Important fuel subsidies, must continue – Mustapa

Although the government has previously said that the country’s financial burden is now increasing as it has to bear subsidies due to rising global energy prices, it is acknowledging that subsidies are able to control inflation in the country.

According to Datuk Seri Mustapa Mohammad, Minister (Economy) in the Prime Minister’s Department, energy subsidies are important and will continue to be provided to the people, as well as include four controlled items to reduce inflation in the country. The four items are cooking oil, petrol, diesel and liquefied petroleum gas (LPG).

“Our country is now moving to a local level and despite some pressure due to volatile inflation, the government is still able to control the rate. This is due to the efforts of the government and the support of the concerned agencies,” he said in the report. NST.

“To maintain this situation, the government will continue to monitor the situation from time to time,” he said. He added that domestic inflation was 2.2% in March, lower than in the United States at 8.5% and in Europe at 7.5%.

However, inflation is expected to rise. “The country’s inflation rate is expected to rise due to 11.6% increase in producer price index (PPI) and pressure on global inflation. In February, the PPI was 9.7%. The government will closely monitor the situation, “he said.

Although the government has promised that the energy subsidy will not be abolished, it is expected that the structure will be changed and only those who need it will be allowed to do so.
For the time being, the government subsidy allows the sale of RON 95 petrol at a maximum price of RM2.05 per liter.

However, with the existing subsidy system, the government will have to bear a huge financial burden as the country could lose RM410 million as a result of rising crude oil prices for every US $ 1 in the world. Therefore, the government is expected to change the way it subsidizes available fuel, and will only provide it to those who really need it.

This was mentioned by Mustafa last month and according to him, the government is still drafting a new energy subsidy structure and it is expected to be completed soon.

“Those who can afford it should pay more and those who are not eligible for (subsidy) should not be given subsidy at all. Subsidies for the poor, especially B40 (below 40% income group). That is when it will be implemented, “said Mustafa.

He said energy subsidies have played an important role in controlling rising inflation in Malaysia and the government has been able to maintain price growth between 2% and 3% in the last 10 to 20 years. “However, it will be a big burden on the budget. When we announced our budget last year, the estimated subsidy was about RM5 billion. Now the estimate is around 30 billion, representing a six-fold increase in the amount of subsidy,” he added.

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