Targeted Subsidies Will Save Money Former Treasury Man Tells Govt

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The government provides up to RM8 billion in fuel and cooking oil subsidies this year. (Bernama pic)KUALA LUMPUR: A former top civil servant has called on the government to rethink its decision to provide up to RM8 billion in fuel and cooking oil subsidies this year.
This will only lead to smuggling of the commodities to some neighbouring countries, said Mohd Sheriff Kassim, a former secretary-general of the finance ministry.
He said if the retail prices of fuel and cooking oil in southern Thailand, Sumatra and the Philippine islands off Sabah followed market trends, then the subsidised Malaysian fuel and cooking oil would be cheaper.
“If the price differentials are big, this will be an opportunity to smuggle the products out and make a quick profit from cross-border trade by land and sea,” he said in a statement.
There had been rampant smuggling of diesel to southern Thailand due to such subsidies, Sheriff said.
He also said the disadvantage of a price subsidy was that even the high-income group would benefit.
Sheriff said that instead of price subsidies, it would be better to do targeted income subsidies, as was done previously so that only the poor would benefit.
“The best way to help the poor is to subsidise their income without wasting government funds.”
He said the government should come out with a bigger income subsidy plan for the really poor, including petty traders who have lost their incomes because of some measures to contain the Covid-19 pandemic.
Finance minister Tengku Zafrul Aziz said yesterday the higher subsidies this year were due to the increase in global market prices.
He said the government would continue to subsidise fuel and cooking oil prices to help reduce the impact of rising commodity prices on the cost of living. - FMT

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