Economist suggests subsidy vouchers for lower-income households

 

Carmelo Ferlito of the Center for Market Education said using a voucher system would allow households to receive electricity at market price.

PETALING JAYA: The introduction of a subsidy voucher system will allow the government to target subsidies directly at lower income households, an economist said.

Carmelo Ferlito of the Center for Market Education said, with the system in place, every household would receive electricity at market price.

He said the eligibility for subsidy vouchers could be calculated according to income group.

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“Households in the lower income segments will receive vouchers that they can use to purchase the products and services they need or sell the vouchers if they do not use them,” Ferlito told FMT.

Prime Minister Anwar Ibrahim announced last week that the government would maintain the current electricity tariffs but will remove the qualification of those in the T20 group for a subsidy.

Later in the same week, natural resources, environment and climate change minister Nik Nazmi Nik Ahmad said targeted electricity subsidies for the T20 group would be announced by the end of the year, after an integrated database system has been set up.

Ferlito said the voucher system could also be used for other subsidised goods and services, such as petrol.

Meanwhile, Geoffrey Williams of the Malaysia University of Science and Technology said the government could save almost RM4 billion annually by removing the electricity subsidy for the T20 group, adding that this was a practical way of slashing the national subsidies bill.

Williams said T20 households tended to use the most electricity as affordability was not an issue for them.

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“Of course, there are also large households in lower-income groups, but these can be identified and given special treatment to help keep bills down,” he said. - FMT