Najib (right), accompanied by Ismail Sabri, speaking at the press conference. — Bernama photo
SERDANG: Consumers will directly benefit from the managed float system effective Dec 1 for Ron 95 petrol and diesel, by way of lower prices, Prime Minister Datuk Seri Najib Tun Razak said.
He said the people will also see greater socio-economic benefits from the managed float system which enables increased savings from subsidies.
“With savings of between RM10 billion (and) RM20 billion annually, we can for sure increase allocations to those sectors deemed important in the context of the country’s socio-economic development.
“The agricultural, rural development, education and health sectors are among those for which we can increase allocations, as they all are directly linked to the wellbeing of the people.
“At the same time, the government is implementing the managed float system to provide direct benefits in the face of declining global fuel prices.
“If it goes down further, we can make adjustments according to the prevailing global market prices,” he added.
The prime minister told reporters this after officiating at the Malaysian Agriculture, Horticulture and Agrotourism Show (MAHA) 2014, at the Malaysian Agro Exposition Park (Maeps)here, yesterday.
The managed float system decided by the Cabinet on Friday is the same as that for determining the retail price of RON97 petrol from July 2010.
Following the Cabinet decision, from Dec 1, there would no longer be any subsidies for both Ron 95 and diesel as the global market prices are now lower than the pump price.
Najib, who is also Finance Minister, said the method will also educate the people that the rise or fall in fuel prices in the country did not depend on the government, but the global market.
He said the fuel subsidy was subject to a lot leakages, including widespread smuggling activities, and this caused the government to lose billions annually.
“Fuel entails a bulk subsidy, so the rich get bigger benefits from those in the lower income group, alongside the widespread smuggling, and then tourists also come and buy our petrol.
“So, the fuel subsidy has a lot of leakages and losses,” he added.
Najib said apart from the fuel subsidy, the government had other ways to also assist the people and the managed float system did not mean that it had done away with the provision of subsidies altogether.
“Targeted subsidies as such have greater benefits, meaning, we will not do way with the 1Malaysia Peoples Aid (BR1M), incentives for fishermen and education, among others,” the prime minister added. — Bernama