RON95 subsidy removal should be in stages; can start at RM2.45 this year, not directly to RM3.30 – analyst

RON95 subsidy removal should be in stages; can start at RM2.45 this year, not directly to RM3.30 – analyst

The fuel subsidy rationalisation for RON 95 petrol can be expected to be carried out in stages, said TA Securities chief analyst Kaladher Govindan, reported Harian Metro.

The Malaysian government may take some time to evaluate the impact of the floated retail price of diesel fuel, and the readiness of the Pangkalan Data Utama (PADU) database in order to determine the cash assistance required before carrying out the subsidy rationalisation for RON 95 petrol, Kaladher said.

Implementing the subsidy rationalisation for RON 95 petrol is more complex than that for diesel fuel because of its significant impact upon the majority of registered vehicles in Malaysia, which is around 36 million vehicles, which contributed to RM66.7 billion in sales of retail fuel last year, he said.

RON95 subsidy removal should be in stages; can start at RM2.45 this year, not directly to RM3.30 – analyst

The subsidy rationalisation cannot be rushed before a proper system is in place, and the government is likely to implement the rationalisation in the fourth quarter of this year before revising it in stages until 2025, he continued.

Additionally, further details on the fuel subsidy will be tabled in Budget 2025 that has been scheduled for October 2024, and by that time, the government will have had several months of data on inflation between June and September 2024 to evaluate the results of the mechanism for the diesel subsidy, Kaladher said in a TA Securities’ mid-year report, according to Harian Metro.

On one hand, the removal of petrol subsidy could increase the retail price of RON 95 petrol from its current rate of RM2.05 per litre by RM1.25 to RM3.30 per litre, though on the other, implementing the subsidy rationalisation for RON 95 petrol could bring even more savings to the government, he said.

RON95 subsidy removal should be in stages; can start at RM2.45 this year, not directly to RM3.30 – analyst

Assuming 20 billion litres of fuel is consumed this year, every 10 sen increase in fuel price will bring around RM2 billion in savings from fuel subsidies each year according to Kaladher. In its inflation forecast, TA Securities expects an adjustment of 40 sen to the retail price of RON 95 petrol, raising it to RM2.45 per litre.

However, the RM8 billion in savings from fuel subsidies may only be realised next year, depending on the quantum and duration of the fuel price adjustment, and more could be saved if the RON 95 subsidy rationalisation takes place this year, according to the TA Securities report.

The fuel subsidy rationalisation programme began on June 10, with the retail price of diesel fuel sustaining a 56%, or RM1.20 increase to RM3.35 per litre in Peninsular Malaysia. The fuel continues to be priced at RM2.15 per litre in East Malaysia.

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Mick Chan

Open roads and closed circuits hold great allure for Mick Chan. Driving heaven to him is exercising a playful chassis on twisty paths; prizes ergonomics and involvement over gadgetry. Spent three years at a motoring newspaper and short stint with a magazine prior to joining this website.

 

Comments

  • talkcockking on Jul 04, 2024 at 8:24 pm

    all big sharks and crocodiles corruption cases never solved…..year in year all sorts of leakages, abuse of powers, hanky panky nener resolved……now all wanna talk cock reduce subsidies ….haha fark

    Like or Dislike: Thumb up 36 Thumb down 2
    • I never take salary but I still need to buy underwear for wan azizah. How?

      Like or Dislike: Thumb up 2 Thumb down 1
    • bullshitking on Jul 06, 2024 at 4:03 pm

      end of the days …rakyat kena diperlembukan especially the poor and middle class gonna eat shit and pasir coz nothing will be done to stop all the abuses of funds, leakages and corruption…all wayang saja tiap tiap tahun…

      Like or Dislike: Thumb up 3 Thumb down 0
  • ROTI CANAI on Jul 04, 2024 at 8:55 pm

    please dont waste time with these small increases cause the wontonmee gonna increase anyway just do a major increase and be done with it

    Like or Dislike: Thumb up 27 Thumb down 3
  • Regime change...a clear and present danger on Jul 04, 2024 at 9:57 pm

    Rm 4 or Rm4.5 /litre,Rafizi…we dont give a damn of your surprises.
    You can use the same tactic for diesel.The rakyat is better prepared this time.
    Former deputy menteri Ong Kian Meng predicted backlash very soon.
    There is a saying “enough is enough”.

