KUALA LUMPUR: The government is considering fashioning the targeted subsidy scheme for RON95 after the diesel programme implemented in June this year, and the possibility of providing cash assistance via e-wallet.
The Finance Ministry deputy undersecretary (economic research) for fiscal and economics division Dr Nirwan Noh and said with the diesel subsidy rationalisation programme stabilising and those eligible for the subsidy now registered with the relevant authorities, the government is considering a similar mechanism for the RON95 programme.
He was speaking during the 'MARC360 Reflections: Analyses of Malaysia's Budget 2025 And Post-Budget Debates' webinar.
In June 2024, the government removed diesel subsidies at the pump and offered subsidised diesel via fleet card for businesses and RM200 cash aid for individuals.
On the T15 classification, Nirwan said the government is still assessing the conditions that will make up the T15 income group.
As mentioned in the 2025 Budget, the group will not be eligible for the RON95 subsidy that will be implemented in the middle of next year.
Nirwan said the government has yet to finalise the threshold or conditions that determine the T15 income group.
"The government is still considering it. It used to be based on household expenditure survey by the Statistics Department (DoSM) but the Economy Ministry has mentioned that it will not solely based on that and will take into account other additional conditions," he explained.
Meanwhile, Center for Market Education chief executive officer Dr Carmelo Ferlito said it is still too early to assess the inflationary impact from the RON95 subsidy rationalisation as there is no clear picture of the mechanism yet.
Ferlito said he prefers a mechanism where market prices at the petrol station are equal for everybody but vouchers are provided for those in need of a subsidy.
"This is more of a bottom up approach and may bring the emergence of market redistribution of cash aid," he said.
In terms of inflationary impacts from the subsidy, he said it is important to note how the government will finance the subsidy.
"The real inflationary impact will not be from the eventual increase of the price of the petrol but largely depends on how much the quantity of money will increase into circulation.
"Will it be financed through existing funds from taxation or borrowed funds such as government bonds? The impact will not come from the increase of price but from the way in which it is going to be distributed," he added.