KUALA LUMPUR, July 31 — The implementation of targeted diesel subsidies is not expected to have a significant impact on inflation and economic growth, as the government has taken into account the rate of increase in diesel retail price and the cash assistance provided, said the Finance Ministry (MoF).
Therefore, the official 2024 forecasts for inflation and gross domestic product growth remain at 2.0 to 3.5 per cent and 4.0 to 5.0 per cent, respectively.
“In principle, the government takes the approach of subsidy rationalisation while continuing to provide subsidies to groups that are in need, especially those with low to medium incomes,” it said in a written reply on the Parliament website.
MoF was responding to Datuk Seri S. Vell Paari's query on the problems that may arise from implementing targeted diesel subsidies, as well as how to avoid burdening the people and whether the government plans targeted subsidies for RON95.
It added that retargeting the subsidies is intended to reduce leakages to groups that are ineligible to receive them including foreign citizens, large private companies, and high-income individuals.
Under the diesel subsidy retargeting, cash assistance to vehicle owners is only given to 300,000 individuals with assistance provided based on a single rate of RM200 per month, which is estimated to be sufficient for individual owners of diesel vehicles who mainly use pickup trucks.
“In contrast, the number of RON95 petrol consumers is far larger, including owners of motorcycles and cars as well as e-hailing drivers. Therefore, if cash assistance is used as the RON95 approach, it may differ from diesel,” MoF said.
— Bernama
