KUALA LUMPUR: A new approach will be implemented for RON95 petrol subsidies by mid-2025, focusing on methods that are fairer and do not burden the public.
The Secretary-General of Treasury Datuk Johan Mahmood Merican said that the approach of raising RON95 prices in line with market rates and providing cash assistance to eligible individuals, as implemented by previous administrations, has proven to be less effective.
"The government under Tun Abdullah Ahmad Badawi once implemented this approach, raising petrol prices and providing cash payments of over RM600 to eligible citizens. However, this step caused dissatisfaction, especially among vulnerable groups," he said in an exclusive interview with Berita Harian.
He said one of the main issues withcash assistance is that it might be used for other needs, and cause recipients to face the burden of higher prices over the long term.
Johan added that the varying fuel usage levels between individuals also led to dissatisfaction.
"For example, cash assistance recipients who live near their workplace may find the amount sufficient. However, those who live farther away may find that the amount is insufficient to cover their daily fuel costs," he said.
Johan emphasised the importance of an approach that allows eligible individuals to receive subsidies based on their usage levels.
"This approach is fairer and can reduce dissatisfaction," he said.
No perfect method
Recently, Economy Minister Rafizi Ramli confirmed that the government agreed in principle to implement a two-tier pricing system for the RON95 petrol subsidy.
According to Rafizi, this method can not only be improved over time but also help curb sudden price hikes and control inflation.
However, Johan acknowledged that there is no perfect method for subsidy rationalisation because any measure will face challenges such as operational risks, fraud, and additional costs.
"However, the government is committed to ensuring that the approach taken will achieve the goal of balancing the needs of the public with effective subsidy management," he said.
This step reflects the government's ongoing efforts to ensure that the assistance provided truly benefits those in need without compromising the country's economic stability.