The Malaysian government’s decision to reduce fuel subsidies this year has obviously been a source of debate, as it has sparked fears it may lead to a drastic increase in petrol prices. To that end, an analyst has urged authorities to float the price of RON95 fuel in stages to prevent a price shock that sends consumers and businesses panicking.
Bank Muamalat Malaysia’s head of economy and social finance Dr Mohd Afzanizam Abdul Rashid told Berita Harian that when the fixed price of RM2.05 per litre for RON95 was enacted in September 2021, the gap between it and unsubsidised RON97 was only around 30 sen per litre. That gap has grown to a chasm of RM1.42 per litre, with RON97 now retailing at RM3.47 per litre.
“If we take this figure to be an indicator for adjusting the price of RON95, then the big gap to RON97 needs to be closed. However, it needs to be done in stages so that it does not cause sudden inflation,” he said.
Mohd Afzanizam added that Malaysia last experienced a sudden jump in fuel prices on June 5, 2008 when the price of RON97 was floated, bumping the price up by 78 sen per litre. This caused inflation to surge to 7.7% that month, compared to 3.8% in the previous month.
“There are a few things that need to be monitored with the reduction in subsidies. The first is the quantum of fuel price increase that is needed to reduce the cost of subsidies, which ideally should not be drastic. The second is the frequency of price increases.
“Therefore, the use of an Automatic Pricing Mechanism (APM), in which a new price of RON95 petrol is announced every week [as it is currently], could be the solution. With this approach, the rakyat can better plan their finances,” Mohd Afzanizam said, adding that enforcement needs to be stepped up to prevent business from raising prices of goods drastically.
Not everyone is on board with the idea of a managed float. Prof Madya Dr Aimi Zukhazmi Abdul Rashid, an economic analyst at the UniKL Business School, opined that the gradual increase in fuel prices will not resolve the issue of rising inflation rates.
According to him, there will be businesses that will take advantage of the situation and raise the price of goods several times, using the gradual fuel price increases as an excuse. There’s also the issue of enforcement, as there is not enough government agency staff to oversee every station across the country, especially when it comes to the control of purchasing and mechanisms at the stations.
As such, Aimi Zukhazmi said the price of RON95 petrol should immediately be floated to match market rates, not in stages. “Having just one price increase would make it easier to coordinate the price increase of other products, as certain goods like sugar are still subsidised by the government.
“Such a sudden rise [in fuel prices] will be a cause for concern, as the price of crude oil has been increasing due to the crisis in the Middle East. Even so, a staggered price increase will not be enough to achieve the government’s goal in reducing the country’s fiscal deficit and national debt,” he added.
Separately, the Consumers Association of Kedah has warned the government that the withdrawal of fuel subsidies could have a domino effect on the economy and the rakyat‘s livelihood, the New Straits Times reported. President Yusrizal Yusoff said that rising fuel prices could cause high-income business operators to raise prices for goods and services, which will be passed to the consumer.
He also asked if the government had any actual data on how much fuel Malaysians use in order to ensure a more equitable channeling of subsidies. Yusrizal said that as part of an oil-producing country, Malaysians have the right to enjoy fuel subsidies, adding that the government should focus on revitalising the economy to counter the effects of the COVID-19 pandemic, rather than withdrawing subsidies.
This comes after economy minister Rafizi Ramli confirmed to Bloomberg this week that the government plans to reduce fuel subsidies this year to address its fiscal deficit. As part of this plan, blanket subsidies for RON95 petrol, which formed the bulk of the RM81 billion in subsidies borne by country, will be phased out.
A look at the website of Double, an unsubsidised fuel station in Padang Besar, Perlis to serve Thai motorists, shows the floated price of RON95 petrol to be RM3.47 per litre today, which is exactly the same as RON97. Diesel fuel, meanwhile, retails at RM3.46 per litre.
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In Jakarta Indonesia.. 1liter of RON95 – RM4.60
Remove petrol subsidy = Remove car tax. Agree?
Tesla BYD Ora cat oredy 0% car tax …Apelagi hang mau
Analysis sohai…the reality is preferred 1 time increase price and 1 time impact.
If multiple increase of price by stage will have multiple increase of price, and total up spike will 100% sure higher than single time price hike.
