1. A couple of days ago, the Malaysia government via PEMANDU has announced the reduction in the subsidy of the Petrol, LPG, and sugar. This means that the consumers have to pay more for these items and hence resulting in an increase their monthly expenditure especially those who live in the urban areas.
2. We have to remember that the price hike may be followed by an increase in the price of other products especially food products. Not to mention those who take this opportunity to increase the price of the groceries by putting the blame in transportation cost.
3. According to the source the current price is still cheaper compared to most of the neighboring countries such as Singapore, Thailand and Indonesia. While this is true, the price hike has been utilised by the opposition parties to rally support from the 'rakyat' and embed hatred towards the government. Malaysiakini for example has used the source from CNNMoney.com (see the table of the left) comparing the petrol price of Oil-producing countries.
4. For those people who look at it superficially (not not considering other factors that influence the petrol price in these countries), it is apparent that our petrol price is much higher (given the fact that our beloved Malaysia is also an oil-producing country).
5. Without reducing the subsidy, the amount the government has to bear is too much leading to fiscal deficits and this will deny the money to be spent towards the benefit of the poorer people in the country (this is what the government people says).
6. Well, for me, there is a lot to be explained to the people in the city and villages, to make them understand the rationale behind the price hike (they are feeling the impact of this price hike, the ministers don't...).
7. Failure to do so may give a negative impact towards the ruling coalition in the next General election.
The government today announced subsidy reductions of five sen per litre for RON 95 petrol and diesel, five sen per kg for LPG and 20 sen per kg for sugar effective tomorrow.
With the reduction, RON95 petrol will cost RM1.90 per litre, diesel RM1.80 per litre, LPG RM1.90 per kg and sugar RM2.10 per kg.
The subsidy rationalisation announcement was made in a joint statement by the Ministry of Domestic Trade, Cooperatives and Consumerism and the Performance Management and Delivery Unit (Pemandu) of the Prime Minister’s Department.
The statement said that despite the increase, Malaysia's retail prices for all the items remained lower than those in neighbouring countries, such as Indonesia, Singapore and Thailand.
For example, the price per litre for RON95 petrol is RM2.46 in Indonesia, RM4.36 in Singapore and RM4.25 in Thailand, while the price per litre for diesel is RM2.50 in Indonesia, RM3.18 in Singapore and RM2.96 in Thailand.
LPG costs RM2 per kg in Indonesia, RM6.42 in Singapore and RM1.93 in Thailand while sugar is priced at RM3.50 per kg in Indonesia, RM3.80 in Singapore and RM2.80 in Thailand.
The first step towards the subsidy rationalisation programme was made on July 16 when subsidies for RON95 petrol and diesel were reduced by five sen per litre, for LPG by 10 sen per kg, and for sugar by 25 sen per kg.