Monday, May 20

Luxury cars of 1,500 cc and below not eligible for petrol subsidy

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KUALA LUMPUR: The government has stressed that luxury cars possessing engine capacities of 1,500 cc and below will not be entitled to the Ron 95 petrol subsidy.

Finance Minister Lim Guan Eng said a study was being undertaken on implementation of the subsidy mechanism which is expected to be effective in the second quarter of next year to benefit beyond the B40 group.

“We want to see how to broaden the implementation, so that it is not just limited to the B40.But, I wish to stress that, those using luxury cars should not expect the subsidy,” he told reporters at Parliament here tyesterday.

In tabling the 2019 Budget, the government had allocated RM2 billion to provide the subsidy on a targeted basis for private car owners with an engine capacity of 1,500 cc and below or motorcycles with an engine capacity of 125 cc.

The subsidy is limited to 100 litres monthly for cars or 40 litres for motorcycles.

The move is expected to benefit four million car owners and 2.6 million motorcyclists.

On the Samurai Bond, Lim said the government is looking to utilise proceeds from the bond for refinancing or substituting existing foreign dominated loans and for development projects.

“This is something that we will discuss and decide later and it will be done before March,” he said.

When tabling the budget, Lim announced that the Japanese government had guaranteed up to RM7.4 billion for the issuance of the 10-year Samurai Bond with a coupon rate of 0.65 per cent.

Meanwhile, on the country’s fiscal management, he said the government would continue to focus on fiscal consolidation, albeit, over a three-year period instead of one.

“The reason why we want to do it in three years, instead of one, is that we think the people’s socio-economic welfare should be given priority.

“At the same time, it will also help grow the economy,” he added.

Under the budget, the government aims to reduce the fiscal deficit to 3.4 per cent of the gross domestic product in 2019, 3 per cent in 2020 and 2.8 per cent in 2021, while reducing it to around 2 per cent in the medium term.

In another development, Lim said the government would continue to honour 1Malaysia Development Bhd’s (1MDB) bond payment to avoid being in default, despite challenging the settlement agreement between it and the Abu Dhabi sovereign fund’s International Petroleum Investment Co (IPIC), reached last year.

“Malaysia can’t afford to be in default (because) we have our own international reputation to protect.

“If we default, there will be an immediate automatic downgrade (and) we can’t afford that.

“Although it is to finance 1MDB, we have to pay the bondholders, but the amount we pay, we will use it as claims against those who are responsible,” he added.

Attorney-General Tommy Thomas had previously stated that Malaysia will file a legal challenge over a settlement agreement between 1MDB and IPIC on the basis that the consent award was procured by fraud or in a manner contrary to public policy. — Bernama