Fuel price hike

By Fadzilah Binti Hamid Sultan
2013-121698
Topic : Minstry of Finance

Motorists line up to purchase petrol before the price hike at midnight, at a gas station in Putrajaya, outside Kuala Lumpur on September 2, 2013. The price of RON95 petrol and diesel will go up by RM0.20 per litre from midnight, Prime Minister Datuk Seri Najib Razak announced , in a move to rationalise subsidies.  Datuk Seri 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. He said cash aid programmes like BR1M should be done more selectively, and should not become a crutch like the public’s dependence on fuel subsidies. Dr Mahathir, who also held the finance portfolio, added that the impact of the recent 20 sen reduction in RON95 and diesel subsidies would only contribute to between 1 and 5 per cent inflation to the price of goods and services. “Any inflation or changes in prices, even at five per cent as Dr Mahathir claimed, would have a huge impact on the disposable income of ordinary folks.

People queue up at petrol station to refuel their tanks in Putrajaya.

 

 Datuk Seri 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. Prime Minister 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 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.

In conjunction with Visit Malaysia Year 2014, Putrajaya will also be looking at diversifying its export market through tourism. PM announced that, 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.

The price hike will reduce Putrajaya’s 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. Basically, these are just the proposed hikes for RON95 only. Thus, once petrol price hike, everything will be more and more expensive. Malaysia government will cut the subsidy budget and will increase the petrol price by 15 cents from the current price (RM1.80 per liter) for RON95. Not only that, our petrol price will hike in schedule. These are the forecast petrol price in between 2012-2015.

* 2012 petrol price - RM2.10/liter
* 2013 petrol price - RM2.34/liter
* 2014 petrol price - RM2.52/liter
* 2015 petrol price - RM2.60/liter

 

As ministry of the finance I would like to suggest that, use wisely our subsidy budget that can benefit to everyone because this is the time our peak seasons that the manufacturing company and transportation will take this advantage to increase the price. Besides that, boss don’t want to increase the salary, and end up workers suffer the most. The outcome is, people with higher salary can pay for this price hike but for that lower income group, they will definitely feel the pinch. I hope sellers will not take this opportunity to increase the price of goods without taking care the interests of the peoples . Besides that, 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. Then, government must be more prudent with its spending and whatever financial assistance is doled out, such as the 1Malaysia People’s Assistance (BR1M), must be “properly budgeted for”.

 

Reference

1.      www.themalaymailonline.com/malaysia/article/price-for-ron95-petrol-diesel-up-by-20-sen#sthash.0UpZeIUE.dpuf

2.      www.malaysia-today.net

3.      www.themalaysianinsider.com/malaysia/article/upset-malaysian

4.      www.themalaymailonline.com/malaysia/article/pakatan-dr-ms-financial-advice-too-little-too-late-for-bn#sthash.7ido1qBG.dpuf

5.      en.wikipedia.org/wiki/Price of petroleum

    6.    www.pmo.gov.my/dokumenattached/bajet2013/SPEECH BUDGET