PUTRAJAYA must conduct a thorough study before it floats the price of RON95 petrol to avoid backlash, experts said.
They said the government must do better at disseminating information to arrest the public discontent that arose when it cut the diesel subsidy.
Putrajaya must use the next six months to study how it can do the same for petrol without incurring the wrath of the public.
The diesel subsidy in the peninsula was lifted last month, causing the price to rise from RM2.15 to RM3.35 per litre.
Several sectors had indicated that higher transport costs would raise the prices of essential goods.
Putrajay has introduced the Budi Madani programme to provide monthly cash aid of RM200 to selected vehicle owners and businesses to offset the higher pump prices.
Prof Barjoyai Bardai said the government would do well to float the price of RON95 next year, adding that Putrajaya must not rush into a decision.
The economist said the government must be better prepared to counter criticism.
"Look at the the diesel subsidy removal as an example. The issue is being used to condemn the government. It must come out with a strategy to overcome this narrative," said Barjoyai.
On Tuesday, Economy Minister Rafizi Ramli said the government was considering targeted subsidies for RON95 petrol.
For the time being, he said the focus is on the implementation of the diesel subsidy to ensure that it achieves its objectives.
At the same time, the government will work to reduce leakages in the distribution of diesel subsidies.
"If the rationalisation of subsidies for RON95 petrol is implemented, the government will take appropriate measures to ensure that those who are affected are given appropriate assistance," he said in parliament.
Rafizi said fuel subsidies accounted for 12.3% of the government's operating expenditure in 2023.
"Savings from the subsidy retargeting initiative will be returned to the people through the implementation of programmes and projects that are more beneficial and needed by the people, such as improvements in the provision of social services and public facilities, including health, education, transport, and security," he said.
Good idea to float RON95 price
Economist Prof Dr Ahmed Razman Abdul Latiff said the government should spend the next six months studying how to to execute the RON95 targeted subsidy programme.
"It should look at how effective this diesel subsidy removal programme is and how it has reached the right people.
"Only half of the adult population has registered on Padu. As such, next year is the best time to introduce the RON95 targeted subsidy programme."
Padu was launched with the expectation that it would be a game changer for data management in Malaysia. It is a central depository for income and socioeconomic data to serve as the basis for targeted subsidies.
Razman said it is a good idea to float the price of RON95.
"For now, the subsidy is enjoyed by the T20 (top 20% earners) and foreigners. I was also told that following the diesel subsidy removal, there is a high possibility of RON95 being smuggled out of the country."
Prime Minister Anwar Ibrahim has said that the government still pays about RM7 billion in subsidies for diesel in Peninsular Malaysia.
He said subsidies have not been fully abolished and rationalised to ensure that they are not abused and that they reach the right groups.
He said the government remains committed to combating diesel smuggling while keeping the cost of living low.
The Domestic Trade and Cost of Living Ministry launched an operation in March last year to combat the misappropriation of subsidised diesel.
As of December 2023, a total of 6.44 million litres of diesel, estimated to be worth RM14.12 million, were seized. – July 2, 2024.
