Petrol subsidies to be given in cash to eligible Malaysians

During the Budget 2019 announcement, Finance Minister, Lim Guan Eng had mentioned that RM2 billion will be allocated for RON 95 petrol subsidies. This will be given to owners of cars with a 1.5L engine and below, as well as motorcycles of 125cc or less.

After considering several proposals for almost a year, the government has decided that cash handout as the best option to distribute subsidies to those who are eligible. This could be deposited directly into the bank accounts of low-income recipients.

According to Malay Mail’s report, there are concerns from economists that it is difficult to ensure subsidies will go only to those eligible and it is prone to leakages due to the lack of reliable data. However, Malay Mail’s sources have told that the government has built an improved database that has updated income and vehicle ownership information that’s extracted from the BSH (Bantuan Sara Hidup) and Road Transport Department data. Most applicants for BSH have been vetted using payslips and pension fund contributions.

According to the senior aide at the Ministry of Domestic Trade and Consumer Affairs, they will use the BSH list to decide who gets the cash and they can cross-check the list against data obtained from the RTD. Those who don’t own any vehicles will not receive the cash.

The government plans to subsidise a minimum of 30 sen per litre for RON95 petrol. There will be a cap of 100 litres for each car owner with a 1,500cc engine and 40 litres for motorcycle owners with an engine of 125cc.

At the moment, RON95 petrol in Malaysia is subsidised and the price is capped at RM2.08 per litre. Malaysians use about 1.2 billion litres of petrol monthly and 90% are using RON95, while the remaining 10% uses RON97. It was previously reported that the government may remove the RON95 price cap once the new targeted petrol subsidy program is introduced.

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