Net household disposable income to be used as measure for targeted subsidies, says Rafizi

Household net disposable income metrics will be used for a more focused distribution of targeted subsidies.

This new approach was announced by Economy Minister, Rafizi Ramli, which will begin in January 2024. The current approach, which focuses on the three general income brackets fails to provide an accurate representation of household disposable income when considering factors such as the number of dependents as well as locations, Bernama reported.

*Image credit: Jupiter

This new approach will be integrated with the recently announced socioeconomic database, Pangkalan Data Utama (PADU), which aims to consolidate socioeconomic information for every household in the country.

It's also considered a more clearer method of understanding household income comparability than just the general groups of B40, M40, and T20. This way, the government be able to refine a host of programs including the targeted subsidies.

The initial implementation will focus on subsidies for electricity and diesel, but if the program proves to be effective, there's a chance that the RON95 fuel subsidy will be thrown into the mix as well.

This, however, will require a lot more consideration as the RON95 fuel subsidy has a much bigger effect on a much larger group here in the country. The effectiveness of PADU, when it's deployed in 2024, will determine whether the RON95 fuel subsidy can or should be included.