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The need for a tiered subsidy system

The need for a tiered subsidy system

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Malaysia’s headline inflation increased 3.4% year-on-year (y-o-y) in June, largely attributed to the significant surge in the prices of food (+6.1% y-o-y) and transport (+5.4% y-o-y).

EFFORTS to rebrand the fuel subsidy are still proceeding, especially after the recent announcement that the government is testing the mechanism for targeted subsidy which comes in the form of e-wallets.

Notwithstanding, the effectiveness of the proposed mechanism remains a questions especially from the aspect of government’s fiscal position and the risk of inflation.

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