Politicking Analyst
We call them “Politicians”
Now gotta see how “inclusive”
PMX definitions of “targeted”
Key control is Commercial side
transporting Factory-to-Consumers
In Iran and Venezuela with sanctions preventing them from selling is only less than RM1 without subsidy. Why compare with those who sells at higher price instead of comparing with those that sells at lower price? Don’t forget our high car tax, AP, toll, poor infrastructures etc. Always compare with better policies to improve instead of comparing with lousy things that other country does to feel good. Sohai like you will forever be an average Joe. You are nothing in real life and now you know why
deswai Iran and Venezuela r pariah states. Same pariah brown manure minded pipu hadap Tongkat, subsidi, bantuan, spoonfeedings sampai kiamat …Wkwkwkwk
Funny they became pariah state after USA sanctions making them poor. Previously they were some of the richest nations in their region with free education & healthcare. All because they want to be nonaligned with Uncle Sam. So whose fault that throw them brown manure?
@The Truth, I respect you. You really know the truth. Kudos to you. Not many people as smart as you.
As above.
PH Gomen continue to troll millions of Msians
In Hong Kong it cost RM15.3 for Shell FuelSave (from Shell HK website price board).
Fancy filling your MyVi 36L tank for RM550?
Malaysia is blessed with fossil fuel……that will run out in between 15-40 years.
For once we have someone talking some cow sense about gradually reducing the petrol subsidy. Petrol subsidy is like taking steroids. You can’t just stopped at once. Like steroids, petrol subsidy must be weaned slowly as not to caused sudden hardships. I am for reducing the petrol subsidy gradually.
not sure which is better, one shot skyrocket the petrol price and teh tarik increase price 50 cents or one month increase a bit petrol price and teh tarik increase 20 cents per month. whichever way food sellers will cry baby tak boleh untung in their brand new tesla cybertruck
In the markets where the petrol price floats, every week there are changes. But you dont see their latte price doing Yo-Yo.
Is down to the maturity of the market to rebalance itself. Consumer needs to really exercise their rights in their spendings. There will be changes in lifestyle for sure, and it will not be as before.
Subsidy has shielded us from alot of things that, in actual, our income will not be able to afford. But this is at the expense of broader development of the country.
Lafizi had a point when he cited that we dine out too much. In alot of develeped countries, dining out is an expensive affair that perhaps only do 1-2 times a week. But even average salary malaysian dine out almost everyday.
Is our choice. You want cheaper petrol and teh tarik, or you want better public services and health care.
Pakatan Rakyat Leader = Pakatan Harapan Leader
Promises of Pakatan Rakyat for RM1.50/L petrol = Promises of Pakatan Harapan
Stop defending and give us cheap fuel that we voted for!
Everyday increase 10 sen until equilibrium market price needs how many days to archived?
Then every day inflation increase by 10%
Just scrap it.
reduce gradually also bungkus la the b40 and m40…business will take every opportunity every round to increase price…mampos la
Burden to rakyat or lighter on the ruling elites’ pockets?
Reduction should not be more than 10%. The remander will be from government wasted billions of free money that is the cause of price increase and weaker ringgit . Stop wasting the public money, Annuar is a hopeless leader but just another stupid politician !!!
can but please take away the silly tax on cars too
True!!! M’sia has 1 of the crazy prices in this world!!!
When in oposition, they barked that petrol price was to high and burdening rakyat. Now when in government suddenly they wamt a price hike but ot has to be reduced in stage tp not burdening rakyat??? Inikalah!!
Kick this government out. Let me gali the oil instead and tomorrow RON95 will be cheaper.
sappot u brader!!! jom !!! Rakyat cari gali!!!
Tahniah! to those that voted this current regime….btw, since petrol subsidy is going to abolish, why the car duties and taxes still remains? we actually paid the soo called subsidy upfront when we purchase a car! Pls explain
set RON95 at RM2.50 for then all good
There should be subsidy for petrol as Malaysia is blessed with natural resources. But less subsidy. Sudden cancellation will also plunge the economy down as people will cut down on travel .
Malaysia’s reserve were estimated to last for another 15-40 years. We cannot jump from RM2.05 to RM8 (or RM16.5 like HK) overnight so it has to tick up. World reserve has the same expected lifesan (2040 – 2060 to run out)
Renewables (hydro, solar, wind) can power EVs indefinitely. Also EV tech won’t stay at 450km real world, 30 minutes charging and current prices forever. I know EVs are hated now because people think it’s a rich man’s toy but the truth is there are no other viable options *at the moment*
Start by reducing the salary, pension and all the benefits of the ministers first especially the finance and economic minister. Kepimpinan melalui teladan. Otherwise, we better throw them out fast.
I don;t support reducing salaries for ministers. In fact I am happy if ministers get paid a very high salary provided there is a meritocratic system in place where only a person with proven track record be it in their own business or managing a small village. As long ada proven track record from their own hard work, then they get the job. If low pay, who can work well?
