Once again the government is planning to change it's strategy on how best to channel subsidies on petrol to the targeted section of the population. And once again many opinions and suggestions on food and fuel subsidies from the public are being volunteered. I, therefore, take this opportunity to also give my comments and suggestions.

It is a fact that the lowest income wage-earners in Malaysia cannot survive solely on their incomes alone. Therein lies the need and reason for subsidies.

Unfortunately, besides leakages and losses due to smuggling and other criminal activities, the higher income earners and the wealthy actually also end up as legal but unintended beneficiaries who benefit more than the targeted low income group because they use more subsidised petrol and consume more subsidised food items.

The actual amount spent by the government on fuel and food subsidies is not clear because different branches of the government quote different figures. Even the same people quote different figures at different times.

However, they all seem to agree that the government spends tens of billions and not just billions of ringgit per year on such subsidies, and also that billions are lost to smuggling and other criminal activities.

Instead of spending tens of billions of ringgit - most of which goes to unintended beneficiaries and fraudsters - why not give a mere portion of this money directly to the intended beneficiaries?

Since the government, rightly or wrongly, has decided that the country is not ready to legislate a minimum wage system, then create a system whereby those households with a total household income of say, below RM20,000 per year are eligible to claim a direct subsidy of say, not exceeding RM6,000 per year per household.

The actual amount of subsidy eligible should depend on the claimants total household income. There are about six million households in Malaysia. Assuming that about 20% (1.2 million) are eligible for an average subsidy of RM4,000 per household, the total subsidy that the government needs to spend per year will be RM4,800,000,000 (1,200,000 x 4,000).

RM4.8 billion may be a big amount of money but is only a fraction of the tens of billions which the government claims to be spending at present. More importantly, this money will go directly to the targeted beneficiaries.

No doubt there will be fraudulent claims but even if such claims amount to hundreds of millions, it is still a lot less than the billions being lost under the present system of subsidies.

In any case the perpetrators of fraudulent claims are subject to criminal prosecution if caught whereas under the present system of price subsidy, billions are going legally to unintended beneficiaries besides more billions being lost to smugglers and other criminal activities.

The only serious setback I can think of for such a system is that the present BN government may make race, religion and political party affiliation as qualifying requirements.