KUALA LUMPUR: The government has been urged to consider not giving fuel subsidy but rather encouraging more use of renewable energy.

Economist and former Council of Eminent Persons member Dr Jomo Kwame Sundaram said fuel subsidies were major distortion in markets.

“The government has been trying to reduce this subsidy. Fuel subsidies in all countries are basically benefit middle class rather than the low income group,” Jomo said on the sidelines of the Khazanah Megatrends Forum 2019 here today.

He said the government should rethink who benefit the most before subsidising the rakyat.

“We have to get away from the dependence on fuel. Malaysia is one of the countries with the highest car ownerships in the world.

“Subsidies must be directed towards helping the people who are really worst of. Subsidies should be progressively redistributed to help people who are in need,” he added.

The government yesterday announced the targeted fuel subsidy initiative to replace the existing fuel subsidy of RON95 to gradually float RON95 petrol price from January next year.

Domestic Trade and Consumerism Minister Datuk Seri Saifuddin Nasution said only Bantu Sara Hidup (BSH) recipients were qualified for the fuel subsidy and gave assurances that the gradual move to lift the RON95 petrol subsidy would be done in a manner that would not burden the people.

Jomo said the government should also need to think about other development opportunities including the move to biodiesel.

“The government has made a commitment to increasing the use of renewable energy and that should be the priority,” he said.

The government is likely to save RM1.26 billion in electricity tariffs following the cancellation of four independent power producers (IPP) projects in July last year.

“When IPPs are given to companies, many of them still generate electricity using diesel but now they are using coals, which is going backwards.

“Most of the coal is not clean, as a lot of sulphites will be emitted into the atmosphere and the health of the people being adversely affected,” Jomo said.

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