The government will not increase the price of RON95 petrol, diesel and liquefied petroleum gas (LPG) for now, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said today.
Ismail Sabri, however, refused to specify how long the government would maintain current prices.
“This decision was made because the government is concerned for the people’s welfare,” Ismail Sabri told reporters today.
“But at the same time, the government will continue studying subsidy rationalisation as a whole following the increase of fuel and gas prices in the global market,” he added.
The government announced recently that diesel subsidies for deep-sea fishing vessels and nine classes of commercial vehicles would be removed on June 1, slashing RM886.1 million from the federal subsidy burden annually.
Ismail Sabri said the decision was reached at a Cabinet meeting earlier today, which he said only discussed fuel subsidies.
When asked if the government will slash fuel subsidies should global oil prices spike, Ismail Sabri said, “We will think about that later.”
Investment research firm AmResearch recently estimated Putrajaya is now subsidising at least 90 sen per litre of RON95 versus the intended 30 sen per litre after global crude oil prices surged to US$99 per barrel from US$79 per barrel last year, matching the US$100 per barrel recorded in 2008.
Petrol subsidies will push the government’s fiscal deficit over the projected 5.4 per cent of GDP towards six per cent if RON95 is kept at the current price of RM1.90 per litre for the rest of the year, AmResearch noted.
Ismail Sabri said, however, that the government will work towards achieving the 5.4 per cent target despite maintaining fuel and gas prices.
“We will do subsidy rationalisation as a whole,” he said.
Deputy Prime Minister Tan Sri Muhyiddin Yassin has said the government expects the subsidy burden to double from RM10.32 billion to RM20.58 billion this year.
Prime Minister Datuk Seri Najib Razak also said fuel subsidies were “like opium” to the Malaysian economy and would have to be gradually slashed as the initial bill of RM11 billion had soared to RM18 billion for the year due to escalating crude oil prices.
Ismail Sabri denied that the Cabinet decision today was made in light of snap polls, which many have speculated will be called by year-end or early next year.
“There’s a lot of speculation ... this has nothing to do with elections,” he said.
