Economics Local

Pros and cons of petrol card for targeted fuel subsidy

Ahirul Ahirudin
Written by Ahirul Ahirudin

KUALA LUMPUR – November 1, 2018: Two economists have come up with their own ideas on how the government can best implement the targeted fuel subsidy policy.

For Professor Zulkifli Senteri of Binary University, the way is to provide a guideline on who qualifies, to help petrol station operator adhere to the plan but he cautions that there will always be loopholes.

“To have a targeted subsidy mechanism is easier said than done because there will always be loopholes. Even if you determine which car qualifies, many households may have the same car amongst more expensive cars. In this case the person cannot be from the B40 group.

“Thus we should avoid having a petrol card system as it can easily be abused. The card can also be passed around and it would be too much to manage and monitor who uses the card daily.”

His take is for station operators to decide over the counter. This means they can take a look at the car or motorcycle and determine if you are eligible for cheaper petrol.

Zulkifli is also not a fan of imposing a penalty for those who abuse whichever mechanism to be used.

“Who wants to monitor? Who can punish? All these would take resources. The best bet is for the government to educate people on why it is important to not abuse the system,” added Zulkifli.

Domestic Trade and Consumer Affairs (KPDNHEP) Minister Datuk Seri Saifuddin Nasution had last week said his ministry was discussing with the finance ministry on how to implement the system.

The government started to impose a blanket subsidy for Ron95 petrol and diesel, with prices fixed at RM2.20 and RM2.18 per litre respectively since Pakatan Harapan took over the government after the May general elections.

Unlike Zulkifli, Professor Dr. Faridah Hassan of Universiti Teknologi Mara believes that the use of the petrol card is the best way to implement the system.

The card can be given using the driver’s identity card, allowing customisation such as pin-protected cards or how many times the person refuels with subsidised fuel each day or week.

“With this a limit can be introduced. The government can easily limit the purchase of subsidised petrol for each person, thereby reducing the likelihood of abuse,” she said.




About the author

Ahirul Ahirudin

Ahirul Ahirudin