    Like or Dislike: Thumb up 22 Thumb down 3
  • Diam-ler on Jul 04, 2024 at 10:54 pm

    Then remove AP and high duty taxes on our cars

    Like or Dislike: Thumb up 40 Thumb down 2
  • Sohai on Jul 04, 2024 at 11:15 pm

    Increase in stages is thecreal stupid sohai. Those sohai who calculate in surface in theory really sohai if they really increase in stages, because you created the oppourtunities for the goods price to increase in multiple times as example if increase price in 10x times then those businessman will increase the goods price everytime total up to 10x times. If u 1time float to market price then the impact only 1 time. Now u see many businessman who run commercial transport using diesel not apply for subsidy because they millionair businessman no need your hundreds ringgit of subsify, only gomen stupid foc them diesel subsidy.

    Like or Dislike: Thumb up 18 Thumb down 2
    • T20 businessman on Jul 05, 2024 at 9:12 pm

      Sorry for being opportunistic altho our Astons, Porsches, Lambos & Ferraris are not actually impacted coz we use ron100

      Like or Dislike: Thumb up 2 Thumb down 0
  • Amarjit Singh on Jul 05, 2024 at 12:56 am

    The price of RON 95 can be increased to RM2.50 per litre before subsidies can be removed.

    Like or Dislike: Thumb up 2 Thumb down 8
  • Those self proclaimed economy specialist, economic analiser are making nonsense prophecy and making rakyat knee jerk reactions.
    This statements make round into haters TikToks just for the sake to make people angry, just like Blackrock drama.
    G have many other option to meets its fiscal target. Not replacing just pension government servants, and now rampantly using MACC to get rid those corrupted officers so G can save a lot on OE.
    Since last year, the OE for G office has been slash to half, no makan-makan during meeting and no hotel based function anymore two of the many. Even PM don’t take his pay eitjer foe his PM post or even the Finance Minister post. Bot forgetting other GLCs perks too.

    Like or Dislike: Thumb up 49 Thumb down 1
  • Ben Yap on Jul 05, 2024 at 8:08 am

    the removal of MPs multiple pension and allowances can start in stages too.

    Like or Dislike: Thumb up 34 Thumb down 0
  • RM5 also no problem on Jul 05, 2024 at 8:21 am

    just increase RM5 to ease the traffic, need to get rid of those 20 years old car also, classic car kononnya, go in highway then breakdown

    Like or Dislike: Thumb up 8 Thumb down 8
    • got inspired, Pay @ RM5/L and give 33% cash back system autopay by 3rd week of the month.
      RM5 – 33% = RM3.30/L

      ni macam like forced saving, Rakyat ada money rolling.
      so tak rasa bankrupt by 3rd week no balance money survive.

      RM5 for 12km/L 2000km = RM 833
      cash back 33% @ 3rd week = RM 275

      this can confuse Noob use more for more cash back.
      even though it is 33% cash back fixed.
      but it help Noob to survive over spending.

      Like or Dislike: Thumb up 3 Thumb down 5
  • Cooking frog in warm water…haaa

    Like or Dislike: Thumb up 4 Thumb down 1
  • pakcik on Jul 05, 2024 at 9:18 am

    Everytime increase, kopi +20sen. Better increase to 3.30, kopi still +20sen

    Like or Dislike: Thumb up 26 Thumb down 1
    • Makcik kiah on Jul 05, 2024 at 9:14 pm

      That’s what you think. You come home now and stop going to warung to mengeteh otherwise I’ll stop your duit rokok too

      Like or Dislike: Thumb up 1 Thumb down 2
  • Masih murah on Jul 05, 2024 at 10:51 am

    Stop Ron95, introduce Ron92 again, and maintain Ron97 as per previous years.

    Like or Dislike: Thumb up 11 Thumb down 0
  • PaulineChan on Jul 05, 2024 at 11:08 am

    just rip the band-aid off completely. Do it at once. No stages. Let everyone complaint and moan once and get on with life. Rakyat is tired of changes every so often. So just change it and be done with it. remove tongkat.

