When the Prime Minister’s Office released the full announcement on the new petrol and diesel prices for Malaysia as well as the new subsidy structure last week, it was mentioned that the RM625 subsidy would be issued for cars (and RM125 for bikes) with road tax renewable between the 1st of April 2008 until the 31st of March 2009, with payments to be issued via postal orders from July onwards.

At that point we were unsure on what this meant as it seemed to indicate that the RM625 subsidy was a one-off thing only.

Second Finance Minister Nor Mohamed Yakcop has cleared up this uncertainty on the subsidy, clarifying that it is indeed a one-time payment only, and not a yearly thing as some had hoped. Anyone who is planning to cheat the system and try to profit from a yearly subsidy scheme by stocking up on old cars that are nearing scrap-metal condition can forget about it now.

It is still not clear at the moment whether cars and bikes with engine displacements above 2000cc and above 250cc respectively would have their road tax cut by RM200 and RM50 permanently, or just for one year as with the fuel subsidy.

Price controls are supposed to be lifted in August, which is when fuel price controls are to be lifted and allowed to be determined by market rates, free of government restrictions. The government will maintain an RM0.30 per litre subsidy on whatever the price is, which means if the market rate is RM7, we will pay RM6.70 per litre. With crude oil prices touching a record high of US$139.12 a few days ago, its anyone’s guess what August’s fuel prices will be like… and I shudder to think how much it’ll cost to refuel next year.

I guess compared with our per capita income, cars are now officially a luxury and thanks to our pathetic public transport system, a necessity at the same time! We will have to find alternate ways to cut our fuel bill without relying on public transport, such as minimizing travel and car pooling.

UPDATE: Datuk Shahrir Samad says the current prices of RM2.70 per litre will be maintained until March 2009, so there will not be any lift of price controls in August 2008. However looking at the government’s flip flop style of dissemination of information, this intention may change anytime in the future without warning.

Related Posts:
New Petrol and Diesel Prices Effective 5th June 2008