CJMY
The Consumers Association of Penang (CAP) has expressed its support for Prime Minister Anwar Ibrahim’s recent announcement regarding revising electricity subsidies in Malaysia.
The decision aims to address the issue of disproportionate subsidies for households that consume excessive amounts of electricity, particularly those in the Top 20 (T20) income segment.
CAP applauds the government’s commitment to ensuring the fair distribution of subsidies and promoting responsible energy consumption.
Non-subsidized electricity rates for T20 households
According to a media report in August 2022, the government had allocated approximately RM6.51 billion in electricity tariff subsidies for that year.
However, the current subsidy system favours T20 households, who tend to consume more electricity due to their use of power-hungry electrical appliances like air-conditioners.
CAP agrees that it is essential for T20 households, known for their usage of numerous energy-intensive appliances, to pay non-subsidized electricity rates. This approach aligns with the principle of fair distribution, ensuring that subsidies primarily benefit households in need.
To further encourage cost-saving measures, CAP suggests that T20 households explore alternative energy solutions, such as installing solar panels. By utilizing renewable energy sources, these households can reduce their electricity costs while contributing to a more sustainable environment.
This shift toward non-subsidized rates for T20 households demonstrates a commitment to responsible energy consumption and incentivizes the adoption of eco-friendly practices.
Targeted subsidies and reduced leakages
The government’s decision to revise electricity subsidies reflects its commitment to targeted assistance and reducing leakages in the subsidy system.
By redirecting subsidies from T20 households to the Bottom 40 (B40) and Middle 40 (M40) segments, the government aims to ensure that subsidies reach those who genuinely require financial support. CAP fully supports this approach, as it promotes social equity and allocates resources more efficiently.
In September 2022, when comparing electricity prices across nine of the ten ASEAN countries, Malaysia stood out for having the third cheapest household electricity rates, surpassed only by Myanmar and Laos.
Therefore, maintaining subsidized rates for B40 and M40 households is crucial to assist low- and middle-income families and mitigate the impact of potential price increases. To offset the costs, the government plans to charge higher rates for significant factories, while exempting the agriculture sector, small and medium-sized enterprises (SMEs), and critical sectors such as food production.
Anwar emphasized, during the Prime Minister’s Question time session at the Dewan Rakyat today, that the revised subsidy scheme excludes the T20 households from electricity subsidies and haj financial assistance.
The Main Database (PADU) will play a crucial role in managing and coordinating the distribution of subsidies to eligible groups, ensuring a more targeted approach. Anwar explained that this exclusion aims to facilitate the granting of subsidies in a manner that benefits those in genuine need.
These new policies implemented by the unity government’s administration demonstrate a strategic response to the challenges posed by a shrinking global economy. By addressing the disparities in electricity subsidies, the government aims to promote the fair distribution of resources while encouraging responsible energy consumption among high-income households.
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