The Ministry of Finance stated that in 2023, the Government spent more than RM80 billion for all subsidies, incentives and assistance including agricultural subsidies, cash assistance and the largest amount of expenditure is for the purpose of consumer subsidies which is as much as RM50 billion including petrol, diesel and liquid cooking gas subsidies, cooking oil subsidy schemes, electricity bill subsidies and chicken and egg price subsidies.
Finance Minister II Datuk Seri Amir Hamzah Azizan said this today (Mar 18) in the Dewan Rakyat in reply to a question raised by Vivian Wong Shir Yee [ Sandakan ] on what method will the Government use in introducing a targeted subsidy scheme so that all Government subsidies will not “go astray” just like that of the subsidised cooking oil which is always found to be “missing the way” as likened to that of Thailand and the Philippines at this point.
Amir Hamzah said the implementation mechanism for targeted subsidies is still under consideration and is not expected to increase the cost to the existing industry, however, the Government still emphasises the implementation and effective communication aspects to the industry so as not to cause a shock to the economy.
The implementation of this targeted subsidy will be done in stages subject to availability based on the appropriate model and feasibility as well as maintaining the Government’s focus on ensuring that the cost of living of the people is not affected.
As announced in the Budget 2024, the Government will focus on targeting diesel subsidies first through methods and mechanisms announced by the Ministry of Domestic Trade and Livelihood (KPDN) on 6 March 2024.
Expansion of grants under the Diesel Subsidy Control System 2.0 ( SKDS 2.0) to 9 types of goods vehicles has been opened for applications starting March 7, 2024 and is expected to benefit more than 260 thousand vehicles.
From 8 March 2024 until 16 March 2024, a total of more than 5,800 companies with more than 34,400 vehicles have successfully registered in SKDS 2.0.
Therefore, the Government calls for all eligible vehicle owners to be registered under SKDS 2.0 so that they can continue to enjoy subsidies in the future.
The total diesel subsidy expenditure in 2023 has reached RM14.3 billion where the total consumption has increased to 10.8 billion litters per year compared to 6.1 billion litters in 2019 (before the COVID-19 pandemic).
This 70% increase in usage is not seen to be in line with the increase in the number of diesel vehicles which only recorded an increase of less than 3%.
This reinforces the claim that the diesel subsidy leakage is huge, said Amir Hamzah, adding, currently, all diesel vehicles in the public transport category under the existing SKDS including vans/school buses have enjoyed subsidised diesel prices at a rate of RM1.88 per litre while fishermen receive diesel subsidies at a price of RM1.65 per litre.
These two categories will continue to enjoy the diesel price and will not be involved in the targeted Diesel Subsidy Program.
In addition, another important strategy that is emphasised is enforcement which is the most important element in ensuring that traders do not raise the prices of goods and services arbitrarily.
Various OPS are implemented by KPDN such as OPS KESAN, OPS CATUT, OPS TERJAH, OPS TIRIS, OPS MENU, OPS PASAR and OPS SAMAR to ensure stable supply and curb profiteering elements in the market.
