This evening, the Government of Malaysia just made an announcement the newly restructured Fuel Subsidy Scheme. Here's the gist of it....
- Effective 5th June 2008, fuel petrol price raised to RM2.70 per litre; diesel up by RM1 per litre to RM2.58; ULG 92 up 74 sen; ULG 97 up 78 sen;
- Cars up to 2,000cc, pick-ups up to 2,500cc to get RM625 annual cash rebate; motorcycles up to 250cc get RM120; rebates via postal order from July 1, 2008;
- Power sector gas raised to RM14.31 from RM6.40 per mmbtu; IPPs pay 30% windfall tax on PBIT; Tenaga can raise tariffs by next month; households using less than RM40 of power will not be affected;
- Industries using less than 2mmscfd of gas to pay up to RM24.54 per mmbtu versus RM9.40 now; industries using more than 2mmscfd to pay RM32.56 per mmbtu from RM11.32 now;
- Cars above 2L get road tax discount of RM200; motorcycles more than 250cc, road tax discount of RM50;
- Crude Palm Oil CESS removed; Instead, this will be replaced with a windfall tax at 15% at threshold of RM2,000 per tonne for the oil millers; East Malaysia millers to pay 7.5%; (CESS is a levy imposed on palm oil producers by the Government to help subsidize the cost of producing cooking oil in Malaysia)
- Annual inflation expected to rise towards 4%-5%;
- Rebates for motorists expected at RM5 billion;
- Government to maintain GDP growth at slightly above 5% (instead of the previously projected 6%);
- Fuel subsidy this year expected at RM18 billion versus RM57 billion;
- Government expects to save RM13.7 billion from fuel subsidy; savings to go towards essential items such as food security, cooking oil, rice, bread, flour, among other things.
What's your view on this re-engineered fuel subsidy scheme?
2 comments:
Great post! Yes! its the tip of an 'ICEBERG' wait a few weeks and more to come! From the negative point, crime rates may increase!!!!! It already bad here but can it be worsen by rising cost of living and hardships that people are unable to make ends meet? Let's see!
Bokjae,
Absolutely agree with you! Petrol went up 41%! We have not even seen the full effects of others to come, particularly essential items like electricity, food, gas, etc! Given if no adjustment in income/salary, most people will suffer with this drastic increase in cost of living! A mere RM625 rebate is only a small consolation and is not going to help much!
I agree with a gradual removal of subsidy but not this drastic!
Given the current political turmoil, this could well be a political suicide for some!
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