Gov’t needs to resolve issues before proceeding with RON95 subsidy rationalisation, say economic experts

Gov’t needs to resolve issues before proceeding with RON95 subsidy rationalisation, say economic experts

The government needs to ensure that it learns from its diesel subsidy rationalisation initiative and resolve financial assistance as well as communication issues before proceeding with the introductuon of a targeted subsidy for RON 95 petrol, say economic experts.

While saying that the move towards a targeted subsidy for RON 95 was necessary for the country to better manage its finances, the academics said that Putrajaya should not rush into that implementation, and that preparation and transparent communication will translate to fewer hiccups when the time comes.

According to Putra Business School economic analyst associate professor Ahmed Razman Abdul Latiff, the registration of targeted recipients in the database must be efficient to ensure the smooth execution of the initiative.

Gov’t needs to resolve issues before proceeding with RON95 subsidy rationalisation, say economic experts

“Communication about how it will benefit the intended recipients and transparency about the implementation process (is needed) as well,” he told the New Straits Times. He however cautioned that there could be an increase in the inflation rate, which could slow down domestic economic activities.

Meanwhile, University Kuala Lumpur business school economic analyst associate professor Aimi Zulhazmi Abdul Rashid said that the rationalisation of petrol subsidies should not be done this year.

He said this was because the impact of the diesel price increase and whatever knock-on effects hat would have had not been fully absorbed by consumers and traders. He said the 2025 Budget will be able to provide a true picture of the effects the targeted diesel implementation would have on the economy, especially in terms of the inflation rate.

Gov’t needs to resolve issues before proceeding with RON95 subsidy rationalisation, say economic experts

Additionally, he said that the fluctuation in the value of the ringgit, which is expected to weaken until after the US presidential election is over, means any potential move should not be contemplated this year.

“It is very likely that US interest rates will not be lowered again and the value of the ringgit is expected to not strengthen, but rather weaken. The impact of the currency on imported food items, coupled with any increase in the price of RON 95, would be sure to push the inflation rate above Bank Negara Malaysia’s initial expectation of 3.5% this year,” he said.

This comes following economy minister Rafizi Ramli’s statement indicating that the government is studying the expansion of targeted fuel subsidies to incorporate RON 95 petrol. However, he said that the government’s primary focus was on rolling out diesel subsidies until the targeting of these subsidies stabilises and the leakage in subsidy distribution is reduced.

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Anthony Lim

Anthony Lim believes that nothing is better than a good smoke and a car with character, with good handling aspects being top of the prize heap. Having spent more than a decade and a half with an English tabloid daily never being able to grasp the meaning of brevity or being succinct, he wags his tail furiously at the idea of waffling - in greater detail - about cars and all their intrinsic peculiarities here.

 

Comments

  • A Clear and present danger on Jun 27, 2024 at 10:54 pm

    Today,I witnessed a dude tt money to Indonesia at a local bank.It is Rm4.8 to one Biden dollar.
    At the rate our Rm is falling,pls be ready for Rm 5

    to 1 USD by the time Santa is around.
    So,if u float petrol to RM4/litre(say Israel expands its war to Iran or Lebanon) and our RM5 to 1 USD exchange rate,it will be a double whammy for the rakyat.
    We didnt vote for regime change to become poorer or financially downgraded.
    Folks,the rich got no worries.
    The poor became poorer.The M40 has dropped precariously to just above B40.
    You cant just float fuel prices overnight.
    The rakyat has been addicted to fuel subsidies under the last few regimes.So,if u remove them overnight,rakyat is faced with unbearable withdrawal symtoms.

    Like or Dislike: Thumb up 0 Thumb down 0
  • talkcockking on Jun 29, 2024 at 9:30 pm

    all talk cock and nothing gets resolved….bottomline the poor gonna bleed..

    elite class, ministers and cronies all langsung tak ada rasa….haha….and corruptions continues as usual…haha…

    Like or Dislike: Thumb up 3 Thumb down 0
 

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