KUALA LUMPUR (Nov 27): The government will roll out a targeted subsidy programme for RON95 petrol in the second half of 2024 (2H2024), said Economy Minister Mohd Rafizi Ramli.

He stressed the unsustainability and unfairness of a system in which the top 20% of income earners receive 53% of blanket fuel subsidies, which is neither a sustainable nor a fair model.

"The government will roll out a RON95 subsidy programme in 2H2024, as we look to optimise our resources towards those that need it most. I know analysts keep asking why it takes so long, because we've seen how it's done in other countries. The sequencing is important, which means getting everything ready. Once we roll it out, it is expected that there will be unhappiness here and there, there will be teething problems, but we can’t afford the U-turn,” Rafizi said in his opening address at the National Economic Outlook Conference organised by the Malaysian Institute of Economic Research (MIER) on Monday.

“We have seen so many U-turns, we have seen good policies that have been implemented rather haphazardly and ended up causing so much public backlash that politicians usually turn it around. That's why I have been accused of being defensive, when it takes us a year to prepare the foundation, but I don’t mind,” said the minister. 

Earlier this month, Rafizi said in the Dewan Rakyat that targeted subsidies for petrol and diesel are likely to be introduced next year, after the launch of the central database system known as Padu in January 2024.

The programme will be implemented using three mechanisms, which are based on individual net disposable income, net disposable household income through social protection or assistance schemes, as well as a combination of household and individual earnings, which will be implemented using a subsidy card.

These efforts are in line with the government’s central position of widening the fiscal paradigm the government works in. 

“Given that our public finances ran a fiscal deficit of more than 5% for three consecutive years, we must find new avenues to mobilise our resources and reduce wastage within the system. One inescapable dimension of this is addressing our revenue inadequacy by increasing our tax collection. Spending more money than we have is never conducive to a dynamic, sustainable state,” said Rafizi. 

On the labour market front, Rafizi said the progressive wage policy will be tabled as a white paper in Parliament on Thursday, as the government looks to fix the systemic issue of the country’s low wages. 

“It remains shocking to me that our median wage is only RM11 above the poverty line in this country. The real challenge in the future is how to tap into the best talents. Better talents will translate into better productivity, and you can only attract good talents with reasonable employee compensation. 

“Having said this, we remain mindful that wage growth must be productivity-driven through upskilling efforts. This has been emphasised via the five HGHV (high-growth, high-value) sectors identified in the Mid-Term Review [of the 12th Malaysia Plan], where we want to focus on creating a greater proportion of technological-frontier jobs,” Rafizi added.