Second Finance Minister Tan Sri Nor Mohamed Yakcop revealed last week that the new scheme for subsidised fuel will be revealed in a few month’s time by the Prime Minister, and will benefit low to middle-income earners, with the rich having to pay more together with all the higher tax brackets that they are already paying.
The Cabinet Committee on Inflation will be meeting tomorrow to discuss various measures on how to solve the problem of increasing fuel subsidy costs, which according to current calculations, will amount to RM45 billion this year based on an oil price of US$120 per barrel.
Indonesia is tackling the situation by providing cash relief directly to the poor – an amount of US$1.5 billion in total. On the 24th of May 2008, Indonesia raised the prices of fuel products by up to nearly 30%.
Under the cash relief scheme, US$10 will be given every month over the next 1 and a half years to 19 million families, hardly enough to compensate for the rise of the fuel itself and the domino effect it will have on other products like food.