BUDI95 can be the engine that drives reform in terms of government spending, reducing deficit and increasing productivity, says an economist.

PETALING JAYA:

The government’s decision to anchor the new BUDI95 initiative to the MyKad will help reduce leakages and improve the country’s fiscal management in the long run, an economist said.

Ahmed Razman Abdul Latiff of Putra Business School said using the MyKad would ensure that only Malaysians are eligible to purchase RON95 fuel at RM1.99 per litre, beginning Sept 30.

He said finance ministry data indicated that 20% of subsidised petrol was being consumed by non-Malaysians.

“The government is taking a sensible, organised and more transparent approach to managing the country’s finances,” he told FMT.

Razman also said that the government’s decision to cap monthly purchases at the subsidised rate to 300 litres would deter hoarding and cross-border smuggling.

He said the successful distribution of Sumbangan Asas Rahmah (SARA) aid via MyKad demonstrated the system’s effectiveness.

“It has set the precedent for the distribution of other types of aid in the future,” said Razman, adding that it was logical that the government would adopt the same mechanism for the BUDI95 scheme.

Earlier this year, finance minister II Amir Hamzah Azizan announced that the government had decided to premise the implementation of targeted subsidies on the MyKad, citing the success of its use to disburse cash aid under the SARA scheme.

He said the roll-outs would be more “efficient and inclusive”, as all Malaysians hold the national identification card.

On Tuesday, home minister Saifuddin Nasution Ismail said the government had synchronised data from the national registration department (JPN) with the finance ministry to curb the misuse of MyKads in subsidy claims.

Economist Idham Razak of Universiti Teknologi MARA (UiTM) said the BUDI95 programme was not just a short-term solution to help reduce the financial burden on consumers but a stepping stone to holistic and sustainable fiscal reform.

He said subsidy rationalisation was vital to free-up funds which could be used to invest in infrastructure, education and innovation, given the country’s limited fiscal space and debt.

“BUDI95 can be the engine that drives reform in terms of government spending, reducing deficit and increasing productivity.

“It also has the potential to maintain or increase the country’s credit rating,” said Idham.

LatestHeadlines

MyKad usage in BUDI95 roll-out will reduce leakages, says economist

Putra Business School's Ahmed Razman Abdul Latiff describes it as a sensible and transparent approach to managing the country’s finances.