PUTRAJAYA, Sept 2 — The price of RON95 petrol and diesel
will go up by RM0.20 per litre from midnight, Prime Minister Datuk Seri Najib
Razak announced today in a move to rationalise subsidies.
Najib, who is also the finance minister, added that the
1Malaysia People Aid (BR1M) will be raised from the current RM500 in Budget
2014 to better direct financial aid to the needy. RON95 petrol will be priced
RM2.10 per litre and diesel RM2.00 after the hike, up from RM1.90 and RM1.80
respectively. “We hope sellers will not take this opportunity to increase the
price of goods without taking care the interests of the people,” Najib told
reporters after a Fiscal Policy Committee (FPC) meeting here, describing the
effect of the hike as “minimal”.
The decision today was made as part of Putrajaya’s move to
consolidate its fiscal position, and reduce the federal government current
account deficit-to-gross domestic product (GDP) ratio to 3 per cent by 2015.
“Currently, our subsidy system benefits everyone, including the higher income
group and foreigners. Thus, we need to move to a more targeted subsidy system
that caters for the vulnerable groups,” Najib added. The price hike will reduce
fuel subsidy of RON95 petrol to 63 sen per litre and 80 sen per litre for
diesel.
Previously, the total fuel subsidy allocation for 2013 was
recorded at RM24.8 billion. Najib promised to increase the amount of BR1M
handout as a way to reduce the burden of the low-income and vulnerable groups
resulting from the price hike, and pledged a comprehensive social safety net
over the longer term. Besides the two announcements, Najib also announced that
public sector projects will be considered carefully, giving higher priority to
projects with low-import content and high-multiplier effects.
However, certain projects such as the Mass Rapid Transit
(MRT) will continue as planned, while the Kuala Lumpur-Singapore high-speed
rail project is still being negotiated. In conjunction with Visit Malaysia Year
2014, Putrajaya will also be looking at diversifying its export market through
tourism. Najib however declined to comment on the proposed 4 per cent Goods and
Services Tax (GST), which was mooted as a much-needed remedy to trim the
deficit, saying it will be discussed in full when he presents Budget 2014 to
Parliament to be tabled next month.
The prime minister also stressed the need for a healthy
current account balance, especially after global ratings agency Fitch Ratings
revised Malaysia’s sovereign debt outlook from “Stable” to “Negative” last
month. “The market will feel more confident if we’re able to bring down our
fiscal deficit. That is why it is important for us to ensure we’re on track to
fulfil our commitment,” said Najib.
The last time RON95 petrol and diesel’s prices were hiked
was in December 2010, from RM1.85 per litre to RM1.90 and from RM1.75 to RM1.80
respectively. The price for RON97 petrol was last increased in May 2011, from
RM2.70 per litre to RM2.90. Malaysia’s fiscal deficit has already widened to
RM14.9 billion, and runs a relatively high government debt of 53 per cent of
GDP in addition to one of Asia’s highest household debt levels.
Source: The Malay Mail
