PETALING JAYA: Local economists propose that the government map out new fuel subsidy mechanism based on Malaysians’ incomes, to allow only B40 and M40 lower- and medium-income communities to purchase subsidized fuel.

International trade and industry senior minister Datuk Seri Mohamed Azmin Ali has recently said that people driving BMW should not be using subsidized fuel as Perodua Kancil drivers, hinting that the government may implement a more targeted fuel subsidy mechanism.

Asia Business Center tax and financial adviser Datuk Chua Tia Guan told Sin Chew Daily the government’s fuel subsidy mechanism should benefit only targeted communities to make it more effective.

However, he admitted that it is rather complicated to decide who should benefit from subsidized fuel, such as based on the number of vehicles owned, or car models.

“If we want to disqualify someone driving a new BMW, then the databases of at least three government departments, including LHDN, transport ministry and JPN must be integrated in order to get more detailed particulars of a car owner.

“If this can be done, we should be able to more specifically lock in the targeted groups for the fuel subsidy to be spent more effectively.”

For every ringgit of fuel subsidy, 53 sen would go to the T20 group while B40 only gets 15 sen.

Finance minister Tengku Zafrul Tengku Abdul Aziz has said the government would spend RM30 billion on fuel subsidy this year, and for every ringgit of fuel subsidy, 53 sen would go to the T20 group while the B40 group only gets 15 sen.

Chua said if the T20 group is no longer entitled to the subsidy, the government should be able to save at least RM15 billion a year.

“Perhaps those in T20 may argue that they are also paying the tax and should be entitled to the subsidy, but the backlash is insignificant.”

Nevertheless, Chua admitted that he was not in favor of petrol card, as this would mean the existing petrol station system will have to be modified and the petrol card itself is a cost.

“If the government provides assistance and the money is directly banked into the beneficiaries’ accounts, this will be much easier to implement and the cost will also be remarkably reduced.

“Besides, petrol cards can also be abused by people.”

Local economist Dr. Ch’ng Huck Khoon also agreed that it is appropriate to determine who should be entitled to fuel subsidy based on income.

“The thing is, our system is not yet ready, and the cost is high!

“If MyKad is to be used to decide whether one is entitled to subsidized fuel, then there will be problem as only two million people in Malaysia are taxpayers.

“Moreover, people may borrow the MyKads of their family members to fill up their tanks. There are always some way to get around the system!

“You save RM3 to RM5 each time filling up your tank, and this is enough to make people feel good. I think the government just wants to make the B40 and M40 groups feel good.”