If dont like low salary, then dont become minister la
But Jakarta Indonesia vehicle price is a lot lower than Malaysia I believe is not 300%?!
Rich or not we malaysians entitle to this fuel subsidy since our country is an oil producing country. Gov always ask people to create add income but gov cannot add income for the country also. Dont know how to prosper country’s economy but blame to the rakyat. If really want to pull out subsidy, just do it in stages so that maybe the gov can produce more income. Take out other subsidies but not the fuel coz it will affect all sectors. If gov cannot make more income means the gov really useless. Malaysians in kl take the most burden, step out from house kena toll (tax) but still jam, every year inflation rises (tax), and tax rate also same as other states. 360 also kena la people in KL
You are correct @EDY. We pay high tax and high tol but our gov can only provide us with infrastructures and lousy job opportunities. No one will complaint if our government make Malaysia a high income nation with pension for all citizens. At the moment we pay and get nothing. Roads are terrible, drainage system sucks, train system super slow and infrequent, high car prices……All OKU running the country is only good at talking but has no substance to make Malaysia great.
High tax? High toll? You should look up what are the taxation rates in developed countries and the toll/congestion charges there too. We enjoy very low rates on both locally fyi.
Nowadays, governments often prioritize the interests of wealthy moguls and corporations over those of ordinary citizens, leading to a lack of support and even exploitation of vulnerable individuals.
Only Najib can save this nation.
Betul! Betul! Betul! The rakyat has spoken!
Absolute Hell to those who voted PAS PN who kondem our supreme leader Najib to jail.
X cukup kepala basah kena kencing. 2024 diberi pula headshot kpd rakyat. Auto pening kepala rakyat pabila minyak naik nnti.
Bahan2 mentah keperluan rakyat automatik akan naik secara mendadak…
Problem is not enough tax revenue. If they didn’t abolish GST because they want to win election, then there is no need to remove any subsidies. Tax on cars will always remain, so for those who keeps complaining, there is no party in or out of garmen that will get rid of that tax! Next time you vote, look for that party that will being back subsidies!
Things like this should be look really careful, In the short, medium and long term. Our country’s economy fundamentally relies on transport of people and goods on roads. Admit it, we don’t have a good public transportation such as good cargo train network.
Please don’t prolong the PADU mistake and do put the ego at bay.
2008 petrol 2.70, food prices increase
2010 petrol 1.90, food prices increase
GST comes, food prices increase
GST abolished, food prices increase
SST comes, food prices increase
Abolish petrol subsidy, food prices increase
Singapore’s Food Court Price is the best!
literally about same price to Malaysian price,even after conversion.
Just give a fixed amount either yearly quarterly to vehicle owners regardless of income . No need trouble of tracking enforcement. And to be eligible for this subsidy owners must have valid road tax , insurance and no outstanding saman . On top of that must have LHDN tax filing.This is to ensure certain quarter like those earning SGD but residing in JB is not qualify and also those doing business here that did not declare tax . One stone can kill do many birds .
Sound like PADU
Sound like BR1M, so why need PADU eh.
All forms of petrol subsidy should be removed. Only then, effective and efficient use of resources. And divert those subsidies to public transport improvement. We need better public transport! Period.
price of goods once goes up, rarely comes down even though petrol price has come down. retailers will put the blame on the supply chain that their vendors are not reducing prices.
Here…what goes up never come down. Those come down, will be just temporary for show. After that goes up or shrinkflation. Better to cut subsidy in 1-go rather than in stages. If in stages, prices of goods/services goes up even more (excuses from suppliers).
Depending on estimates, fossil fuel will run out by 2045-2060. That will be in most of our lifetimes. Yet we have ICE fanbois screaming that EVs are a scam and not the solution. When our reserve starts to run out, what happens to RM2.05? RM3/4/5/6/7/8/12 (HK is RM16.50 now)?
EV tech won’t stay at 2024 levels forever. The tipping point for EV will come as battery density goes up(range up with less batteries, lighter car, cheaper batteries etc), charging time comes down and most importantly price come down.
These EV naysayers will say the govt. were incompetent for not incentivising EV adoption earlier, whilst screaming in 2023/2024 that EV policy only helped in rich.
Can’t win
Prepare change of Gov
every now and then, we keep on hearing Proton & Perodua wanted to implement Hybrid or EV
why need to wait another year over another year.
if Hybrid can be implement soonest, isn’t that one way to reduce the subsidy? Hybrid claim to have better mileage, so less petrol will required per family per month if can fully enforce the Hybrid car as soon as possible