RON95 petrol subsidy rationalisation to be detailed in Budget 2025 to be tabled next month – RHB IB

RHB Investment Bank (RHB IB) expects that more details on subsidy rationalisation for RON 95 petrol, as well as on the reintroduction of the goods and services tax (GST) will be revealed in the 2025 Budget that will be tabled on October 18, Bernama has reported.

The investment bank expects RON 95 petrol subsidy rationalisation to take place towards the end of this year, according to the report. At present, the RON 95 grade of petrol retails at its ceiling price of RM2.05 per litre, an upper limit that was set by the Malaysian government in February 2021.

“Despite some progress on reforms, we believe the government still has ample political capital to make further meaningful progress on subsidies and initiatives to broaden the tax base to narrow the fiscal deficit further, create headroom for infrastructure investments, and establish a pathway to contain the national debt,” said analyst Alexander Chia.

RON95 petrol subsidy rationalisation to be detailed in Budget 2025 to be tabled next month – RHB IB

“In this regard, the two key pending initiatives are subsidy rationalisation for RON95 petrol and reviving the GST that will dovetail with full implementation of e-Invoicing,” Chia said.

The fuel subsidy rationalisation programme in Malaysia began June 10 for diesel fuel this year in Peninsular Malaysia, which saw a hike of RM1.20 to RM3.35 per litre from that date. Following several price adjustments, diesel dropped to RM2.95 per litre last week, with no change for the coming week. The retail price of diesel fuel in Sabah, Sarawak and Labuan remains unchanged at RM2.15 per litre.

While the removal of subsidy for RON 95 petrol has been previously said to take place this year, economy minister Rafizi Ramli said in June that the government is still studying the removal of RON 95 subsidy. As of today (September 26), the price of unsubsidised RON 95 petrol in Malaysia is RM2.81 per litre, according to unsubsidised fuel outlet Double.

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