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Rafizi Reaffirms Fuel Subsidy Reduction Plans

In an interview with Bloomberg on Tuesday, Economy Minister Rafizi Ramli reaffirmed the government’s decision to cut fuel subsidies this year as part of efforts to reduce the national fiscal deficit.

As reported by The Star, Rafizi emphasised the necessity of implementing the subsidy cuts to “manage the sequence” effectively, particularly in light of looming inflation risks. The move aligns with the government’s targeted RON95 subsidy programme planned for the second half of 2024, aimed at optimising resources for those most in need.

Highlighting concerns over the distribution of blanket fuel subsidies, Rafizi noted that the top 20 (T20) income group currently receives 53% of these subsidies. He stressed that such blanket subsidies, particularly on RON95 fuel, have accounted for a significant portion of the total RM81 billion in subsidies disbursed in 2023.

The government aims to narrow the budget deficit to 4.3% of gross domestic product (GDP) this year, compared to 5% in 2023. Rafizi emphasised the importance of adhering to a certain timeline to achieve this fiscal target.

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Woman Fills Thai-Registered Car with Subsidised Fuel in Rawang

A video showing a woman filling her Thai-registered car with subsidised fuel at a petrol station in Rawang, Selangor, has ignited frustration among netizens. The video not only highlighted the audacious act but also raised eyebrows as a petrol station employee was seen assisting in the process.

In the footage, a man stood in front of the woman, holding the fuel nozzle, while another person, seemingly a station worker, pressed on the car’s boot—a common practice to facilitate the fuelling process. Netizens expressed their anger not only towards the woman’s actions but also questioned why the station employee allowed the use of subsidised fuel for a foreign-registered vehicle.

The video owner, expressing disbelief, remarked on the audacity of stealing subsidised fuel meant for Malaysian citizens and questioned the station employees for assisting in the act.

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Malaysia’s Fuel Subsidy Hindering EV Adoption

Gentari’s Deputy CEO and Chief Green Mobility Officer, Shah Yang Razalli, has highlighted that Malaysia’s fuel subsidy policy goes against its efforts to encourage the use of electric vehicles (EVs). This conflict is hindering the overall push towards greater EV usage in the country.

As reported by TheEdge Malaysia, Razalli stressed that a key aspect in driving EV adoption is achieving a balance in the total cost of ownership (TCO). In simpler words, the question is: Is it more cost-effective to buy and run an EV over its entire lifetime compared to a traditional internal combustion engine (ICE) vehicle? This topic was discussed during a session at the Energy Transition Conference held on August 28.

The obstacle to achieving cost parity between EVs and ICE vehicles is the presence of financial incentives. These incentives include direct subsidies for purchasing EVs and additional benefits such as free public charging, parking, or tolls. At the same time, any discouragement of fossil fuel usage is influenced by measures like fuel taxes or carbon taxes.

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Price Of RON95, Diesel May Increase Gradually By The End Of 2023

The existing RM2.05 and RM2.15 per litre subsidy ceilings for RON95 and diesel, respectively, may be subject to revision and a possible progressive rise later this year.

If there is no gasoline subsidy, as opposed to the present RM2.05 per litre, the actual price of RON95 is anticipated to reach roughly RM3.22 per litre, according to PublicInvest Research analyst Sabrina Edora.

Furthermore, it is estimated that eliminating fuel subsidies for the T20 income category would raise inflation by 0.45 to 0.75 percentage points each year. The government recently indicated that the Pangkalan Data Utama (PADU) system, which will be used to deliver targeted subsidies for RON 95 fuel and diesel next year, will be ready by the end of this year.

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