Govt advised to rethink fuel, cooking oil price subsidies

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, saying this will only lead to smuggling of the commodities to some neighbouring countries.

Tan Sri Mohd Sheriff Kassim, a former secretary-general of the Finance Ministry, said if the retail prices of fuel and cooking oil in southern Thailand, Indonesia’s Sumatra province 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 the 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 subsidy, he said.

He pointed out that the disadvantage of a price subsidy was that even the high-income group would benefit.

Mohd Sheriff said that instead of the 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.

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 Datuk Seri Zafrul Abdul 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. – Bernama