Govt Should Adopt Fair Market Price for Targeted RON95 Subsidies - Economist

BANGI, Oct 24 (Bernama) -- To implement RON95 petrol targeted subsidies, the government has been urged to adopt an approach that maintains market prices, making essential goods more affordable while still offering the necessary support to those in need.

Universiti Kebangsaan Malaysia’s Malaysian Inclusive Development and Advancement Institute (MINDA-UKM) director, Professor Tan Sri Dr Noor Azlan Ghazali said the price of RON 95 petrol should reflect a fair market price.  

“In my opinion, do not interfere with prices; a high, fair price is acceptable. Fair price means that if it is high and certain groups are affected, assist them in other ways, not by having two different prices at the pump,” he told reporters after a special media conference on Budget 2025 here today.

bootstrap slideshow

Noor Azlan added that if the government intends to provide subsidies for RON95 to targeted groups, he suggested it should be based on the type of vehicle used rather than household or individual classifications.

“If a wealthy person drives a (Perodua) Kancil, they would qualify for the subsidy because they use less fuel. I believe wealthier individuals are more likely to use vehicles with larger engine capacities.

“Of course, within every classification, there will be some leakages, but this can be minimised,” he said.

bootstrap slideshow

Noor Azlan further stated that the government needs to re-examine the subsidy distribution mechanism using income threshold classifications.

There are currently classifications for B40, M40, and most recently T15.

“I have some concerns as an economist because one thing I worry about is the emotional interpretation from the society that may start to frame T15 as an elite class. For instance, if you are in Kelantan with a household income of RM7,759, you are classified as T15, but when you come to Kuala Lumpur, RM7,000 is barely enough to live on, right?

“So, using T15 as a policy variable, in my view, if not handled carefully, could lead to mistakes in targeting,” Noor Azlan said.

Prime Minister Datuk Seri Anwar Ibrahim, when presenting the MADANI Budget 2025 last Friday, assured that the government would uphold the interests of the majority in implementing targeted subsidies.

He stated that the government plans to implement targeted subsidies for RON95 petrol by mid-2025, and the savings achieved from this will benefit the welfare of the wider population.

-- BERNAMA