Economist: Toll reductions, fuel subsidies will not help all B40

Economist Muhammed Abdul Khalid has advised the government against spending public funds on reducing or abolishing tolls and subsidising petrol as he believes such initiatives will not benefit everyone in the B40 group.

His personal opinion was that the money ought to be allocated to providing and improving public transport in rural areas instead as this would help more poor Malaysians.

A panellist on the “Strategies to Leave No One Behind” forum today, the economic advisor to the prime minister pointed to how more than a third of B40 households do not own any vehicles.

“For fuel subsidies which we are going to give to the B40, one-third of those in B40 do not have any cars or motorcycles [...] so they are not going to get it.

“Now we are discussing, which I disagree, taking over tolls in urban areas.

“(This is) still not going to benefit this one-third of the B40,” Khalid (above) said during the forum held in conjunction with UN Sustainable Development Goals Summit in Kuala Lumpur.

According to the Household Income and Expenditure Survey 2016, 33.2 percent (922,557) of the 2.78 million B40 households do not own a car while 30.1 percent (836,416) do not own a motorcycle.

Khalid's remarks referred to the government RM2.2 billion targeted fuel subsidy scheme beginning Jan 1 next year aimed at car and motorcycle owners who are on Bantuan Sara Hidup (BSH) government welfare payments.

Those not receiving BSH will be able to obtain a fuel card which allows them to purchase 100 litres of RON95 fuel at a RM0.30 per litre subsidy.

Meanwhile, the cabinet previously approved the Finance Ministry's plan to acquire four Klang Valley highways - the Shah Alam Expressway (Kesas), the Damansara-Puchong Expressway (LDP), the Sprint Expressway and the Smart Tunnel - for RM6.2 billion.

Putrajaya is also considering several proposals to take over highway tolls from concessionaire Plus Malaysia Bhd.

Rural public transport focus

Muhammad, who was formerly the director of think-tank Khazanah Research Institute (KRI), elaborated that public spending ought to be on public transport in rural areas where many poor households were.

“If I have RM6 billion, do I use it to buy toll (highways) in urban areas? We should not use it on transport, we should use it on public transport.

“If I want to use it on public transport; I (should) use it not in urban areas, but in the rural areas.

“If I buy toll in KL you are not going to benefit anybody from (the rural places). It is not about not having enough money, but how do you spend it better,” he said to claps from the audience.

Muhammed is not the first economist to offer such advice.

Previously, KRI’s Jomo Kwame Sundaram urged Putrajaya to consider subsidising public transport rather than fuel.

Pakatan Harapan had pledged in its manifesto to provide targeted fuel subsidies, review and take over all highway concessions as well as abolish tolls gradually. - Mkini