Fuel subsidies will be reviewed, targeted aid reviewed – keeping fuel prices at RM2.05 will cost Malaysia RM28 billion
With the fuel subsidies in effect, rising oil prices will inevitably carry over, which means government bear the brunt of financial pressure.
This appears to be a burden that the Malaysian government plans not to shoulder indefinitely. Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz said the current fuel subsidy will be reviewed in a targeted way for those in need. Star reported.
According to the Finance Minister, the Malaysian Government is likely to pay RM28 billion in petrol, diesel and liquefied petroleum gas (LPG) subsidies for 2022, the ongoing Russia-Ukraine conflict has pushed crude oil prices above the $100 threshold. (RM418) making it the most expensive since 2014. As of this week, this has surpassed US$120 (RM502) per barrel.
Under the current scheme, everyone is entitled to the same subsidized price, regardless of income, and the high-income group will benefit more from the subsidy based on their higher consumption. them compared to those with lower incomes, added Tengku Zafrul.
“Therefore, the government will review the fuel subsidy mechanism to make aid and subsidies more targeted and focused on the vulnerable and those in need,” the Finance Minister said. talk to Dewan Rakyat in today’s Ministerial Question Time, Star reported.
The finance minister’s statement was in response to a question posed by Wong Hon Wai (PH-Bukit Bendera), asking whether there would be coordination between petrol and diesel subsidy schemes and due to crude oil and natural gas prices. However, the global growth is strong or not. .
The Finance Minister also said that the government cannot borrow for operating expenses such as subsidies, and so the government must offset the increase in subsidy costs by increasing revenue and savings, the report said. know more. According to Mr. Tengku Zafrul, the implementation of targeted subsidies will ease the pressure on the government’s financial resources and the savings collected can be reallocated to other programs for the welfare of the people.
Although Malaysian consumers currently paying RM2.05 per liter for RON 95 . petrol, the actual cost of the fuel came to RM3.70/litre in March, meaning the Malaysian government covered the difference of RM1.65/litre. From a perspective, the price of RON 97 unscaled gasoline is at RM3.75 per liter this weekthrough a spike of 30 sen.
Tengku Zafrul gives the example that when a consumer fills up with RM100 worth of petrol for about 49 liters of RON 95 petrol, the government pays RM81 because the actual market price is RM181 for 49 liters of RON 95 petrol; This means government subsidies of up to 45% of the total price, he said.
Meanwhile, diesel consumers now pay RM2.15/liter for the B10 and B20 blend ( B7 blend is 20 sen at RM2.35 per liter), while the actual cost of fuel exceeded RM4 per liter, the finance minister added.
In terms of damage, the large disparity between the retail fuel price in Malaysia and the actual market price would also lead to a higher risk of subsidy leakage due to the smuggling of fuel into neighboring countries, where the fuel sold at a higher retail price, he continued. .
To compare with the price of fuel sold in neighboring countries, petrol is sold in Indonesia at RM3.74/litre, Thailand at RM5.63/litre and Singapore at RM9.16/litre, according to Tengku Zafrul ; Even compared to other oil-producing countries, Malaysia’s current level of RM2.5 per liter is relatively low compared to Saudi Arabia, which retails gasoline at RM2.59 per liter, he said. .
The Minister of Finance said that the Malaysian Government is also in the process of considering a targeted subsidy approach to expand subsidies to other products, to support those in need.
