THE petrol subsidy debate is a great divider. It polarises people. On one side of the divide — let’s call them the “abolishers” — want it to be removed. On the other side — the “retainers” — want to keep it, but targeted to only the deserving.
We are all for petrol subsidy to the deserving. And that too as a short-term measure. There is a good reason for this. Petrol subsidy as an economic instrument is a great equaliser, especially given the Malaysian context.
There are some three million Malaysians in the bottom 40 per cent (B40) earning just over RM4,000. Among them are more than 24,000 living on an income of under RM1,000 per month.These are cogent reasons for petrol subsidy.
But the question is: how does one ensure only the deserving get it? It is not going to be easy but it must be done. Otherwise, the rich will get what is meant for the poor.
Bank Negara Malaysia’s Annual Report 2014 tells how that can happen. Of the blanket fuel subsidy given in 2009, only 14 per cent reached the B40 who were then earning between RM1,050 and RM1,900. Much of it — 42 per cent — went to the top 20 per cent.
This the new mechanism must avoid.
The new mechanism — slated to commence in the second quarter of 2019 — is expected to benefit 6.6 million vehicle owners at a cost of RM2 billion to the government. But how the government gets the RM2 billion worth of fuel to the deserving is the key.
One way is to use the identity card to target them . This will ensure that only the deserving have access to the subsidy.
But there is a catch.
Malaysian identity cards do not include income information, though it is a smartcard. Should it?
This is debatable.
Malaysians have very low trust level of the authorities for safeguarding personal information.
It is common knowledge that our personal data given to hospitals, government departments and telcos are being freely traded.
Depsite the Personal Data Protection Act 2010 no big companies have been hauled up for data breaches.
Another is by way of petrol subsidy cards issued by oil companies.
Whatever mechanism the government decides on, it must make sure there is no room for human intervention. A small space is all that is needed for leakages to occur.
For the longer term, though, the government needs to work towards removing the petrol subsidy. From the cost angle alone, RM2 billion is a lost opportunity cost to the government.
This money can be used for more productive purposes: infrastructure, healthcare and education.
The way forward is for the government to build a better public transport system so that the B40 and M40 can do away with owning their own vehicles.
Our southern neighbour Singapore has done a good job of it. Trains and buses are clean and arrive and leave on time. Taxis are metered and drivers do not fail to use them. Haggling fares lands taxi drivers in court.
This we must learn to emulate. If not, petrol subsidy it is for a very long time.