Exclude T20 from BUDI95 to save RM1.5bil a month, says economist

Exclude T20 from BUDI95 to save RM1.5bil a month, says economist

PETALING JAYA: An economist has suggested that the BUDI95 subsidy scheme be limited to those in the B40 and M40 income categories as this can save Putrajaya up to RM1.5 billion a month.

Pointing out that those in the T20 still get to enjoy RON95 subsidies, Ahmed Razman Abdul Latiff of Putra Business School said this could be a targeted measure to manage the cost of living.

“The government can consider restructuring existing subsidies so that only those in need would receive them. For example, BUDI95 now applies to all Malaysians with a valid driving licence. Perhaps this can be limited to the B40 and M40.

“It was previously said that over 30% of RON95 is used by the T20. If RM5 billion is spent on RON95 subsidies a month, that 30% would equal to the government saving RM1.5 billion a month if the T20 don’t get the subsidies,” he told FMT.

Yesterday, Prime Minister Anwar Ibrahim acknowledged the rising cost of living pressures, but said responses must be targeted and measured.

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He said not all issues could be fully resolved because of the country’s financial constraints, especially given the uncertain global environment.

Bank Muamalat chief economist Afzanizam Abdul Rashid also said Putrajaya should review the RON95 subsidy structure, maintaining it for the vulnerable and limiting the high-income group from receiving it, given the government’s fiscal pressures.

He said it was uncertain when the Iran war and the Strait of Hormuz restrictions would end, having already impacted global energy supply and prices.

“The savings from the subsidies for the high-income would be quite significant since these users typically use high-powered vehicles. The lower-income benefit more from the subsidies,” he said.

Afzanizam said World Bank and International Monetary Fund studies have also shown that rationalised subsidies for the higher-income groups were implementable.

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Instead of removing the T20 from BUDI95 as a whole, he suggested giving them a lower monthly quota compared with the lower income groups.

Exclude T20 from BUDI95 to save RM1.5bil a month, says economist

Exclude T20 from BUDI95 to save RM1.5bil a month, says economist

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