So, come December 1, RON 95 petrol and diesel will no longer be subsidised, and their pricing will be set via a managed float, similar to the one employed for RON 97 petrol. Good, or bad news? A few research firms have offered their takes on the issue.
According to a Bernama report, RHB Research Institute believes the move can ease the government’s subsidy burden, since plummeting global crude oil prices will impact oil revenue negatively, as well as put pressure on the government’s budget deficit.
“We do not expect the move to impact the economy negatively, as we believe consumers as well as businesses, can adjust to it and will likely get used to it over time. The savings from the fuel subsidy can then be used for more productive purposes such as development and improve the country’s competitiveness,” the institute said in a note.
RHB Research said the managed float system will likely prevent businesses from simply raising prices each time the fuel subsidy is cut. “We believe the strength of economic growth will likely be a more important consideration, relative to inflation for monetary decision in 2015, given the challenging global economic environment,” it said.
Meanwhile, Kenanga Investment Bank expects little to no impact on inflation, as October’s hike already brought the fuel price close to the unsubsidised rate. It added that this should have minimal impact on the monetary policy which the research firm feels will be more concerned about weaker global growth next year.
“Nonetheless, the move will definitely help the government towards fiscal consolidation and making the fiscal deficit target of 3.5 per cent of gross domestic product in 2014 and 3.0 per cent in 2015, more than likely, achievable,” it said.
CIMB Economic Research had similar sentiments, telling The Star that the move will have a benign effect on overall inflation as the average market price is close to the current fixed retail price, but if oil prices continue to drop, this may change.
“We estimate that every 5 sen decline in RON 95 prices shaves off about 0.2% of the consumer price index on-month. If oil prices decline further, this would help defray the spike in inflation as a result of the Goods and Services Tax (GST) implementation,” it told the English-language daily.
“Moving forward, falling global oil prices put the possibility of lower inflation on the table, given a more direct pass-through of falling global oil prices to domestic pump prices.
“The savings from the government’s subsidy bill will allow it to better dictate the direction of the fiscal deficit. If government revenue streams from oil-related revenues, GST and income tax collections remain intact, the government can re-channel the RM12 billion earmarked for fuel subsidies through BR1M cash handouts or other means of targeted assistance.
“Otherwise, the savings can be used to offset any potential declines in revenue as a result of slower growth or lower oil prices in order to keep its deficit reduction on target,” CIMB Research told The Star.
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz has also told the English-language daily that no inflationary impact is expected due to the fuel subsidy removal, adding that any decision to review the nation’s monetary policy will be made after taking the risk to inflation and other developments on growth into consideration.
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This is Madness!!
Madness???? This is Sparta!!!!!
“The savings from the government’s subsidy bill will allow it to better dictate the direction of the fiscal deficit.”
Joke of the year, can’t stop laughing… HAHAHA…
Stop wasting money, then you will solve your bloody fiscal deficit!!
Sparta ??? this is madness!!!
Remove car excise duty ? Nobody even think about it.
It’s fun to see rakyat suffer pay 75% car excise duty.
Cant afford import car? Just buy axia or iriz.
Axia, you may as well say, can’t afford a house? Just stay in a box.
I can’t afford an axia or iris too. but only a Honda motor bike.
excise duty mention on every freaking post regardless of topics. come on la. simple math; if you have money then by all means by the imported ones. if got no money then by the cheaper ones la.
Excise duty is mention all the time because the duty is ‘very high’ as compare to majority of the countries in the world. The cheaper P1 and P2 are more or less force down the throat of the middle class citizens.
I don’t think Govt will reduce Car Duty Excise unless Govt Imposed Fuel Tax like others country after fully abolish subsidy…
To me, Govt should revive Excise Duty comparable with loss of income from Fuel Tax cause right now it look like Govt Charge Excise Duty even higher than Govt loss on Fuel Tax or it could be other way round. Due to Govt didn’t transparent enough, we doesn’t know exactly the diff on this issue….
I think tax is already applied? the tag said” harga sebenar termasuk CUKAI”?
Just think in Gov point of view.
Do they even think of Rakyat point of view?
Everything keep increasing but salaries still same.
Do Gov ever consider Rakyat situation?
Dooms day is here and as where the fair Car selling price??
Gov shiting with Rakyat and all lies with the research been make.
Who care about Rakyat? As long as government make the public servants (RM1.2mil ppl, don’t play-play) and the cronies happy, votes stay in next GE, who care about rakyat?
You bankrupt your problem, you still have to pay taxes.
There are 2 things we can’t avoid in our life: death and taxes.
agreed with all
just about the salary.. it not gov who controls the salary
Actually they do, also the economoy plays a big role, which they are screwing up fantastically.
The simplest question to ask here.
What will happened to the think tank if they said negative thing about fuel hike?
I think they will be fired and strip off all title and privilege they have, and then need to work at the gas station for the rest of their live for many generation to come.
Subsidy or no Subsidy, we’ll we all know by 1/12/2014 there will be no more subsidy. How ever for me, there are few things I would like to highlight such as : 1.where does all the subsidy funds will be rechanneled at?. Will we be getting better public service from the government ? If we are paying more in fuel & taxes we might as well demand better public service & GOVERNMENT as well.
I gip you answer:
1) 1MDB – I Manyak Debt, Bang.
2) Fat Mama Cincin Foundation
3) Cows Bungalow (Condo too small oready)
4) Projek-projek Gajah Putih Nasional.
Sekian, Terimakasih.
