Automotive Fuel Subsidy

Published on July 29th, 2020 | by Subhash Nair


Perikatan Govt Scraps Petrol Subsidy Programme

The Petrol Subsidy Programme (PSP) that was discussed under the Pakatan Harapan government has been scrapped under the Perikatan Nasional government. Under the PSP, the government would have worked as follows:

  • Targeted at B40 group
  • Would only be applied to those in Peninsula Malaysia
  • Would subsidise the price of RON95 petrol only
  • Would apply to all cars with engine capacities below 1600cc and cars above 1 year old over 1600cc
  • Would apply to all motorbikes with engine capacities below 150cc and motorbikes above 7 years old over 150cc.
  • Fuel subsidy would be between RM12 and RM30 a month depending on the types of vehicles that are owned

The fuel subsidy programme was supposed to come into effect the same time the price ceiling for RON95 was removed. No new plans for how this government will handle the price of RON95 have been announced.

BHPetrol RON95 Euro 4M

The Domestic Trade and Consumer Affairs (KPDHNEP) deputy minister Datuk Rosol Wahid announced that the PSP would not be implemented. His announcement was made at Dewan Rakyat today.

BHPetrol station

Reasons given included the price difference of fuel between Peninsular Malaysian and East Malaysia, the lack of transparency in the programme, and to avoid misunderstanding, as the programme.

What is the Petrol Subsidy Programme (from KPDNHEP Website)

The Petrol Subsidy Scheme (PSP) is the Government’s initiative to ease the burden of low-income population through redistribution of subsidized gasoline. It is a form of financial aid to help the people finance some of the cost of their fuel use.

The basic assistance provided by the Government is through fair subsidy redistribution (policy redistribution) and policy driven data. The monthly subsidies of petrol consumed by users regardless of nationality and income will be changed to eligible target groups of Malaysian citizens who need the most.

Currently, the public retail price of RON95 petrol is being subsidized by the Government. This means that for every liter of RON95 petrol purchased, the Government finances the subsidy so that the price paid is at a low rate of RM2.08 per liter. The actual price of RON95 petrol is higher and is constantly changing according to the market.

Bulk subsidies are also enjoyed by ineligible people such as foreign nationals, high income groups and commercial companies.

The government wants to rectify this imbalance by redistributing equitable subsidies by introducing PSP especially to low-income groups.

In general, PSP is to achieve the following objectives:

  1. Achieving the 12th UN Sustainable Development Goal: Responsible consumption and production;
  2. Reduce the impact on living costs and help the lower income group;
  3. Reduce the leakage of petrol subsidies;
  4. Reduce fiscal burden;
  5. Promote consumer behavior changes such as efficient use of petrol, use of public transportation and encourage savings.

You are eligible if you meet the following criteria:

  1. Is the recipient of BSH residing in Peninsular Malaysia;
  2. Have a registered private vehicle and a valid Motor Vehicle License;
  3. Individual vehicle ownership limit is 2 cars and 2 motorcycles; and
  4. Eligibility based on one of the following criteria of engine capacity:
    i. Cars <= 1,600cc
    ii. Cars >1,600cc and age >= 10 years
    iii.Motorcycles <= 150cc
    iv. Motorcycles >150cc and >> 7 years.

One of the objectives of the Petrol Subsidy Scheme is to reduce the cost of living for low-income households.

Low-income people who receive BSH (household income of RM4,000 and below) and own a vehicle are eligible for petrol subsidies.

Establishing income limits and vehicle ownership is to minimize leakage and to ensure the Government remains responsible and prudent in managing the country’s fiscal management.

About the Author

Written work on @subhashtag on instagram. Autophiles Malaysia on Youtube.

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