Targeted subsidy should be expanded to avoid subsidy leakage - Tengku Zafrul

He said the government currently bears the cost of subsidies for petrol, diesel and liquefied petroleum gas (LPG) as well as the cost of subsidies for cooking oil.

"In line with the increase in the market price of palm oil, cooking oil subsidy expenditure in 2020 was RM500 million and had increased more than four times to over RM2 billion in 2021 and continues to show an upward trend in early 2022," he said in the 88th Laporan Kewangan Rakyat released today.

The government has also taken new measures such as introducing subsidies for chicken and eggs with a subsidy cost of more than RM130 million a month to protect the people from sharp price increases.

"This approach is not targeted and the price subsidy of either petrol or chicken benefits all consumers irregardless of income level and consumption level. With that, the government now covers billions of ringgit in subsidies for the high-income group which should be more appropriate to spend for national development and assistance to those in need," he said.

In Budget 2021, RM28 billion had been allocated for subsidy purposes. However, this year the government had to cover a significant increase in subsidies for petrol, diesel and cooking gas or LPG of up to 10 times, increasing to more than RM2 billion in January 2022 compared to RM200 million for January 2021.

"If the world crude oil price remains above US$100 per barrel, the total subsidy for the whole of 2022 is expected to reach RM28 billion, compared to RM11 billion for 2021," he added.

To date, the government has allocated subsidies and educational assistance of RM7.7 billion, subsidies for agricultural entrepreneurs of RM2 billion and transportation subsidies including rural air services of RM1.9 billion.