PUTRAJAYA (Dec 23): Putrajaya is likely to unveil its targeted subsidy mechanism "in a matter of months" as it is a financial necessity for the government, according to Economy Minister Rafizi Ramli.
"After three Cabinet meetings [since the formation of government], it is quite obvious that we have to expedite a proper roll-out of a sophisticated and if possible, index-based targeted subsidy system.
"I think, hopefully, very soon... when I said soon, [I mean] a matter of months, rather than years... we will have to decide in 2023, the sooner the better, the actual mechanism, system, index, and the roll-out, not so much because of politics, but because of sheer economic necessity," he told reporters at a press conference on Friday (Dec 23).
While a targeted subsidy mechanism may result in higher inflation, Rafizi gave his assurance that the government will find the "right balance" when it develops the mechanism.
"Our country has no choice in terms of fiscal room or financial capability [to maintain blanket subsidy] unless we move to targeted subsidy [mechanism]. Everyone knows. It is not even a discussion. It is a question of which mechanism that we need to use to determine who gets the subsidy and who doesn't.
"That is the challenge we have now — to ensure not just that the mechanism or index is fair so that there are no leakages, but [what's] equally important is that it can be rolled out quickly. We cannot keep discussing about targeted subsidy [mechanism] for the next four years."
Rafizi said the targeted subsidy mechanism will have to ensure that it is tied to disposable income, household size, and for a certain kind of subsidy, it is also tied to consumption behaviour.
"All these, while quite straightforward, in terms of economy understanding and the story of it, the implementation, [in terms of] what platform, data, data architecture required and laws to amend... these actually would have to land in a matter of months, so that we can tell a date for such a system and approach to be rolled out," he said.