KUALA LUMPUR: Cash transfer will be the best method for the implementation of targeted subsidies.
Former second finance minister Datuk Seri Johari Abdul Ghani said the government needs to be careful with the implementation to ensure not too many people are left behind.
"When too many are left behind, those who are not included in the subsidy will see a sharp increase in expenditure and we will face a one-off spike in inflation.
"We need to see the mechanism but if it is cash transfer, it would be easier to conceptualise" he said during a pre-budget analysis hosted by TV3 today.
With the targeted subsidies, Johari said the middle 40 (M40) income group would also be affected as they cover a wide group of people.
"What I would suggest is for the government to implement the targeted subsidy gradually in the period of five years. Government has to be dynamic on this. We need to brainstorm. I think cash transfer would be the best," said Johari.
Taylor's University philosophy, politics and economics programme director Prof Ong Kian Ming concurred with Johari's suggestion, saying it was the "right and easy" mechanism to be implemented.
He also suggested for the assistance to be given monthly.
"Maybe the government can give the cash transfer monthly instead of once every three months. If the cash transfer is given to every B40 or M40 via their e-wallets monthly, then the assistance would be more obvious and felt by many," he said.
In the 2024 Budget, Prime Minister Datuk Seri Anwar Ibrahim announced that subsidies will amount to RM81 billion this year, which is higher than the RM64 billion budgeted previously.
He said the subsidy mostly benefited the rich and 3.5 million foreigners.
To prevent leakages, the PM said the government will rationalise subsidies in phases.
Savings from the subsidy will be transferred to "Sumbangan Tunai Rahmah" which is expected to climb up to RM10 billion.