A ‘State of Households’ survey conducted by Khazanah Research Institute opines that fuel subsidies should be gradually replaced with targeted cash transfers to help low-income earners, Bernama reports.

Targeted cash transfers (like BR1M) are better than untargeted subsidies, which could benefit smugglers, businesses and the rich, said  Tan Sri Nor Mohamed Yakcop, the chairman of the think tank.

“Subsidies need to be targeted to Malaysians who really deserve it, and a mechanism such as the 1Malaysia People’s Aid (BR1M) does help,” Bernama quoted him as saying.


Each household receives average subsidies of RM625 per year for electricity and RM885 per year for fuel, but high-income households get about 80% of the subsidies, the survey found. It added that most subsidies go to businesses rather than households.

“Of what goes to households, the high-income group benefits the most – a household that only has a motorcycle and ceiling fans enjoys far less subsidy than a multiple-car and air-conditioned household in Damansara Heights,” the survey said.

Last month, Universiti Malaysia Sarawak business and economics faculty lecturer Prof Dr Shazali Abu Mansor opined that the government should consider increasing the road tax for luxury cars instead of making high-income groups pay market prices for RON 95 petrol.


He said that all consumers should be allowed to purchase subsidised petrol, and be free to choose between RON 95 and RON 97, irrespective of the car they drive.

Also last month, Raub MP Datuk Ariff Sabri Abdul Aziz proposed in his personal blog that a fuel tax be imposed on vehicles with bigger-displacement engines.

He suggested a multi-band tax structure comprising engine capacities of 1,601-2,000 cc, 2,001-2,500 cc, 2,501-3,000 cc, 3,001 cc and above, and that the pre-arranged fuel tax be paid at the next road tax renewal.