Databases and E-Wallets for RON95 Subsidies?

KUALA LUMPUR: The government is assessing the feasibility of using databases linked to identification cards and integrating e-wallets and debit cards as part of a two-tier pricing structure for RON95 petrol subsidies.

According to Datuk Johan Mahmood Merican, treasury secretary-general of the Finance Ministry, it is vital to create a mechanism that mitigates subsidy leakages.

“The government is devoted to ensuring that Malaysians can continue to benefit from subsidies. The details of this system are still being worked on and require finalization, which is why Prime Minister Datuk Seri Anwar Ibrahim has indicated that we expect implementation around mid-next year,” he stated.

These comments were made during the Post-Budget 2025 Debate organized by the Malaysian Economic Association (MEA) on Monday (Oct 21).

Also in attendance was MEA president Yeah Kim Leng.

The discussion was moderated by Tan Sri Sulaiman Mahbob, chairman of the Malaysian Institute of Economic Research board of trustees, with participants including Tan Sri Noor Azlan Ghazali, director of the Malaysian Inclusive Development and Management Institute, and Firdaos Rosli, chief economist at Ambank Group.

When comparing the RON95 pricing mechanism to the diesel subsidy system, Johan noted that it could replicate aspects of the fleet card mechanism implemented in the Subsidised Diesel Control System (SKDS).

He underscored that having the pump price reflect the market rate is advantageous as it results in a significant reduction in subsidy leakages.

“We identified leakages after the diesel subsidy mechanism’s introduction, occurring not just across borders but also in sectors that should be purchasing at commercial prices.

“Despite these challenges, we have observed a 30 percent reduction in diesel sales at petrol stations, alongside increased sales in commercial sectors, indicating that both challenges are being effectively addressed,” he concluded. – Bernama