Revista Internacional de Economía y Ciencias de la Gestión

THE DETERMINANT OF LATENT INCOME ON WHO IS ELIGIBLE TO RECEIVE ENERGY SUBSIDY. A CASE IN MALAYSIA.

Abstract

Kwang Jing Yii, Amran Ahmed, Caroline Geetha, Vivin Vincent Chandran

Up to date the Malaysian government has been providing subsidy for various products like energy sources, health, food, education and so on. Among the subsidy given by the government, the most significant amounts go to energy subsidy. Misallocation of resources may lead to leakages and cause national deficit and eventually lead the country to bankruptcy. Therefore, the aim of this study is to identify the eligible individual to receive subsidy based on each energy resources. The study used cross sectional data collected from 500 respondents using structured questionnaire to determine the energy consumption of each energy source by households in urban and rural areas. The latent income threshold value determined indicates the benchmark used to examine the eligibility of subsidy recipient for each energy resource. The findings show that leakages exist in the consumption of energy when subsidies are given and not given. The latent income for urban area to receive energy subsidy should be distributed to those who earn below RM3000 while for rural area should be below RM1500.