Gradually increasing petrol prices is the answer to reducing Malaysia’s fiscal deficit, according to Datametrics Research and Information Centre (DARE). In a report by FMT, the Malaysian-based think tank says this approach is more effective compared to introducing targeted subsidies and will allow the government to directly assist those in the lower-income groups.
DARE managing director B Pankajkumar said by increasing petrol prices to align with the market price, the government can significantly reduce its petrol subsidy, which can instead be used to provide direct cash transfers to the bottom 50% of society. “The approach involves gradually increasing petrol prices every quarter by 20 sen per litre, or to reach RM1 above the market price within the next two years,” he explained.
“That’s your answer in terms of tackling your budget deficit. Imagine the amount of savings you can make by putting petrol price back to where it should be. To me, why bother going to a different system (of targeted subsidies for petrol). It’s not proven, it takes a lot of effort, and there will be leakages,” he continued, adding that a different system would likely require the government to spend more in terms of administration.
Following yesterday’s fuel price update, RON 95 currently retails at its ceiling price of RM2.05 per litre, while the price of RON 97, which is floated according to market prices, is at RM3.47 per litre. Using the latter as a benchmark, it can be assumed the actual price of RON95 would be around the RM3.30 mark.
Pankajkumar also pointed out that Malaysia is listed as the country with the ninth lowest fuel price globally. Our neighbour Singapore, for instance, prices its base petrol fuel at the equivalent of around RM10 per litre.
“Prime minister Datuk Seri Anwar Ibrahim mentioned Malaysia is expected to spend RM81 billion for subsidies this year. Last year’s figure was RM62 billion, of which RM45 billion was related to fuel subsidy,” Pankajkumar said.
Anwar will table Malaysia’s Budget 2024 this Friday, October 13 at 4pm, and it is expected that measures will be announced to reduce public debt by steering the economy away from decades of blanket subsidies. Do you agree with DARE’s stance on this matter? Is increasing fuel prices better than introducing targeted subsidies, or is there another way?
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Nurul Izzah
on 
Unrelenting pressure from Rafizi n CO
on 
Atok geng PN
on 
Dah Menang Semua
on 
Janji dicapati
on 
PT No Capati
on 
abah tak sembang seperti budak mentah mcm kau
on 
NK
on 
Kam
on 
T1
on 
Mike Tee
on 
memang
on 
Ben Yap
on 
TT laman
on 
4GR-FSE
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Wake Up Malaysia
on 
cut all subsidies plz
on 
Tak habis habis
on 
zi
on 
seancorr
on 
RAJAH
on 
Is the tank really thinking?
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Black horse
on 
Robot
on 
Sohai
on 
Dominic
on 
ABC
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WeeWee
on 
Kx
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Cyberclito
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AI-generated Summary ✨
Comments reflect widespread concern over increasing fuel prices and the potential impact on living costs, with many advocating for targeted subsidies over blanket hikes. Several critics dismiss the government's plans as ineffective or corrupt, fearing misuse of savings and increased inflation. Some suggest alternative measures like tax increases on the wealthy or market-based pricing, while others express skepticism towards politicians' intentions, emphasizing the need for fair, transparent policies benefiting the needy. Overall, sentiments highlight distrust and apprehension about the proposed fuel price increases.