CAP: Introduce electronic card system for fuel subsidy, targeted aid for B40 and M40 groups

Amidst increasing talk of changes to Malaysia's fuel subsidy system, the Consumers' Association of Penang (CAP) has urged the government to hasten implementation of targeted fuel subsidies for those in the B40 group.

Mohideen Abdul Kader, president of the CAP, recommends the government to consider adopting an electronic subsidy card system to provide targeted subsidies to those in the B40 income groups.

In a statement, he said: "The government can credit fixed minimal monthly subsidies into the person’s electronic subsidy card which the person can use to purchase petrol, cooking oil, cooking gas, and whatever the government decides to subsidise. To make a purchase, the person just needs to show his or her identification card for validation purposes."

Mohideen adds, “Such electronic subsidy cards are relatively easy to implement since the government already has the database on B40 recipients for various forms of aid and the Inland Revenue Board should also have data of those in the lower M40 group,” he said.

Also read: Azmin Ali: Those with BMWs cannot enjoy the same subsidies as driving Kancils, targeted fuel subsidy could come soon

One close example of such system in place is in oil-producing Oman. Recipients of the card must be residents aged 18 and above, own a regular vehicle, and with a monthly income not exceeding OMR 950 (~RM 10,830).

Those benefitting from this programme can only fill M91 grade fuel at a capped, subsidised rate of 180 Baisa/litre (~RM 20.52), at a total utilisation limit of 400 litres per month at the subsidised rate.

Mohideen continues by saying that the current subsidy system was flawed due to its uneven distribution between various income groups, alongside being open to abuse such as smuggling of diesel.

Currently, the government subsidises prices of RON 95 petrol, diesel, and liquefied petroleum gas (LPG). Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz had earlier estimated that fuel subsidies are going to cost as much as RM 28 billion in 2022, a steep increase from the RM 11 billion in 2021.

Also read: MoF: Fuel subsidy to be reviewed, RM 28 billion subsidy cost for 2022 if no intervention

Mohideen points out that this subsidy is more than "the RM 25 billion allocated in 2022 to Yayasan Keluarga Malaysia which would be used to protect the welfare, education, and the future of orphans or the RM 20 billion allocated for execution of Malaysian Incentive Community Empowerment Initiative."

"With savings on subsidies, the government should improve the public transportation, which is generally lacking in our country," said Mohideen.

Also read: Oil price highest since 2008, but Malaysia is not profiting from it, here’s why

Mohideen's comments come after Datuk Seri Zafrul's earlier statement of the government looking into creating new electricity and petrol subsidy mechanisms.

Also read: Brace yourself for fuel subsidy cut; RM 4 billion worth of petrol subsidies paid as of March