Rafizi Ramli: 40% of the B60 group have no valid vehicle registration data with JPJ, complicating RON 95 targeted subsidies

The government faces challenges in implementing a vehicle ownership-based levy method for targeting RON 95 subsidies, as it risks overlooking a significant portion of eligible beneficiaries.

The main reason for this according to Economy Minister Rafizi Ramli, is data from the Main Database System (PADU) shows that about 40 percent of the B60 group do not have registered vehicle ownership data with the Road Transport Department (JPJ), due to third-party registrations. 

He noted, that lower-income groups, especially within B40, often use vehicles registered under other individuals, through continued payment arrangements (sambung bayar) or by registering vehicles in the names of family members, which complicates targeted subsidy systems based on vehicle registration. 

The B60 group includes households in the B40 category and the lowest tier of the M40 group. B40 households have incomes below RM 4,849 per month, with some below the poverty line income (PGK) of RM 2,208 per month. Meanwhile, M40 households are classified between RM 4,850 and RM 10,959 per month.

Rafizi was responding to Parliament member Suhaizan Kaiat (PH-Pulai), who suggested a levy payment system, similar to one proposed by Wee Ka Siong (BN-Ayer Hitam). Rafizi rejected the levy system as it could lead to eligible recipients missing out on subsidies.

Data from PADU highlighted significant mismatches due to different practices among the B60, such as informal payment use and third-party vehicle registrations.

In response to Abdul Latiff Abdul Rahman (PN-Kuala Krai), Rafizi pointed out that other countries do not have as extensive a fuel subsidy system as Malaysia. Most countries have shifted to market prices with cash assistance to offset fuel costs.

In the Mid-Term Review of September 2023, the government identified subsidy retargeting as a primary focus to strengthen the economy and fiscal position.

Rafizi emphasized that the Government has taken multiple factors into account and conducted studies before setting the subsidy targeting policy, countering opposition claims that this approach was implemented without thorough research.

Recent reports indicate that the Government is considering a system where eligible citizens can scan their MyKad at fuel pumps to purchase RON 95 petrol at subsidized prices, while others pay market rates.

Rafizi also mentioned that a cloud-based database is being developed to manage eligibility to streamline subsidies for (T15 and lower) middle- and (B40) lower-income groups and reduce misuse.

Also read: Household incomes alone won't decide RON 95 petrol subsidy eligibility, two-tier system to come

Also read: MyKad to power targeted RON 95 petrol subsidy, says Economy Minister