Analysts say the government will do better by removing the
fuel subsidies altogether and returning handouts to the most needy of society,
rather than the multi-tiered fuel pricing proposed. 
In recent years, Malaysia has shielded its citizens from the
full brunt of surging crude oil prices with fuel subsidies of around RM24
billion annually. That has exacerbated the government's budget deficit, one of
the region's biggest as a proportion of gross domestic product.
To shore up its finances, Malaysia cut the subsidies in
September 2013 and then again this month. That raised the price of petrol and
diesel, stirring public debate on inflation and living costs.
- The subject is growing ever more tender as Malaysia heads towards implementing a 6% goods and services tax in April next year.
- Economists say a window has opened up for Southeast Asia to consider dismantling subsidies as global crude prices sink to multi-year lows. But instead of biting the bullet and pledging more market-oriented fuel prices, Malaysia earlier this week proposed tweaking its subsidy system.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah
said on Monday that the government is considering implementing a three-tier
fuel subsidy mechanism next year under which some of the population will be
fully subsidised and some not at all, depending on how much people earn a
month.
Critics of Prime Minister Datuk Seri Najib Razak's economic
stewardship say it is a tactic to ensure that the majority of society continues
to be subsidised, especially poor but politically important states, such as
Sabah.
"The whole idea of subsidies is you target the lower
income, and the sad thing is subsidies are also a reward programme," said
James Chin, a professor of political science at the Malaysian campus of
Australia's Monash University.
Under the proposed tiered mechanism, individuals earning
less than RM5,000 a month will be eligible for a full subsidy.
Those earning between RM5,000 and RM10,000 would get a partial subsidy and those earning more than that would get nothing.
Those earning between RM5,000 and RM10,000 would get a partial subsidy and those earning more than that would get nothing.
But the median monthly salary for Malaysia's 9.3 million
workers stood at RM1,500 last year, according to a government report published
in August. That suggests at least half of the population will continue to get
fuel subsidies.
Source: The Malaysian Insider...More...
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