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    Malaysia government signals targetted fuel subsidies that might exclude the rich

    ANN/THE STAR – Malaysian Deputy Finance Minister Ahmad Maslan (pic below, The Star) signalled on Tuesday that the government is mulling over targetted fuel subsidies that could exclude the rich from receiving them.

    He said in Parliament that billions could be saved if there is a targetted fuel subsidies mechanism, with the savings chanelled to other more needy groups.

    “If T20 (top 20 per cent income group) was not given petrol, diesel and LPG subsidy, the amount saved is between MYR15 billion (USD 3.3 billion) and MYR17 billion, so Honourable Members please imagine how many other items we can use to assist the people in various matters in 26 ministries,” said the deputy minister.

    He explained that out of the MYR50.8 billion spent by the government on petrol, diesel and liquified petroleum gas (LPG) subsidies in 2022, 35 per cent – or MYR17 billion – had benefitted the T20.

    Meanwhile, the lowest income group (B40) accounted for only 24 per cent, while the middle-income group (M40) used 41 per cent.

    Ahmad was responding to a parliamentary query by Kuala Terengganu Member of Parliament (MP) Ahmad Amzad Hashim, who asked how those from the M40 who dropped down to the B40 group in the city areas will receive the benefits of targetted subsidies if they are put in place.

    The deputy minister also pointed out that diesel subsidies rose to MYR8.4 billion in 2022 as compared to MYR5.8 billion in 2018 and MYR6.1 billion in 2019.

    “Was it due to actual consumption or smuggling?

    “Because of that, we estimate that diesel is being smuggled, the same goes for RON95 petrol,” he was quoted as saying by The Star, adding that the issue will be monitored by Putrajaya in an integrated manner by various government agencies.

    According to him, the price of RON95 in Malaysia is much cheaper at MYR2.05 per litre compared to neighbouring countries such as Singapore (MYR8.51 per litre), Thailand (MYR5.71 per litre) and Indonesia (MYR3.78 per litre).

    Last Friday, Malaysia Prime Minister Anwar Ibrahim unveiled an expansionary 2023 budget of MYR388.1 billion, the largest in the country’s history.

    At the same time, he announced a slew of measures aimed at lowering the cost of living amid high inflation as well as more progressive taxes.

    Among the measures include proposing lowering income tax for the M40 group while increasing taxes for the rich.

    “The T20 group are rich so they don’t need assistance. The B40 has been given government assistance all this while. But what about the M40?,” said Anwar.

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