SHAH ALAM – The government is expected to generate annual savings of between RM10 billion and RM12 billion after foreign nationals are no longer allowed to enjoy subsidised items such as packet cooking oil and RON95 petrol.
Universiti Sains dan Teknologi Malaysia (MUST) economist Professor Emeritus Dr Barjoyai Bardai said the estimate took into account leakages including smuggling to neighbouring countries prior to the implementation of the policy.
“We estimate savings from the ban on selling subsidised packet cooking oil at around RM2 billion.
“The amount may not be very large, but at the very least it is an effort to plug gaps caused by inefficiencies in subsidy control,” he said.
Barjoyai said savings from RON95 petrol were expected to reach up to RM10 billion, noting that the subsidy had previously been the largest.
“This subsidy was not only enjoyed by foreign nationals in the country but was also smuggled to neighbouring countries.
“So, I see the government’s move as very positive and something that should have been implemented earlier, as Malaysia has suffered significant losses by providing subsidies to those who were not entitled to them,” he said in an interview with Sinar Harian.
Asked how the savings could be utilised, Barjoyai said one option was to increase the amount of assistance provided to the public.