Fuel subsidy plan to include M40 group – gov’t aiming for simultaneous implementation with B40 next year

The ministry of domestic trade and consumer affairs (KPDNHEP) is hoping to implement the petrol subsidy programme (PSP) for recipients of the Bantuan Sara Hidup (BSH) – or B40 – as well as those in the middle income M40 category simultaneously from January next year.

At last week’s Budget 2020 tabling, it was revealed that there would be another category for the PSP, with a “Kad95” being issued to those whose household income are below RM4,000, but are not eligible for BSH for various reasons (thus categorised as M40). At the time, finance minister Lim Guan Eng said the Kad95 system would be implemented progressively in the first quarter of 2020.

“Following the announcement of the PSP on Monday, the ministry received a lot of feedback from the people, and among the most popular feedback was the call to include those in the M40 group as eligible to receive petrol subsidies,“ said domestic trade and consumer affairs minister Datuk Seri Saifuddin Nasution Ismail in a report by The Sun Daily.

According to Saifudin, KPDNHEP will hold discussions with the ministry of finance (MOF), Road Transport Department (JPJ) and Tenaga Nasional to obtain data on eligible recipients and to refine the required mechanisms.

“From the Budget 2020 presentation, the government has allocated RM2.2 billion for the targeted PSP scheme which will benefit about eight million motorists and by excluding 2.9 million recipients from the B40 group, about five million eligible drivers will be identified including those from the M40 group,” he said.

For everyone else not covered by the PSP, there will be no subsidies, and they will be subject to fuel prices that will be floated next year. Based on the finance ministry’s latest Automatic Price Mechanism (APM) calculations (for the period of October 12-18), RON 95 petrol would be priced at RM2.37 per litre without the current RM2.08 price cap in place. As a recap, here are the main points of the PSP:

• The subsidy will only be given to car/motorcycle owners, and is limited to one vehicle per recipient. If a person owns a car and a motorbike, then he/she will receive the higher subsidy, which is for the car. The car or motorcycle must be registered under the recipient’s name.

• The subsidy rate will be capped at RM30 a month for car owners, and RM12 a month for motorcycle owners.

• The government will reimburse the subsidy once every four months, so car owners will receive RM120 and motorcycle owners will receive RM48 every four months. The payment method will see cash being directly credited into the recipient’s registered bank account. The first payment is scheduled for April 2020.

• The household income of the recipient must not be more than RM4,000 per month.

• To qualify, a recipient can only own a maximum of two cars and two motorcycles at any one time in his/her household. See the info-graphic panel above for a clearer picture of what vehicle combination qualifies and what doesn’t.

• For cars, the pre-requisite is that the engine displacement must be:
  – 1,600 cc or below
  – or above 1,600 cc, but only for cars that are 10 years old and above

• For motorcycles, the pre-requisite is that the engine displacement must be:
  – 150 cc and below
  – or above 150 cc, but only for motorcycles that are seven years old and above

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