Putrajaya weighs RON95 subsidy cuts, admits tough call on who should lose aid

 

PUTRAJAYA, May 11 — The government has acknowledged the difficulty in determining which Malaysians should be excluded from RON95 fuel subsidies as it fine-tunes its targeted subsidy mechanism.

Economy Minister Akmal Nasrullah Mohd Nasir said one of the key challenges was setting a clear cut-off point for eligibility without affecting groups that still require assistance.

“That is among the challenges we face, to ensure that in our effort to channel subsidies to target groups, we do not create a significant shock to groups who may still need support or may not yet be fully prepared to transition away from such assistance,” he told reporters after an event here.

“These are among the key issues being discussed in determining where the dividing line should be drawn between those who ought to receive subsidies and those who may be better removed from the system.”

Akmal said the matter had been discussed at the National Economic Action Council (MTEN), following Prime Minister Datuk Seri Anwar Ibrahim’s remarks that the government was reviewing the RON95 subsidy rationalisation plan.

He said the government is now studying implementation details, including where the threshold for eligibility should be set.

“The government is prepared to consider the need to further refine the method of subsidy distribution.

“Certainly, one of the greatest challenges is determining where exactly the threshold should be set, and this will require consideration from various dimensions,” he said.

Akmal said there was pressure to ensure subsidies are no longer distributed on a blanket basis, but instead aligned with actual usage needs.

When asked about concerns that middle-income earners could fall into the “T” category and lose access to subsidies, he acknowledged that some may still require assistance despite higher income classifications.

He said this was among the key considerations in drawing the line between those who should continue receiving subsidies and those who could be removed from the system.

Akmal also indicated that implementation could begin at the start of a month once systems are ready, though he did not specify which month.

“Introducing such changes also involves systems, so it depends on the readiness of the system to ensure the screening process can be carried out effectively,” he said.

On eligibility data, he said the government would consider income levels as well as other available datasets, including those from the Economy Ministry.

“The details will only be shared once a decision has been finalised because, naturally, when such a policy or approach is implemented, there must also be room for appeals and similar processes. Having a clearer dividing line will also make it easier for target groups to accept the policy.

“Certainly, the existing data points, including those from the Ministry of Economy, are ready to form part of the determination process or serve as references for the data and dimensions that will be taken into consideration,” he said.

Yesterday, Anwar said the government was reviewing RON95 assistance for higher-income earners, amid calls to better target fuel subsidies towards lower- and middle-income groups.

He said the government had agreed in principle to exclude or partially assist top income earners from subsidised petrol.

Fuel subsidies in April alone were estimated at RM7 billion, double March’s figure, amid global oil price pressures linked to geopolitical tensions.