‘Choppy waters ahead’ for petrol subsidy cut but Malaysia will factor in not just household income: Minister

VARIABLES BESIDES HOUSEHOLD INCOME TO BE CONSIDERED

Household income will not be the only factor that determines who qualifies for subsidised RON95 petrol in Malaysia, Mr Rafizi told local media over the weekend.

“I can confirm it will not solely use household income levels in the B40, M40 and T20 categories,” he said. B40 refers to the bottom 40 per cent of income earners in Malaysia while M40 refers to the middle 40 per cent. 

“It is not to say that if you earn a certain amount, you won’t obtain the subsidy (for RON95 petrol) … We can’t draw a line based only on household income. We have to consider other variables and not apply a one-size-fits-all approach,” he said on Sunday, as quoted by media outlet Kosmo. 

Mr Rafizi did not elaborate on other factors that would be considered, but said his ministry is conducting simulations and processes with the finance ministry, the statistics department and other relevant departments. 

Second Minister for Finance Amir Hamzah Azizan also confirmed on Sunday that details of the subsidy implementation, such as income threshold and mechanisms, are still being discussed and will be announced next year, Bernama reported. 

One proposal being considered is for Malaysians to produce their government-issued identity card or MyKad at the petrol pump, Transport Minister Anthony Loke said on Saturday.

Currently, RON95 petrol costs RM2.05 per litre in Malaysia, the second-lowest price in Southeast Asia behind Brunei. 

According to the Malay Mail, Malaysia has subsidised petrol prices since the early 1980s to keep fuel prices affordable for Malaysians while facilitating economic growth. 

This has become a significant source of government expenditure with the rise in oil prices. In 2023, Malaysia spent over RM50 billion (US$11.6 billion) on direct fuel subsidies alone. 

In June this year, it cut diesel subsidies, resulting in a price increase of about 50 per cent for the fuel, but provided cash assistance to eligible owners of diesel vehicles, as well as small-scale farmers and commodity smallholders.