Vehicle engine capacity data from the road transport department (JPJ) will be among the resources used by the Malaysian government in the creation of the targeted fuel subsidy mechanism in order to determine which users are eligible for the future targeted fuel subsidy which is almost ready, reported Bernama.
According to domestic trade and cost of living minister Salahuddin Ayub, the ministry has discussed the matter with the ministry of finance, the economy minister Rafizi Ramli and the JPJ, according to the report.
“In terms of the data, they are almost ready to be forwarded to the prime minister on how we can implement this targeted subsidy,” Salahuddin said, adding that the JPJ database can identify those who are eligible for the targeted subsidy based on the engine capacity of the vehicle they own.
The proposed paper on targeted subsidies was presented at the meeting of the National Action Council on Cost of Living (NACCOL), which was held last Tuesday and chaired by prime minister Datuk Seri Anwar Ibrahim, Bernama reported.
“The prime minister has given instructions for [the targeted subsidy mechanism] to be studied. But for the time being, the government is continuing the existing policy, which is so that we do not withdraw [subsidies] or increase any tariffs that we feel could burden the people, so the policy will continue until the cabinet decides on the [targeted subsidy] later,” Salahuddin said.
At the end of last month, the prime minister gave the relevant government ministries a duration of two weeks to discuss and analyse the matter of targeted fuel subsidies, including that for fuel.
“I have no problem with subsidies for the people, especially the poor. But our explanation in full, when it comes, is that this sub-section should be targeted. Otherwise, like in the case of fuel subsidies, the subsidy benefits everyone, including the rich,” Anwar said at the time.
Ongoing development of new vehicles mean that a vehicle’s capability is not strictly tied to the capacity its engine displaces, and so there will be a need to establish the difference between vehicles by more than just engine capacity as a measure.
For instance, the third-generation Perodua Myvi facelift with a 1.5L engine was priced from RM50k at launch in November 2021, while the W206 Mercedes-Benz C200, which also displaces 1.5 litres, was priced at RM288k at launch in February this year. Each of these vastly differs from the other in terms of pricing, market positioning and therefore the cost sensitivity of the customers targeted by each car.
Fuels that are currently subsidised in Malaysia include RON 95 petrol and diesel fuels, with the ceiling price of RM2.05 per litre of RON 95 petrol introduced by the Malaysian government in February 2021. The price cap for Euro 5 B10 and B20 diesel fuels is RM2.15 per litre, while Euro 5 B7 diesel is priced at RM2.35 per litre. Meanwhile, unsubsidised RON 97 petrol is priced at RM3.35 per litre as of December 22, 2022.