Government adviced to reconsider fuel and cooking oil price subsidies

Tan Sri Mohd Sheriff Kassim who was a former secretary-general of the Finance Ministry, has said that 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.

This former top civil servant has called on the government to reconsider its decision to provide up to RM8 billion in fuel and cooking oil subsidies this year. He said that this will only lead to smuggling of the commodities to some neighbouring countries.

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 “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 added and also pointed out that the disadvantage of a price subsidy was that even the high-income group would benefit.

Mohd Sheriff emphasized more on the fact 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 further stated in the interview.

He suggested also that 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 Datuk Seri Tengku 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.