Following the reduced subsidy, the new retail price for RON95 will be RM2.30 per litre while diesel fuel will cost RM2.20 per litre.
The current market price for RON95 is RM2.58 per litre while diesel is RM2.52 per litre.
Despite the cut in subsidy, the government would still need to spend more than RM21 billion on RON95, diesel and liquefied petroleum gas subsidies for this year.
“This move is in line with the government’s subsidy rationalisation plan to ensure that the country’s finance remained strong.
“The government also aimed to curb leakages and smuggling of fuel by irresponsible quarters,” the ministry said in a statement.
The ministry said the subsidy should be better targeted and not given across the board as non-citizens, including foreign tourists, would also benefit from the subsidy provided by the government.
The measure could also result in equitable savings and be capitalised for the development of education, healthcare, and comprehensive and efficient public transport system, and enhancement of national security.
The ministry said the government was aware that the subsidy rationalisation would have an impact to the economy and society.
Hence, the government will continue to provide assistance and incentives to ease the burden of the people, particularly low and middle-income earners.
In this regard, one of the measures to be taken by the government is to increase the 1Malaysia People’s Aid (BR1M) which will be announced in the 2015 Budget, the statement said.
Other measures that are being considered in the 2015 Budget included continuing education assistance, subsidising house prices and providing tax incentives.
The government would also ensure that daily essentials are sold at affordable prices and take stern action against those who are involved in profiteering.
The subsidy rationalisation would be implemented with caution and in stages to ensure minimal impact on the economy and will not burden the people, especially the low and middle-income groups.
The ministry said subsidy rationalisation would ensure that the Federal government’s financial position would remain strong and on the right track.
It is also aimed at reducing the fiscal deficit gradually from 3.9 per cent of the GDP in 2013 to three per cent in 2015 and achieve a balanced budget by 2020.
The subsidy rationalisation is part of efforts to transform the economy into a high-income developed country.
The government is confident that this move would further strengthen the country’s financial base and economy to meet global economic challenges and to ensure the country’s prosperity.
–BERNAMA
