Can govt afford the new diesel subsidy?

 

When the news about the government extending the petrol subsidy to include diesel, I was ecstatic.

I have not driven my truck for too long. I love my truck. I bought it years ago because growing up, one of my favourite movies was “Back To The Future”, and in it, Marty McFly (played by Michael J Fox), dreamt of having a pickup truck.

So, when diesel prices started increasing like crazy, I almost completely stopped driving my truck. My wife and I are lucky because our second car is an electric vehicle (EV), so we just use that car most of the time.

Honestly, we were already using the EV more even before the price increase because it just made more sense.

When Prime Minister Anwar Ibrahim announced that diesel users would also start getting subsidised, I thanked my lucky stars.

Taking my truck out now isn’t equivalent to buying a return flight ticket to Bangkok. But then again, flight tickets have also gone up, and buying a return flight ticket to Bangkok is like going to Paris.

Personally, I think this is fair. There are many diesel users in the country and extending the subsidy to them can help them go a long way, albeit the government cannot afford it.

But looking at the logic of the subsidy structure, it does look okay. There is a cap of 200 litres a month, which is also the same for petrol.

This quota cap is similar to the Budi95 programme, and for people who use both petrol and diesel, the cumulative cap is still 200 litres.

According to the government, 90 percent of motorists use less than that every month, so it makes sense from their perspective.

Do I use less than 200 litres a month? On average, yes, I do. I only use more if I have to travel, and if I have to, I plan my travels accordingly to make it more efficient.

I mean, my wife and I have already been trying to be more financially prudent and environmentally friendly before anyway, hence the EV.

High subsidy costs

Can the government afford it? I can’t honestly say that we have all the data to say that it does. I am sure that it is definitely a burden for the government to add this subsidy.

The country’s fuel subsidy bill is already high and the government needs to see how to offset this.

I also understand that people are facing huge burdens as well (like me!). However, looking at the safeguards that are in place, I believe they have considered it all.

By using our MyKad to verify identity, it shuts out non-citizens and plugs leakages.

The 200-litre cap also restricts extra, non-essential, or even luxurious use of diesel and petrol. Allocating other forms of luxury tax to subsidise petrol and oil is also a good move.

I don’t know for sure but the discussion our government had with Russia regarding long-term assurances of oil and gas supply probably played a role, too.

Preparing for rainy days

With all this being said, I think whether we feel relief or not from these subsidies, we need to realise that in the long run, we will still have to pay more.

It is just how the situation is in the world right now. Gripe, complain and criticise all we want (and there is nothing wrong with that), but just realise that we still need to prepare for it.

So many experts, including the government, have been warning us not to be complacent. We have been told that although we might not feel the rising costs so hard now, we will start feeling it more significantly come July and August onwards, so we'd better take heed of this.

For a government that is heading into the general election season very soon, when they start advising this regarding the economy, I think it is best we take it seriously.

Is it fodder for campaigning later on? Maybe, but being financially prudent is not bad advice in general. So, I will do my best to prepare.

Am I still happy about the new diesel subsidy? Yes! In the short term, it is a relief, but I also see it as an opportunity to cut back on costs and save in the long run.

I believe that most Malaysians are in the same boat with me. It doesn’t mean that I’ll be taking my truck everywhere now. The EV will still be our main vehicle.

By extending the fuel subsidy to diesel, the government is moving towards a more “universal citizen entitlement” model, which is a good move.

So, let’s also play our part by being smarter with our savings and spending. Then we’ll see how it all goes in the end, which I am hoping for the best. - Mkini

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ZAN AZLEE is a writer, documentary filmmaker, journalist and academic. Visit fatbidin.com to view his work.

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.