Tuesday June 24, 2008

Fuel subsidy reform to be continually improved

PUTRAJAYA: Malaysia's fuel subsidy reform will be continually improved to ease the burden on the low- and middle-income groups.

It would also plug leakages, increase savings and make the economy more efficient, Senator Tan Sri Amirsham A. Aziz, Minister in the Prime Minister's Department in charge of economic planning, said yesterday.

More projects would also be offered on a tender basis to ensure competitive pricing, he told Bernama in his first one-on-one interview after being appointed to the Cabinet.

He said the money saved from the fuel subsidy reform would be used to increase food supply, ensure food security and cap prices at affordable levels.

The Government was also looking at a comprehensive plan to improve public transportation services.

As for the rebate for vehicle owners, Amirsham said the Government was considering a MyKad solution based on the principle of fuel usage as opposed to cash rebates as the latter was not equitable as it was not based on usage.

“The subsidy reform exercise will plug leakages in the subsidy system and ensure only intended target constituencies, such as the poor as well as low to middle groups benefit from the assistance,” he said.

Besides cash rebates to vehicle owners, the Government was increasing the social safety net by providing more for disabled people and ensuring low-income electricity users would not be affected by the new tariffs.

Amirsham said the country's economic growth was expected to bounce back after “adjustments” had been made for the higher fuel prices in the country.

He estimated that Malaysia's gross domestic product would be around 5% this year as opposed to a forecast before the fuel price hike of 6% to 6.5%.

“The interests of the rakyat must come first and the Government is doing all it can to ease their burden,” he said. – Bernama