The Malaysian Institute of Economic Research (MIER) anticipates a “mild adjustment” in RON95 subsidy and therefore, the fuel’s retail price in Malaysia, and it expects the price adjustment to be carried out in July or October this year after the impact of the diesel subsidy rationalisation has been assessed, reported Bernama.
The adjustment is expected to be not as steep as that of retail pricing of diesel fuel, which increased by 56%, or RM1.20 from RM2.15 per litre to RM3.35 per litre earlier this week on June 10, said MIER executive director Anthony Dass.
“We need to look at the impact of the diesel subsidy rationalisation, so we probably need to give it a three- to six-month grace period. We need to look at the impact analysis first, and how the people are adjusting. From that, the government can make the next adjustment to the RON 95 (petrol subsidy),” Dass said.
The price adjustment for RON 95 petrol is expected to be carried out “closer to October” as this would give the government more time to look at the impact analysis, he added.
Regarding the contribution of diesel fuel pricing to the consumer price index (CPI) basket, a 1% increase in diesel price leads to an impact of 0.2% upon the CPI basket, which is therefore almost negligible, Dass said. Meanwhile, the contribution of RON 95 petrol pricing to the CPI basket is around 5.5%.
Yesterday, finance minister II Datuk Seri Amir Hamzah Azizan said the government will focus on the implementation of its targeted diesel subsidy programme before it decides to move on to further related matters, when asked about a timeline for a targeted subsidy to be implemented for RON 95 petrol.
The subsidy reform agenda being carried out by the government is aimed at reducing the country’s fiscal deficit so it can reinvest into things that are important, Amir Hamzah said. “Over time, there has been leakage of subsidies caused by smuggling of petroleum products and subsidies enjoyed by sectors who do not deserve them,” he said.
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