Government should not delay the implementation of RON95 petrol subsidy rationalisation, say economists

Government should not delay the implementation of RON95 petrol subsidy rationalisation, say economists

Economists say that the government should proceed with the implementation of its planned RON 95 petrol subsidy rationalisation despite the recent spike in global oil prices brought about by escalating tensions in the Middle East, The Star reports.

According to Sunway University economics professor Yeah Kim Leng, implementing the programme without delay will allow the burden of rising oil prices to be shared with consumers and businesses while preventing a ballooning subsidy burden to the nearly RM100 billion incurred in 2020 during the Covid-19 pandemic.

He said that unless absorbed by the government, higher global oil prices would lead to increased pump prices, putting pressure on national finances. “This would require the government to cut other expenditures or incur a higher fiscal deficit, which will further raise the country’s debt level,” he said, while suggesting that the rollout be accomplished in gradual fashion.

Echoing that sentiment was economist Geoffrey Williams, who said that higher oil prices would widen the gap between market prices and retail pump prices, increasing the government’s subsidy burden. He added that the government would save at least RM8 billion or more once it was in place, saving that can be redirected to critical areas such as healthcare, education and social protection.

He said that the rationalisation of diesel and electricity subsidies, which raised RM11.5 billion without triggering hostile market or public reaction. “The government must push through with targeted subsidies now. There is no better time and any delay will signal weakness and damage credibility,” he said.

Government should not delay the implementation of RON95 petrol subsidy rationalisation, say economists

Elsewhere, Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong agreed that any delay could significantly increase the government’s subsidy bill if oil prices continue to rise. However, he said a phased implementation was necessary.

“This is to avoid a sudden shock to the nation’s economy, which is already grappling with the current geopolitical uncertainties,” he said. He also called for the Price Control and Anti-Profiteering Unit to be strengthened to prevent businesses from arbitrarily raising prices, potentially driving up inflation.

Meanwhile, Federation of Malaysian Business Associations vice-chairman Nivas Ragavan stated that the timing of the rollout is crucial. “Volatile oil prices can exacerbate the burden on the rakyat if not carefully managed, but a sudden implementation during a price spike could be highly inflationary and politically sensitive,” he said.

Earlier this month, the Petrol Dealers Association of Malaysia (PDAM) urged the government to delay introducing the RON 95 petrol subsidy rationalisation plan until critical industry issues were resolved.

Incidentally, the unsubsidised price of RON 95 as sold by fuel retailer Double Petrol is RM2.59 per litre (today, June 16), which makes it 54 sen more than the subsidised RM2.05 per litre that has been in place since it was capped by the government in February 2021.

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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

  • Timbalan Presiden binti Presiden on Jun 16, 2025 at 3:55 pm

    Anwar menang rakyat senang

    Like or Dislike: Thumb up 4 Thumb down 10
  • Janji Dicapati on Jun 16, 2025 at 3:56 pm

    Refer my name

    Like or Dislike: Thumb up 11 Thumb down 2
  • Ben Yap on Jun 16, 2025 at 4:20 pm

    bising la all these economist. if M’sia government no money, they wouldn’t have given discount for Bijan. we still have lotsa money.

    Like or Dislike: Thumb up 3 Thumb down 9
    • Make Malaysia Great Again on Jun 16, 2025 at 6:34 pm

      Funny how the economy was doing much better under him, makes one wonder who stole the money after he step down.

      Like or Dislike: Thumb up 11 Thumb down 10
  • Remove all subsidies, please!
    Parasitic mentality should be curbed.

    E.g. Food delivery Co., the start-up provided an opportunity.
    However, specific nincompoops start demanding & roll on the floor as though they were forced to sign up & work.
    Tongkak mentality, buat malu aje.

    Like or Dislike: Thumb up 5 Thumb down 1
  • Susukotak on Jun 17, 2025 at 8:21 am

    Mcm dah lama harga ron97 tak berubah.. apa yg naiknya? Prof pun lantik dlm BNM tskkan nak banagkang.

    Like or Dislike: Thumb up 2 Thumb down 0
 

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