Experts Urge Fairer, Data-driven Approach To Petrol Subsidy Reform
By Muhammad Faiz Baharin
KUALA LUMPUR, May 13 (Bernama) -- The government has been urged to adopt a multi-dimensional household income classification system to ensure that the proposed review of petrol subsidies for high-income earners is implemented more transparently and accurately.
Economist Emeritus Prof Dr Barjoyai Bardai said the approach would provide a more comprehensive assessment of a household’s actual financial capacity, as it would take into account not only income, but also assets, location, number of dependents and spending patterns.
The Provost and Dean of the Institute of Graduate Studies at Universiti Sains dan Teknologi Malaysia said the current B40, M40 and T20 classification system no longer reflects the realities of today’s cost of living, particularly the disparity between urban and rural areas.
“An income of RM15,000 in Kuala Lumpur is not the same as RM15,000 earned by a household in Kota Bharu, because living costs in major cities, medium-sized towns, rural areas, as well as Sabah and Sarawak, differ significantly,” he told Bernama.
Barjoyai said a score-based multi-dimensional approach would be more practical in the long term as it measures a household’s real financial capability rather than relying solely on gross monthly income.
He also cautioned the government against policies that could intensify the “middle-class squeeze” phenomenon, where middle-income groups face mounting pressure from taxes and subsidy reductions, leading to a higher cost of living.
On the proposed petrol subsidy review, he suggested that the government consider alternative mechanisms such as a controlled fuel price float or limiting subsidised petrol purchases to the first 100 litres per consumer.
Meanwhile, Fellow of the National Professors' Council, Azmi Hassan, proposed reducing the high-income household category to the top 15 per cent instead of the current 20 per cent, using data from the Main Database (PADU) as the primary reference.
He said integrating PADU data with information from the Inland Revenue Board could help the government identify subsidy recipients more accurately and comprehensively.
Azmi also dismissed claims that the move would be unfair to high-income earners, stressing that the proposal only involved households with strong financial standing.
Federation of Malaysian Consumers' Associations chief executive officer Dr T Saravanan said public concerns remained over the accuracy of government data involving income levels, employment status, family dependents and changing economic circumstances.
“If the data is inaccurate, there is a risk of exclusion or mistargeting. Before full implementation, the government must ensure that review, update and appeal processes are simple, efficient and accessible so consumers are not adversely affected by data weaknesses,” he said.
Saravanan also proposed that the government introduce incentives such as tax relief or additional targeted assistance if subsidy reductions are implemented for certain groups.
At the same time, he said the government should continue prioritising efforts to curb fuel smuggling, reduce wastage in public spending and improve the efficiency of subsidy distribution systems.
Meanwhile, Deputy President of the Consumer-Friendly Organisation of Malaysia, Azlin Othman, said the proposed subsidy review for high-income groups is a reasonable step towards ensuring government aid is more targeted and sustainable, while strengthening the country’s fiscal position over the medium and long term.
However, she stressed that any subsidy rationalisation measures must be implemented cautiously and in stages, accompanied by clear communication to avoid negative public perception and market sentiment.
On Sunday, Prime Minister Anwar Ibrahim said the government was still studying the best mechanism for the proposed petrol subsidy review for high-income groups and that a final decision would be announced soon.
-- BERNAMA
