Petrol subsidies based on JPJ data won't work, say experts

Automotive experts have panned the government's suggestion to subsidise RON95 petrol according to data from the Road Transport Department (JPJ), saying this assumes that vehicles with large engines are a sign of wealth. 

Speaking to MalaysiaNow, Hezeri Samsuri said luxury cars were now being produced with smaller engine capacities than a Naza Ria MPV. 

"These days, the automotive world has to comply with strict carbon emission controls," he said. 

"Engines are getting smaller, even for supercars, which is why the world is turning towards electric vehicles." 

Domestic Trade and Cost of Living Minister Salahudin Ayub had proposed the provision of targeted subsidies according to vehicle type. 

Speaking after talks with the finance ministry on the mechanism for subsidies, he said the JPJ database could be used to identify the horsepower of cars eligible for subsidised RON95 fuel. 

Petrol, diesel and gas subsidies are among the country's highest expenditures, amounting to some RM13.2 billion this year.

Prime Minister Anwar Ibrahim had said that subsidies should be given in a targeted manner instead of being enjoyed by the rich.  

Hezeri, who operates the Careta.my website, said leading carmakers around the world were moving towards the production of small-capacity, yet powerful, engines. 

"A small turbo engine can produce exhaust fumes with only a low amount of carbon," he said. 

"It has nothing to do with our road tax or fuel prices." 

Economic analyst Ahmed Razman Abdul meanwhile said that information on vehicles' engine power could help. 

However, he said this should be supplemented by data on cash aid recipients and information from the Inland Revenue Board. 

"There are some from the B40 income bracket who buy used cars with large engine capacities at a low price," he said. 

A Mercedes Benz E200 or W210 made in 2000, for example, can be bought for under RM10,000 with spare parts available for cheap. 

Hezeri said existing data could be used, with cash payments given to those who are eligible. 

Fuel prices meanwhile could be entirely floated except for public transport and industries that deserve to be helped. 

He said the monitoring aspect would likely run into problems as well, as subsidies based on engine capacity or horsepower will see many modifying their vehicle engines. 

"At petrol stations, who is going to check how much a car's engine capacity is?" he said.