Subsidies to cost govt RM100bil unless reforms made, says Rafizi

KUALA LUMPUR: The government will have to bear up to RM100bil in subsidies every year unless the subsidy system is reformed, says Economy Minister Rafizi Ramli.

The Pandan MP said in 2022, the government allocated over RM80bil for subsidies and according to him, this figure only involved subsidies for RON95 petrol, diesel, LPG and electricity.

"Today, the world crude oil price has reached US$95 per barrel and is expected to increase to US$100 per barrel soon.

"At these price, the subsidy borne by the government will reach RM100bil unless we reform our subsidy system.

"So rationally, we are aware that the spending should be targeted to those who are actually in need and the remaining (money) can be used for public service and national development.

"The question is, what is the most fair method for the public so that we can offset the macro effects such as inflation? The answer is the Central Database Hub (Padu), a mechanism that can ensure the success of this targeted subsidy policy," he told the Dewan Rakyat today.

Datuk Seri Dr Wee Ka Siong (BN-Ayer Hitam) then interjected and pointed out that targeted subsidies may affect the T20 the most given that the group's salary scale did not reach millions of ringgit.

With such a concern in mind, Dr Wee urged the government to explain the method it would employ to ensure no one would be neglected.

"If we take the salary of T20 into factor, we cannot compare this group with millionaires who make RM1mil profits every month.

"This means that the T20 group will be affected the most here. So, please explain the method to prevent this," he said.

In response, Rafizi said the Padu database would include several key aspects such as income, number of households, dependents, locality, distance to workplace, as well as ownership of assets such as houses, vehicles and land.

"Previous governments only used income as the indicator which was why focus was only given on B40 while the M40 was neglected.

"Therefore this time, we will include various criteria (for subsidy recipients) instead of only using income as the key aspect because we want to ensure no one is neglected," Rafizi said.

Prime Minister Datuk Seri Anwar Ibrahim will provide details on the implementation of targeted subsidies in the second Madani Budget in Parliament next month.

Anwar, who is also the finance minister, said any subsidy rationalisation would not burden the middle and lower-income groups.