpanan Nasional (BSN) branch throughout Peninsular Malaysia.

YB Senator Datuk Seri Amir Hamzah Azizan, Finance Minister II, said: “With the BUDI MADANI roll-out, the government has expanded the coverage for assistance to individuals and agriculture and commodity smallholders ahead of targeted diesel subsidy implementation.

“As YAB Prime Minister has iterated consistently, targeted subsidies is a key reform measure under the Ekonomi MADANI framework, to build a financially sustainable and competitive Malaysia.

“An all-of-government approach is being undertaken to ensure the mechanism of targeted subsidy for diesel is comprehensive, efficient, and can effectively reach the majority of rakyat,” he added.

The criteria stipulated above does shed much more light as to how the government might implement a wider targeted fuel subsidy programme, the mechanism of which could involve monthly deposits to eligible Malaysian vehicle owners. Meaning fuel prices will be sold at the market rate at the pumps.

That said, there are still elements here that remain quite vague, such as whether a future rollout of a targeted subsidy for RON95 petrol will also consider the situation where an individual more than a single vehicle, or owns both a petrol and diesel vehicle. In such a cases, is the total subsidy aid still be capped at RM200 per month?