For consumers of RON 95 petrol, you cannot feel the burden of rising fuel prices worldwide as the Malaysian government subsidizes petrol to continue selling it at 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.
The issue of ‘targeted subsidies’ has been mentioned before and Datuk Seri Mustafa Mohammad, Minister (Economy) in the Prime Minister’s Office, has reiterated it. According to him, the government is still drafting a new energy subsidy structure and it is expected to be completed soon.
For the time being, the existing fuel subsidy system will continue to be used, but he explained that it will change soon and is just waiting to be implemented.
“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 Name TV Yesterday
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 around RM5 billion. Now the estimate is around RM30 billion, representing a six-fold increase in the amount of subsidy,” he said.