Rafizi rules out vehicle ownership, cash transfers for RON95 subsidy

KUALA LUMPUR: Economy minister Rafizi Ramli today explained why RON95 subsidies cannot be distributed based on vehicle ownership or through direct cash transfers.

Rafizi said data from the road transport department (JPJ), analysed by Padu, showed that about 40% of B60 households do not have registered vehicles.

“This presents a problem because while we may think that vehicle registration could be an effective tool for targeting subsidy adjustments, the reality is that many lower-income households actually do not have a registered vehicle in their name.

“For instance, one family may share a motorcycle under a single registration name,” he said when responding to a supplementary question from Suhaizan Kaiat (PH-Pulai) during Minister’s Question Time in the Dewan Rakyat.

Suhaizan had asked for Rafizi’s views on a suggestion for an adjustable petrol levy to be paid by drivers when renewing road tax to streamline subsidies, instead of providing direct subsidies at the pump.

Rafizi cited similar challenges encountered when targeting diesel subsidies, where individuals sometimes register vehicles under the names of others, leading to data mismatches.

As such, he said, using vehicle registration data alone could lead to significant exclusions among intended subsidy recipients.

FMT previously reported the Federation of Malaysian Consumers Associations (Fomca) as saying that the two-tier pricing system for RON95 petrol under the incoming targeted subsidy programme should be linked to vehicle registrations instead of identity cards.

Fomca CEO Saravanan Thambirajah echoed former Umno man Shahril Hamdan’s opinion, expressed in an episode of the Keluar Sekejap podcast, that an IC verification system would be prone to abuse.

Shahril himself mooted using cash rebates as a way to reduce subsidy leakages.

Rafizi also said the government had considered the cash transfer method, an approach used in most countries that do not give subsidies to their citizens.

“However, our government has found that this approach poses a high risk of driving up prices. That’s why the government has chosen the current approach (two-tier pricing system),” he said in response to a supplementary question from Abdul Latiff Abdul Rahman (PN-Kuala Krai).

Latif had asked whether there are international models that Malaysia could look to as examples for implementing subsidy rationalisation.

Rafizi said Malaysia is the reference, as most countries have transitioned to market pricing for fuel, with no country offering subsidies as extensive as Malaysia’s.

“Other countries simply do not have a situation like Malaysia’s. Nearly all countries now use direct cash transfers – floating the prices and then providing monthly cash assistance to the people,” he said.