KUALA LUMPUR – The public can expect a targeted subsidy scheme to materialise in the coming months as the country no longer has the fiscal space to provide blanket assistance to all Malaysians.
Economy Minister Rafizi Ramli said while there has not been a detailed discussion on its timeline, cabinet members realise that the government needs to expedite an index-based targeted subsidy scheme.
He said considering the current economic requirement for such a policy, the sooner the government is able to identify a mechanism and platform to implement this scheme, the better.
“The country has no choice in terms of financial capability other than to move to a targeted subsidy. Everybody knows this, it’s not even a discussion,” he said at a press conference in Putrajaya today.
“The question now is what system or benchmark do we use to identify which individuals will get the subsidies. This is the challenge for the government now, not only to ensure the mechanism is fair, but to expedite its implementation. We can no longer talk about three or four years.
“I think hopefully (it will be) very soon. When I said soon, I think it’s a matter of months, rather than years... Not so much because of politics, but because of sheer economic necessity.”
He was asked to comment on whether it is still relevant for the government to implement a targeted subsidy system amid continued inflation.
According to Rafizi, the question of whether such a system will further contribute to inflation in the future will be taken into consideration by the relevant government agencies conducting studies on the matter.
“We have to find the right balance. But there’s no point talking about inflation when we have yet to build a mechanism that will allow us to start distributing subsidies and financial aid to the public in a targeted manner.”
Rafizi said under the new system, the government will ensure that subsidies are tied to, among other things, a person’s disposable income, household size and consumption behaviour.
However, he said while the economic understanding and theory of the matter is quite straightforward, its implementation, platform, required data architecture and necessary legal amendments still needed to be ironed out.
“Hopefully, we will get the landing in a matter of months, so that we can have a date we can hold on to for such a system and approach to be rolled out,” he said.
Earlier today, the Statistics Department had announced an inflation rate of 4% for November, unchanged from the preceding month, with the consumer price index standing at 129 compared to 124 in November last year.
Previously, prior to the 15th general election, the previous government had on several occasions considered plans to introduce targeted subsidies on certain items, including petrol.
Former finance minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz had said that the government is expected to spend close to RM80 billion on subsidies this year, the highest ever borne by any administration. – The Vibes, December 23, 2022
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