“government can re-channel the RM12 billion earmarked for fuel subsidies through BR1M”
How stupid and crazy is that? Save money only to waste it later! Bangang!
That itself is an achievement!
And to all those research firms, better all of you keep quiet lah.
If government can remove subsidy for ministers, also can use for another productive purposes…
Tired with this news oledi… looking forward on automotive industry news much worthy… what will coming & wouldn’t make it to our shore…
Between politicians like Rafizi and learned individuals in their area of expertise, I would trust the latter.
Better tell me bitter truth than sweet lies.
Good decision by government. Any right thinking Malaysian will support this move.
Seems like you’re the one of the kind “right thinking” Malaysian. Bravo.
Educated and sensible ones if you like to put it that way. Do you even economics?
Are you sure you’re speaking out of all honesty on behalf of your unblinded self conscience, your children’s future, and their children’s future ?
Get a grip.
If that’s true, i must be “left thinking”. And so are the rest of the Malaysians who are educated enough to know what bullshit this is.
No matter how much we whine, it will not change the situation. What we can do is educate our friends and families in rural areas to vote to change the govt when the time comes
Hopefully the new govt can correct the wrongdoings
Just take out the subsidy and invest in our country-development.
Urm, wait….. so you want to pump the money into BR1M?!
Oh please la… all these research firms analysts is earning at least 10K a month and to protect their @55, they will beat around the bush.
If you want to give us free world/market petrol prices, please give us free world/market car prices.
Either expensive car, cheap petrol or CHEAP car, EXPENSIVE petrol. No other countries screw their Rakyat both ways.
R sure they earning 10k a month? Political secretaries are earning much more like 20k..politician even better…you know in malaysia to become rich is to become politician..thats why lawyer even surgeon ditch their jobs to become politician…so called democracy..
@yoby.
I beg to differ. We got one politician from MCA switch career to act in porno movie. How about that?
Saving are for !mdb rediculous loans.
now where’s my old dusty bicycle ..
Gov may use the money to search for MH370 but still……Lower the car prices specially Hybrids!!!!!!
when pak jokowi reduce the fuel subsidy, the indo stock rose and the rupiah gained a bit of strength against usd. I think all these analyst bet on the same thing to happen to Malaysia. At the end of the day, only god knows what will happen.
&@%#*&!!!!
Take it or leave it hahaha…
when crude oil price goes up, government will increase price because they say they cannot afford to subsidise further.
when crude oil price goes down, government will not reduce price because they say we’re oil producing country and it has impacted our oil revenue.
So either up or down, rakyat will benefit nothing from it except for more burden.
Really don’t make any sense.
Minyak naik barang naik semua barang naik still rakyat 1 malaysia love umno bn and their cronies become richest. How in the world so that the people would change their mindset for better government.
Savings from the government’s subsidy bill will allow new budget to change road sign =D
ok now where my cheap car? u cannot have expensive petrol and car in the same time..gomen used to compare lower car ownership cost to justify high car price..now its not seem reliable anymore..cut down the car price la st***d gomen
bernama is government linked news agency whereas thestar is owned by mca. so do you think they will dare say anything bad about the government?
if want to remove subsidy for petrol then reduce price of car tax. most of us a paying monthly installment bcos of tax.
this is the silliest joke for year 2014, even it is a month away….
they say sugar subsidy removed bcoz of rakyat health.
petrol/diesel subsidy removed bcoz of Federal Gov vault health? to plug leakage?
i don’t see any new school/hospital build around my area(30km radius)…. no need dream of LRT or upgrading public transport(only seen new bus stop post but no bus since a year already)…
Tonight,if Israel launch a nuke strike at Teheran,the Dec 2014 price of oil will skyrocket to above USD 120 per barrel.
The professor’s daughter at Bank negara says “no inflationary impact”.She is like the MCA junior minister,talking crap and junk.She is not affected cos top civil servants are chauffered driven to work.
What about Samelorr driving his Toyota?KZM…driving to work?and all our dear forum contributors,driving hydrogen powered Toyotas?
if the price is reaaaaaallllyyyyyyyyy following the floating price i don’t mind… when oil price come down below RM2.43 they will tell you, yeah we decided to run fuel tax to maintain the price at RM2.30.
end of story.
Then Govt should reduce Car Excise Duty by 18% to 25% at least coz they turn subsidy become income..
It’s stupid that so called ‘research firms’ only focus on crude oil price decline, but what if it increases? It will happen for sure eventually. Speaking of government saving up the money allocated for fuel subsidy. Really?? Look at the 2015 budget tabled recently!! How many percent allocated for administrative purpose and how much allocated for national development?
Well, first you are buying petrol at market rate when you are living in a oil producing country.
you are paying the highest excise duty (without foreign currency excahnge rate) in the world and yet buying petrol at market rate.
Secondly, you cannot migrate to any other country in this world because you do not have any saving in bank and you cannot withdraw your EPF savings until you are 50 (account 2 only) or 55 (account 1) (by the way, EPF is proposing to extend the withdrawal age to 60).
What you earning now is not enough to pay your monthly spending, unless of course like the government said, eat instant noodle, biscuit and drink water only.
Even then, you still cannot afford to buy your first house or first car, for that matter because you cannot get bank loan approved.
Even somehow you can get bank laon for a house, you still cannot pay it off after you have retired at 60?
Said you are above 30 years old and having a 35 years bank loan.
What’s there to be surprised when it takes 3 generations of a Japanese family to pay off housing loan?
Well, in that case, myself, my children, my grand children and all my next generations will be forever slave to bank forever!