Experts: Adopt diesel template
Scheme's success shows benefits of phased, well-planned rollout
PETALING JAYA: With the impending rationalisation of the RON95 petrol subsidy, experts from the economic and industry sectors have called on the government to draw lessons from diesel rationalisation to ensure inclusive and widespread acceptance.
They stressed the need for clear criteria and a robust verification system to avoid public confusion.
With this rationalisation impacting a broader section of society, continuous feedback and transparent processes are vital to ensure the subsidies reach those most in need.
Tunku Abdul Rahman University of Management and Technology's Centre for Business and Policy Research chairman Assoc Prof Dr Foo Lee Peng said the phased introduction of the Subsidised Diesel Control System (SKDS) 2.0 helped reduce leakages and refine delivery mechanisms.
'The pilot rollout in February, followed by expansion in March, gave the government time to adjust its approach and manage disruptions,' she said.
However, she noted that reforming RON95 subsidies will require stronger public engagement, clearer messaging and inclusive delivery.
'Digital platforms like the Central Database Hub (Padu) can support targeting, but must be complemented by offline support to avoid excluding rural and low-income communities,' she said.
Prof Foo urged the government to reframe subsidy rationalisation not as cost-cutting, but as part of a broader national strategy to strengthen governance, reduce the fiscal deficit and pave the way for reforms such as a carbon tax.
She proposed a hybrid model that combines income-based eligibility, vehicle profiling and digital systems.
She said digital delivery must be integrated with existing databases from the Inland Revenue Board (LHDN), Road Transport Department (JPJ) and Statistics Department, while offline channels should remain available to ensure no one is left behind.
Sunway University economics professor Dr Yeah Kim Leng said the diesel rollout offered a strong example of how good governance and planning can support targeted assistance.
'Producers, suppliers and retailers must fully understand the mechanism and be equipped to deliver it effectively,' he said.
He said a combination of needs- and income-based criteria could help strike a fair balance between reducing government spending and easing the cost-of-living burden on vulnerable groups.
He added that the choice of delivery mechanism – whether through petrol cards, MyKad-based systems or direct cash transfers – must be evaluated for ease of implementation, cost-effectiveness, administrative efficiency and its ability to minimise abuse and leakages.
Economist Dr Geoffrey Williams described the diesel rationalisation as 'completely successful'.
'It reset the system by requiring re-registration, which alone was enough to eliminate misuse by ineligible individuals,' he said.
He said there was 'almost no pushback' and strong stakeholder buy-in, while savings were nearly double what was anticipated.
'This equates to 2.2% of operational expenditure or 8.7% of development spending – a major contribution,' he said.
For RON95, he recommended a tiered pricing system similar to electricity tariffs.
'Consumers receive full subsidy for small volumes. As usage increases, the subsidy tapers off. Beyond a set threshold, they pay full market price,' he said.
This approach, he added, is simpler, fairer and mostly spares low-income groups, while encouraging more efficient fuel use – which also benefits the environment.
Federation of Malaysian Freight Forwarders president Datuk Tony Chia called for a review of the outdated traditional income categories like B40, M40 and T20 to reflect the current cost of living.
Reflecting on the Budi Madani scheme for diesel, Chia said logistics players had to ensure accurate vehicle registration, which, while administratively burdensome, improved transparency and fleet management.
'Similar controls for RON95 could affect the private transport and ride-hailing sectors. Early engagement with stakeholders is crucial to ensure smooth transitions,' he said.
Chia recommended using income tax data to determine subsidy eligibility, urging readiness to identify relevant individual data.
He cautioned against state-level implementation due to worker mobility, which could complicate matters.
To encourage responsible usage, Chia suggested capping the subsidy at RM1,000 for those commuting long distances, with market prices applying beyond this limit.
Universiti Malaysia Sarawak Faculty of Education, Language and Communication senior lecturer Chuah Kee Man suggested leveraging lessons from the Budi Madani scheme to enhance the RON95 subsidy system.
'By linking RON95 subsidies directly with MySejahtera or e-wallets, we could reduce fraud and expedite payments,' he said.
This integration, he said, could facilitate rapid verification and instant notifications, benefiting both the government and users by tracking fuel usage patterns effectively.
With the broader use of RON95 compared to diesel, Chuah said it raised significant data accuracy concerns.
'Some people might fall through the cracks or misuse the system,' he said, recommending cross-referencing data with LHDN or JPJ databases.
He also cautioned that using MyKad at petrol stations might create bottlenecks, disadvantaging households with shared resources.
Advocating for a hybrid approach, Chuah also proposed automatic eligibility for known low-income households alongside an appeal system for others, such as gig workers or those recently retrenched.
'Digital tools must be backed with human checks to ensure no one deserving is left out,' he said, underscoring the need for manual reviews and compassionate discretion for cases that algorithms might overlook.
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