Government yet to sort out how the fuel subsidy will work

The government first needs to obtain statistics and study the mechanism to make the fuel subsidy work

(FMT) – The subsidy to be given to vehicle owners with engine capacity of 1,500cc and below, as announced in Budget 2019 yesterday, will take into account the vehicle’s age and the people’s income level.

The main target will be those in the B40 low-income category.

Domestic Trade and Consumer Affairs Minister Saifuddin Nasution Ismail said many still owned old vehicles and the Road Transport Department needed accurate information on this to implement the scheme.

“We need to know how many Malaysians still own old vehicles as every formula we work out has to take into account its implications on the government’s coffers,” he said after launching the 2018 Deepavali Season Price Control Scheme at the Kulim public market today.

Finance Minister Lim Guan Eng said yesterday that the government would subsidise RON95 petrol by 30 sen per litre, limited to 100 litres monthly for cars with 1,500cc capacity and below.

It will also subsidise petrol for up to 40 litres for motorcycles below 125cc capacity.

The government has allocated RM2 billion for the subsidy scheme expected to start from the second quarter of 2019.

The scheme will benefit four million car owners and 2.6 million motorcyclists.

Saifuddin said his ministry would hold its first meeting with the finance ministry on Nov 8 to find the best formula to kick-start the scheme.

The ministry will also seek inputs from the public in implementing the mechanism.

“We’ll also engage with oil companies and petrol station operators.

“When we implement the subsidy, we want to make sure it will be a smooth and efficient process.”

He said proper implementation of the subsidy mechanism will benefit the government as every sen spent would reach those who really need it.

“Those in higher-earning bracket do not need to be disappointed. The lower-income group will get to buy the fuel at a lower price,” he said.