Prime Minister Datuk Sri Abdullah announced at 5pm today that the price of fuel will be adjusted, with Ron 97 petrol going up from RM1.92 a liter to RM2.70 a liter (an increase of 78 sen). Ron 92 petrol would also be increased by 78 sen to RM2.66 per liter, while the price of diesel would increase by RM1 per liter (from RM1.58 per liter to RM2.58 per liter). The new fuel prices will come into effect at midnight.
(I am just wondering how the mathematics was based on? or maybe just sounds good for them... in chinese like 78 sure prosper and 1.00 is sure and steady!)
He said that after decreasing the fuel subsidy, the government would offer cash rebates to car owners when they renew their road tax based on the horsepower of their car engines. Owners of cars with engines that are 1.999L or less will receive RM625, while motorcycle owners would receive a rebate of RM120.
(And this is rediculous! Go rebates the millionaires and billionaires as well! Subsidies are for the less privileged... for goodness sake! And you just wonder how decisions are made for the rakyat!)
Domestic Trade Minister Shahrir Samad said the pump price could rise as high as 3.00-4.00 ringgit when price controls are completely removed in August. Malaysia is moving to cut the bill for its extensive petrol, diesel and gas subsidies, which Shahrir said are expected to cost 56 billion ringgit (17.3 billion dollars) this year.
(So what are they going to do with all the savings of 56 billion ringgit?)
The subsidy cut was deeper than anticipated, said Yeah Kim Leng, chief economist with research firm Ratings Agency Malaysia. "A price increase has been seen as inevitable and expected, but what happened is way beyond expectations," he told AFP. "We were looking at 20 to 30 percent but 40 percent means the government must be trying to make up for not raising prices last year as well." Under a revamped subsidy system, drivers of smaller vehicles will receive a cash payment of 625 ringgit to offset the rising cost, equating to subsidising some 800 litres of fuel. Yeah said the rebates were not large enough to compensate for average use. "It is clearly only a partial subsidy so we need to see how the lower-income group will be able to now absorb all this," he said.
(There is no need to see my friend, as the lower income group will definitely not be able to cope with the rising cost or to be correct it is spiking cost as the cost of living will just spiral upwards or just abruptly jumps right up into your face!)
Despite the urgent need to lower the subsidy bill, the government is braced for a public backlash over any further increase in a country where public transport is poor and many people are dependent on their cars.
(Now why do you think that we had the subsidy in the first place?)