Targeted subsidies won't hike industry costs - deputy minister

 

Implementing targeted subsidies is not expected to increase costs for existing industries, said Deputy Finance Minister I Ahmad Maslan.

However, he said the government will emphasise effective communication with the industry so there is no shock to the economy.

“The current fuel subsidy is aimed at reducing the impact of the cost of living following the increase of fuel price in the market, especially for the low and middle-income groups.

“To continue protecting consumers from the effects of the crude oil price increase in the global market, the government is maintaining the ceiling price of RON95 petrol at RM2.05 per litre and diesel at RM2.15 per litre even though the market prices of both products have exceeded the set price ceiling,” he said.

He was replying to a question from Senator Nik Mohamad Abduh Nik Abdul Aziz in the Dewan Negara on whether subsidy rationalisation measures and tax reforms will impact low and middle-income groups.

Meanwhile, Ahmad said in relation to tax reform measures, any change in tax-related policies will take into account the impact on the economy and the cost of living of the people.

“Accordingly, the government is always monitoring the current economic situation and considering fiscal measures that suit short and medium-term needs.

“The government will continue to engage with all stakeholders to study aspects of reforming the national taxation system,” he said.

A subsidy is a government grant to ease the burden of the people by covering part of the cost that must be paid to obtain essential goods, transport services, and financing from various funds provided.

The actual price of diesel is RM2.80 per litre but the government has borne a subsidy of 65 sen making the market price of diesel RM2.15 at this point.

Some subsidies will remain

Ahmad said the government will ensure that when targeted subsidies are implemented next year, expected in March 2024, the government will start with diesel first and then RON95 the following month.

“To ensure prices of goods do not rise, the diesel subsidy for vehicles carrying goods will remain, so there is no reason for the price of goods to rise because the price remains at RM2.15 per litre.

“For private vehicles in Sabah and Sarawak, we maintain at RM2.15 per litre. For fisherfolk, we also maintain RM1.65 per litre. And public transport such as school buses will remain at RM1.88 per litre during targeted subsidies,” he said.

Ahmad said what is important is law enforcement when targeted subsidies are implemented.

“The Ministry of Domestic Trade and Cost of Living has many officers to combat leakages. They enforce 12 acts and also strive to create ethical traders to ensure consumers are always protected,” he said.

- Bernama