Malaysia to cease petrol subsidy for high-income earners

BANGI - High-income earners will have to start paying the market price for RON95 petrol, while those in the low-income bracket will continue to enjoy the current subsidised rate once the petrol subsidy rationalisation mechanism is implemented in June.

The current market rate for RON95 is RM2.58 (S$1) per litre, while the subsidised price is RM2.30 per litre.

Deputy Finance Minister Datuk Ahmad Maslan said the mechanism, which might involve the use of MyKad or other cards, was still being refined by the Finance and the Domestic Trade, Co-operatives and Consumerism ministries.

"For the middle-income group, some will still enjoy the subsidised rate," he told a press conference after the Goods and Services Tax (GST) and Budget 2015 briefing for officers from the Rural and Regional Development Ministry and related agencies yesterday.

Ahmad said it did not make sense that those driving luxury cars enjoyed 75 litres of petrol subsidy while the low-income group had 7.5 litres for each refuelling.

"When the system for subsidised diesel starts in January, fleet cards will be used for its purchase," he said.

He added that the Government spent RM23.5 billion in fuel subsidy in 2009.

Asked if the Government would give subsidy across the board to all Malaysians up to a certain usage, considering that the country is a petroleum-producing country, he said there was still time to study it and a decision would be announced later.

He had said that Malaysia produced 700 barrels of high-quality petroleum a day for export while importing 600 barrels of regular petroleum for common use.

Meanwhile, Ahmad said the inflation rate was expected to increase by 1.08 per cent from the current 3.3 per cent (based on the Consumer Price Index) just after the GST launch in April, but would go down to 2 per cent or 3 per cent at the end of 2015 or in 2016, as forecast by Bank Negara.

The reason for the temporary increase is that the 10 per cent sales tax on old stock is added with the 6 per cent GST.

He noted, however, that some were unaware that the 10 per cent could be reimbursed and that the ministry had prepared courses for companies registered for the GST to keep them informed.

As of Wednesday, Ahmad said more than 100,000 companies had registered for the GST, compared with 74,000 companies for the Sales and Services Tax.