Ascertain usage before raising subsidy quota, says economist

 Tan Peck Leong says wider take-up of the existing 300-litre entitlement will give Putrajaya a clearer picture of actual demand.

Tan Peck Leong says while calls for a higher quota are understandable, any increase should be data-driven to avoid undermining BUDI Diesel’s efforts to curb leakages.

PETALING JAYA:

The government should determine which users genuinely need more fuel before implementing a blanket 500-litre diesel subsidy quota in rural Sabah and Sarawak, an economist says.

Universiti Teknologi Mara economist Tan Peck Leong pointed out that actual consumption data is already available to help the government decide on the quantum.

“It may be premature to push for a 500-litre quota when many eligible users have yet to take up the additional 100 litres that have been allocated,” he told FMT.

“Until there is wider take-up, it will be difficult to get a clear picture of actual demand and determine whether a higher quota is really necessary,” he added.

Tan Peck Leong.

On July 20, Kuamut assemblyman Masiung Banah called for an increase in the monthly subsidised diesel quota from 200 litres to 500 litres for users in rural Sabah.

He said a return journey between Kuamut and Kota Kinabalu could take six to seven hours, with residents in the interior also facing long distances, difficult terrain and limited access to urban services.

However, it has been reported that about 71,000 of some 120,000 eligible pickup and jeep owners in Sabah have yet to submit applications for the 100-litre increase in quota, which would raise their monthly entitlement to 300 litres.

Tan said Masiung’s demand was understandable given the difficulties faced by rural communities, but a blanket increase would defeat the purpose of targeted subsidies, including efforts to reduce leakage and cross-border smuggling.

“We need fiscal discipline at the centre paired with flexible relief for those who can prove they actually need it,” he said.

Transport consultant Rosli Khan also opposes a blanket increase based simply on whether a motorist lives in Sabah or Sarawak.

He said higher fuel consumption alone should not determine eligibility for additional subsidies, as it could also involve wealthier motorists with several large-engine vehicles, traders, construction companies and logistics operators.

Rosli Khan.

“Any subsidy offered by the government must be fair to all,” he said.

Rosli said even diesel users in the Klang Valley could exhaust their quota more quickly because of traffic congestion, underscoring why additional assistance should be based on need rather than on fuel consumption and locality alone.

According to the works ministry’s Malaysian Intelligent Transport System Roadmap 2030, congestion increased fuel spending during peak-hour trips in the Klang Valley by about 29% in 2023, based on TomTom Traffic Index data.

Let data, not politics, decide

Tan said any increase in the diesel quota should be based on actual consumption patterns rather than political demands.

He said the government should first establish how many motorists were consistently exhausting the existing 300-litre entitlement and identify the groups and areas where higher fuel use was genuinely unavoidable.

Tan acknowledged that motorists travelling through Sabah and Sarawak’s interior could consume substantially more diesel than those driving in urban areas.

He said 300 litres would ordinarily be sufficient for daily travel in towns or on paved roads, but long journeys through muddy logging roads at low speeds could raise fuel consumption.

“However, these high-consumption trips are periodic rather than daily. Economically, it is impossible to justify giving a blanket 500-litre quota to every driver across Sabah and Sarawak,” he said.

Tan proposed an AI-assisted appeal system that could assess factors such as an applicant’s registered interior postcode, vehicle type and fuel-use patterns before recommending an additional quota.

He said those most likely to exceed the present limit included traders and independent four-wheel-drive owners providing informal transport services in their communities.

These motorists may transport harvests to town or return with bulk supplies, despite operating without a registered company, commercial account or fleet card.

“They are private vehicle owners doing work that looks commercial but is not registered as such — just someone with a pickup truck who has become the de facto delivery service for the community,” he said.

Tan said an appeal-and-top-up mechanism could ensure additional assistance reached such high-consumption motorists without extending a larger quota to everyone.

“At the end of the day, a subsidy is a top-up to assist with living costs, not an automatic entitlement,” he added. - FMT