Rafizi rules out vehicle ownership, low-income households could miss out on RON95 fuel subsidies

The Economy Minister, Rafizi Ramli, explained that distributing RON95 fuel subsidies based on vehicle ownership or through direct cash transfers would not be practical as data from the transport department (JPJ) shows 40 per cent of B40 households do not have registered vehicles.

“This presents a problem because while we may think that vehicle registration could be an effective tool for targeting subsidy adjustments, the reality is that many lower-income households do not have a registered vehicle in their name.

“For instance, one family may share a motorcycle under a single registration name,” he said at Dewan Rakyat in response to Member of Parliament Pulai Suhaizan Kajat.

Suhaizan asked Rafizi’s views on a suggestion to streamline subsidies by introducing an adjustable petrol levy for drivers when renewing road tax instead of providing direct subsidies at the pump.

Rafizi highlighted that relying solely on vehicle registration data for RON95 fuel subsidies could cause similar issues as diesel subsidies. People might use different names to register their vehicles, leading to incorrect information. This could mean that many people who need the subsidy may not get it, which defeats the purpose of assisting.

Furthermore, Rafizi stated that the government had considered using the cash transfer method, a popular strategy employed by many countries that do not provide direct subsidies to their citizens.

This approach was considered, but ultimately not implemented, as the government sought to find a more effective method of targeting fuel subsidies to those who need them the most.

“However, our government has found that this approach poses a high risk of increasing prices. That’s why the government has chosen the current approach (two-tier pricing system),” he said in response to Member of Parliament Kuala Krai Abdul Latiff Abdul Rahman.

Latif had asked whether there are international models that Malaysia could look to as examples for implementing subsidy rationalisation.