Economists say floating RON95 petrol prices now will be manageable for consumers.
Malaysian Prime Minister Anwar Ibrahim said in October 2023 that his administration intends to float the price of the heavily subsidised petrol.
Economists say that the government should capitalise on the stronger ringgit and moderate oil prices currently to rationalise fuel subsidies, which currently cost it between RM15 billion and RM20 billion annually. The stronger local currency translates into cheaper oil imports which are traded in US dollars, and ultimately leads to reduced pump prices for consumers.
Global oil prices edged upwards to around US$77 per barrel on Friday as concerns mounted that a widening regional conflict in the Middle East could disrupt global crude flows. Nevertheless, economists say that oil prices are still considered soft and well below the April levels of US$90 per barrel when Iran first launched missiles and drones at Israel.
The removal of RON95 subsidies has remained off the table since Datuk Seri Anwar’s government implemented targeted diesel subsidy cuts in June, which led to widespread public and business dissatisfaction. The move, which affected a smaller segment of the population, resulted in diesel prices surging by 56 per cent to RM3.35 per litre from the previous subsidised rate of RM2.15 per litre.
Mr Anwar’s administration has already phased out other subsidies, in the form of electricity tariff adjustments and removal of price controls for chicken. Removing RON95 subsidies will have a deep impact on the population, as petrol is more widely used than diesel.
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