    Like or Dislike: Thumb up 11 Thumb down 4
  • 4GR-FSE on Jul 05, 2024 at 11:27 am

    If, and I say If the government really wants to remove the subsidy, I suggest to do it in one go rather than in stages.
    At least businessman will use this excuse to raise price one time rather than multiple times if it is implemented in stages.
    Even Kopitiam will find excuses the raise price. If it is being done one time, maybe Kopi-O will be increased by 50cents. If government do in stages lets say 3 times, Kopi-O will be increased by 50+50+50 cents. Lets be realistic, the way business owners increase prices sometimes tak masuk akal..
    Let that sink into our mind for awhile..

    Like or Dislike: Thumb up 14 Thumb down 0
    • Business owners on Jul 05, 2024 at 9:16 pm

      Man gotta eat bruh

      Like or Dislike: Thumb up 1 Thumb down 0
    • Fixie on Jul 11, 2024 at 3:14 pm

      They shouldn’t be removing fuel subaidy at all, at least for now. They should removed subsidies slowly, once the Ringgit is much2 stronger & stable. At the time the cost of importing foreign oil will be cheaper, there is no need for subsidies if the Ringgit becomes strong. What the gov is doing is lazy quick fix solution. And we all know this kind of lazy approach always comes back to bite you.

      Like or Dislike: Thumb up 0 Thumb down 0
  • Mike Tee on Jul 05, 2024 at 3:30 pm

    Remove subsidies, they are inefficient and distort the market, especially one with rampant corruption.

    Like or Dislike: Thumb up 5 Thumb down 5
  • The issue is what’s the gov is going to do with the savings? The gov should spend them for improving the public transport so that citizen can use alternative without driving.
    Although Singapore cars and petrol is expensive, people can easily move around without cars in most cases.
    The quality of Malaysia public transport in comparison is way below standard

    Like or Dislike: Thumb up 1 Thumb down 0
  • syok semua lah hawker hawker sekalian, can pocket more money multiple times

    Like or Dislike: Thumb up 0 Thumb down 0
  • Syaiful Nizam Hassan on Jul 07, 2024 at 7:59 pm

    Strongly agree, but simplify with RM2.30 or RM2.40 not RM2.45

    Like or Dislike: Thumb up 0 Thumb down 0
  • Micmicseng on Jul 08, 2024 at 2:37 am

    To all malaysian….
    What is the word subsidy stand for ???

    Govt. Is not a bhd co.

    Govt. Comes from rakyat…

    We pay taxes…in order for tis elected to help rakyat n malaysia to grow…

    Govt..salaries comes from rakyat….

    Main job for Govt…
    To detain all curroupted Govt servants to jail.

    Job no.2 …till today no agenda …
    Omg..

    That’s why ringgit is so so scary !!!!

    Malaysia got oil…
    But petrol increase!!!

    Nenas..palm oil..durian..beras..biji timah….natural oil rig….balak…port for ship….getah….factories chips…
    Factories for cars…

    Omg….
    Singapore got what ?

    Like malaysia.

    Worst.
    Brunei..omg
    Only got oil.
    Currencies strong like Singapore

    Lay back…
    Elected ppl….
    Mana sudah betul betul tak correct…

    Like or Dislike: Thumb up 1 Thumb down 0
  • Fixie on Jul 11, 2024 at 3:12 pm

    Our industries are not competitive enough to compete with other countries. Why do we want to make them less competitive by increasing the cost of doing business? Fiscal deficit can be reduced when the government stop giving bonuses to public sector workers or stop giving bantuam rakyat, rahmah or whatever. Cash aid doesn’t help anybody, it actually burdens the people. U give money for zero increase in productivity to the rakyat, what will the result going to be? And then u take away fuel subsidy that can keep prices stable. Is this government purposefully trying to create hyperinflation? The government can stop reducing fuel subsidies when the Ringgit becomes stronger & importing foreign oil becomes more affordable. Lifting subsidies when the Ringgit is this weak, one of the weakest period for the Ringgit in history is ridiculous.

    Like or Dislike: Thumb up 0 Thumb down 0
 

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