The world has suffered from global economic uncertainty for the past few years. Malaysia, a country with a booming economy, is always bound to be affected by the global economic recession just as others were.
I believe that it is vital for us to rationalise some existing subsidies to help us cope with the global economic climate, including the rationalisation of the fuel subsidy.
In September, I announced the move to cut fuel subsidy by 20 sen, which inevitably resulted in the price increase of RON95 fuel.
However, even after the subsidy rationalisation exercise, the government still subsidises 63 sen per litre for RON95 and 80 sen per litre for diesel. In 2013 alone, RM24.8 billion has been allocated for fuel subsidy.
Compared to other countries in Asia, our petrol price remains relatively low, even without the subsidy. The price of RON95 in Thailand is RM4.74 a litre, RM5.44 in the Philippines, and RM3.05 in Indonesia. In June this year, Indonesia hiked up their petrol price by up to 44%. Despite it being a very unpopular move, the Indonesian government realised that it was a necessary measure to improve their economy.
We also need to embark on long-term measures to reduce public dependency on government subsidies now, rather than pass the burden onto future generations. Many don’t realise that Malaysia is a small petroleum exporter amongst big players, and our domestic consumption is high. While we export our petroleum, we also import petroleum from other countries for our domestic consumption.
We cannot be fiscally irresponsible by continuing to take out another RM 10 to 20 billion from the nation’s finances to subsidise fuel when it can be channelled to other important areas such as education and infrastructure development.
Of course it will be hard for some people to deal with the removal of a subsidy – we understand that.
So I would like to assure all Malaysians, especially those of you in lower income groups, that measures will be put in place for you to cope with the price hike.
The government will implement these measures gradually, and prices of controlled items and services will be monitored to ensure that they will not be exploited by irresponsible parties.
I hope that this necessary measure will be accepted with an open heart by all as we work together in our quest towards becoming a high-income nation.
Admin: Follow the tabling of Budget2014, this Friday, 25 Oct.