Govt to reduce subsidies for petrol, diesel and LPG

KUALA LUMPUR: The government yesterday announced subsidies for petrol, diesel, liquefied petroleum gas (LPG) and sugar will be reduced as a first step to the gradual subsidy rationalisation programme effective yesterday.Subsidies for RON 95 petrol and diesel will be reduced by five sen a litre and LPG by 10 sen a kilogramme, said Prime Minister Datuk Seri Najib Tun Razak in a statement yesterday.

This means RON 95 grade petrol will cost RM1.85 a litre while LPG will be sold at RM1.85 per kilogramme.

“RON 97 petrol will no longer be subsidised. It will be subject to a managed float under which the price will be determined by the automatic pricing mechanism,” he said.

RON 97 is only 13 per cent of fuel consumption in Malaysia.

“For sugar, the upward price adjustment is 25 sen a kilogramme,” he said.

Currently, sugar is sold at RM1.65 a kilogramme.

Najib said the minimal changes would help Malaysia achieve a position of fiscal responsibility and “put us on a path towards reducing our deficit”.

“To meet these objectives, we have chosen to make adjustments to our subsidies,” he said.

Even after these changes, the government would still spend an estimated RM7.82 billion on fuel and sugar subsidies this year, he said.

The prime minister said fuel and sugar prices in Malaysia would still be among the lowest in the region.

Najib said the subsidy rationalisation would allow Malaysia to reduce government expenditure by more than RM750 million this year.

“The decision to reduce fuel and sugar subsidies was based on the fact that reducing fuel subsidies would have the greatest impact on government spending and reducing sugar subsidies ‘will allow us to promote healthier lifestyles’,” he said.

“Also, subsidised diesel continues to go to the black market or across our borders, instead of to those we want to assist,” he said.

“Thirdly, unless the government reduces our fuel and sugar consumption, we face potentially serious consequences as a nation,” he said.

Najib said the government arrived at this decision after robust consultations with the people.

He said thousands of Malaysians participated in the policy labs, Open Day and an unprecedented public feedback process.

“As with subsidy reforms, the budget, government Transformation Programme and now the National Key Economic Areas, the government has made a determined effort to engage the public, listen and learn, and then act in the best interest of the nation.

“These measures are designed to have minimal impact on individual families, but long-term benefits for the nation. The government has made a difficult, but bold decision.

“By choosing to implement these modest subsidy reforms, we have taken a crucial step in the right direction towards meeting our commitments to reduce the fiscal deficit, without overburdening the Malaysian people,” said Najib.

The prime minister said these measures are a demonstration of the government’s fiscal responsibility.

They would enhance Malaysia’s financial stability, while also protecting the people, he added. — Bernama