Targeted subsidy framework won't lead to cost increases, Dewan Rakyat told

KUALA LUMPUR: The exact mechanism for targeted subsidies is still under consideration and is not expected to cause any increase of costs to the industries concerned, says Deputy Finance Minister Lim Hui Ying.

She told the Dewan Rakyat today that the government remains focused on effective implementation of targeted subsidies, and would strive to prevent any unexpected "surprises" for the economy.

"The implementation of targeted subsidies will be carried out gradually, subject to availability based on suitable models and feasibility, while maintaining the government's focus on ensuring that cost of living for the people is not affected," she said in reply to Vivian Wong (PH-Sandakan) during Ministers' Question Time.

Wong had asked the Finance Ministry to reveal the exact mechanism to be used by the government in introducing targeted subsidy schemes.

Lim added that the government would place its main focus on diesel subsidies through methods and mechanisms announced by the Domestic Trade and Cost of Living Ministry on March 6.

"The expansion of the subsidies under the Subsidised Diesel Control System Pilot Project 2.0 (SKDS 2.0) to nine types of commercial vehicles is currently open for application starting March 7, and is expected to benefit more than 260,000 vehicles.

"From March 8 to 16, a total of more than 5,800 companies with over 34,400 vehicles successfully registered under SKDS 2.0.

"Therefore, the government urges all eligible vehicle owners registered under SKDS 2.0 to continue to enjoy subsidies in the future," she said.

She also noted that diesel subsidy expenditure last year increased by RM14.3bil, with usage consumption amounting to 10.8 billion litres per year compared to 6.1 billion litres in 2019.

"The 70% increase in diesel usage does not match the increasing numbers of diesel vehicles, which saw an increase of about 3%.

"This (seems to support) the claims that there is a significant amount of leakage of diesel subsidy," she said,

Currently, all diesel vehicles categorised under the public transportation category within the SKDS 2.0 system, including vans and school buses, have been enjoying subsidised diesel prices at a rate of RM1.88 per litre, while fishermen receive diesel subsidies at a rate of RM1.65 per litre.

"Both categories will continue to enjoy these diesel prices and will not be involved in the targeted Diesel Subsidy Programme," she said.
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