Targeted Fuel Subsidy Will Cause Prices Of Goods To Rise Even Further

Members of the public will suffer if the targeted fuel subsidy programme is implemented.

According to a report by Malaysian Insight, the Petroleum Dealers Association of Malaysia (PDAM) has come out and said that a targeted fuel subsidy programme cannot be implemented now, as members of the public will pay a high cost for it.

PDAM President Khairul Annuar Abdul Aziz said that although a targeted programme is better than allowing subsidy leakages - if introduced now, it will cause a ripple effect that will see prices of goods across the board rise even further.

Khairul's suggestion is to gradually increase fuel prices, instead of a jump, and all forms of subsidies should be given as cash aid directly to affected persons, according to a report compiled by FMT.

"We hope the government can sit down with us dealers to talk about the impact as soon as possible," he said.

The current deliberation by the government to introduce a targeted fuel subsidy programme came after Tengku Zafrul Abdul Aziz's intention to review fuel subsidies currently in place due to the sharply rising global price of crude oil, which recently has exceeded US$120 per barrel (RM503.16).

Back in May, Minister in the Prime Minister's Department Mustapa Mohamed said, despite the massive hike in global oil prices, the country's fuel subsidy will continue as oil and gas remain essential drivers of growth and a key pillar of Malaysia's development.

The narrative has changed since then, as an interview with Bloomberg saw Mustapa saying that the Malaysian government has begun work on replacing the current blanket fuel subsidy scheme with a more targeted approach in light of rising government spending to deal with the higher living costs.

"Unanticipated subsidies are expected to push the government's total spending in 2022 significantly higher by about 30 billion ringgit ($6.8 billion), adding that the higher revenue from rising commodity prices was insufficient to offset the spike. The extra funds were mainly for petrol, chicken and egg subsidies as well as flood reliefs," wrote the Bloomberg report. 

The report continued by adding that Prime Minister Ismail Sabri Yaakob expects the final subsidy bill this year to breach 71 billion ringgit.