TARGETED petrol subsidies can be extended to lower income earners in the M40 group if the targeted petrol subsidy system, which will soon begin for the poorest Malaysians, results in big savings for the government.

Domestic Trade and Consumer Affairs Minister Saifuddin Nasution Ismail said the petrol subsidy scheme for the B40 group is expected to start in the second quarter of this year, where they will receive a maximum of RM30 a month.

This is the equivalent of 100 litres of petrol at the cost of 30 sen per litre, Saifuddin said, adding that it will benefit an estimated four million people. The subsidy will be paid directly to their bank accounts, similar to the Cost of Living Aid.

When the system goes online, the government will save money by not paying for petrol subsidies currently being enjoyed by high-income earners.

“When the government is able to save money, it is my proposal that we see how we can extend these petrol subsidies to lower income earners among the M40 group,” Saifuddin told a dialogue session at MIDF in Kuala Lumpur today. 

Saifuddin had previously said that the targeted subsidy system would be in the form on rebates and that eligible recipients would receive a card to use when pumping petrol to tracks the user’s usage of the subsidy.

Households in Malaysia are categorised as bottom 40 (B40), middle income (M40) and top income (T20). This is broken down to 40% each for both low- and middle-income groups and 20% for top-income earners.

The Statistics Department’s 2016 household report states that a B40 household has a median income of RM3,000 per month. The median incomes for M40 and T20 households are RM6,275 and RM13,148, respectively.

The Finance Ministry has finalised and identified vendors for the system while his ministry is completing a list of those eligible for the subsidy.

“We hope that the system will run smoothly and efficiently, and that we can ensure there are no leakages. Once we save money from reducing the government’s financial commitment to these subsidies, I intend to extend them to the lower brackets of the M40 group,” Saifuddin said.

However, Saifuddin said the cabinet has yet to decide whether it will remove the ceiling price for RON95 petrol and diesel once the system goes online.

The government now spends subsidies to cap RON95 petrol at RM2.08 per litre. – April 3, 2019.