The National Economic Action Council (MTEN) decided today (May 15) that three main focus points will be implemented towards the progress of the national economy, which are to strengthen the country’s fiscal position, increase Government revenue and structuring the national economy towards a high value and sustainable economy.
Prime Minister Dato’ Seri Anwar Ibrahim, who chaired the MTEN meeting in Putrajaya, said: “Today’s meeting focuses on two main points, namely, the need for a more comprehensive data system to assess the socio-economic position of each household and a subsidy retargeting plan to ensure subsidies are enjoyed by the target group and prevent leakages that harm the country and distort the economy.”
Central Household Database (PADU)
He added, MTEN has considered and agreed to build main database called PADU that will incorporate as much socio-economic information catered to each household to help the Government target subsidies and assistance more effectively.
Information at the household level will cover things such as the number of households, records of income in the household, dependent children of the household according to education level, location of the household, number of vehicles in the household, records of assistance received from government departments in the content house and other information that can help determine the disposable income of each household.
The existence of PADU will help the Government to ensure that any subsidy targeting program can be implemented more regularly to avoid any dropout among eligible household recipients.
PADU, which uses existing data from Government agencies, is already in place. The version of PADU that uses real time data is expected to be fully functional in January 2024.
Subsidy Targeting
The government has already implemented a phased subsidy targeting program which began in January 2023 involving electricity subsidies. Since then, the Government will no longer provide full electricity tariff subsidies to large companies that use electricity at a high level.
This policy will continue to make the Government’s subsidy targeting program a success. This step is expected to save the Government’s subsidy liability for electricity which amounts to RM5 billion to RM8 billion in 2023 (depending on the current price of fuel). These savings will be channelled to help people’s expenses.
The Government’s next focus is to improve the system for the diesel subsidy which saw the country’s subsidy liability soar to RM13 billion for the year 2022. The review shows the use of diesel surged 37.7% to 6.1 billion litres in 2019 (pre-COVID) to 8.4 billion litres in 2022 (post-COVID), while the total registered vehicles that use diesel only increased by 2.4% (from 2.08 million in 2019 to 2.13 million in 2022).
A sharp increase in diesel consumption compared to the number of vehicles using diesel implies a leakage through smuggling that needs to be addressed right away.
Therefore, MTEN has today agreed to pay special attention improve the diesel subsidy system through the following measures:
1) Extending the provision of subsidized diesel to the sector ground transportation (goods) through the system’s fleet card mechanism Control of Subsidized Diesel (SKDS). This step will ensure the logistics sector that manages the distribution of goods receives diesel subsidized, as part of the Government’s efforts to curb inflation.
This targeted expansion of diesel subsidies will benefit nine(9) types of goods sector vehicles, namely general cargo lorries, beverage lorries bottles, refrigerated trucks, kuton/box trucks, prime movers, tanker trucks flour, water tankers, van panels and window vans; and
2) The existing system is improved by ensuring vehicles that take diesel supply from gas station or skid tank will equipped with a fleet card system to monitor usage diesel and avoid leakage (the cost of installing the fleet card system borne by the transport company).
The government will balance the need to improve the country’s fiscal position with measures that protect the target group so that restructuring national economy towards competitiveness can be done in phases with minimal social impact, the Prime Minister said in a statement.
MTEN, the highest economic advisory council to the Government that leads the overall planning, implementation and monitoring of the national economy consists of Cabinet of Ministers, senior members of the Federal Government administration as well as representatives from various fields and expertise.
