KUALA LUMPUR: In a significant move amidst rising cost-of-living pressures, Malaysia is set to lower the price of RON95 petrol for its citizens. Prime Minister Anwar Ibrahim announced on 22 September 2024 that the subsidised price will be reduced from RM2.05 to RM1.99 per litre, effective 30 September 2024.
New Subsidy Framework
The adjustment aims to alleviate strain on everyday Malaysians, with the government implementing a cap of 300 litres per month per individual. Only Malaysians aged sixteen and above with a valid driver’s licence are eligible for this benefit. Non-citizens will be required to pay the unsubsidised price of around RM2.60 per litre at the pumps.
Control Measures and Exceptions
- Ride-hailing drivers can apply for additional subsidised fuel through their companies if they need more than the allocated limit.
- To prevent misuse, the government will verify the need for increased fuel allowance.
- Identifying eligibility relies on company audits and e-hailing system records.
Financial Implications
According to Second Finance Minister Amir Hamzah Azizan, the new subsidy scheme is expected to save the government between RM2.5 billion and RM4 billion annually, depending on oil prices, while simultaneously addressing issues of subsidy leakages to foreigners and wealthier citizens. This saving can be channelled towards improving public services and infrastructure.
Savings and Public Response
Public sentiment has been mixed. While some appreciate the relief, others question whether the measures adequately target those most in need. Amir Hamzah, during a briefing, expressed that every dollar saved contributes to reducing the fiscal deficit or improving community investments.
Political Context
This announcement follows a series of economic adjustments by Anwar’s administration designed to boost productivity, including a minimum wage increase and higher tariffs for heavy energy users. Anwar emphasised that the goal is an inclusive subsidy programme acknowledging all citizens, irrespective of income levels.
The Prime Minister stated, “Some may criticise that even the super-rich are entitled to it, but this is our way of recognising and appreciating Malaysian citizens.” The government aims to maintain the new fuel price for the near future, promising stability in the immediate term.
As Malaysia navigates the delicate balance of providing relief while ensuring fiscal responsibility, it remains to be seen how effectively these measures will be implemented.