The plans to restructure RON 95 fuel subsidies is on course according to Government sources. Its implementation is by the middle of 2025. Consumer groups are urging the government to defer it due to rising costs and economic uncertainties tied to the U.S. tariffs.
The impact
of US tariffs on imports from China, Mexico and Canada is still not felt but
remains a risk.
The unity government feels that the economic uncertainty due to US policies is not a strong enough reason to delay the subsidy rationalisation. According to research by SME Bank Group, in 2022, the government spent RM23.1bil on subsidies for RON 95 fuel and RM18.7bil for diesel.
The prospect of a global slowdown has worried consumer associations, unions and small business associations as it could dampen local business sentiment. Such a phenomenon, coupled with a surge in inflation from cutting fuel subsidies, would adversely impact low-income families and micro-entrepreneurs.
The Socio-Economic Research Centre (SERC) proposed that the government gradually cut back on RON 95 subsidies to soften any impact on consumers. That’s a more rational approach amidst the uncertainties. Why not do a 3-step approach of review every six months? The argument that the rationalisation exercise will provide sufficient funds to subsidise the B40 group, is spurious! It is still a subsidy! The current RON95 price is one of the few benefits that the T20 and M40 get to enjoy. And they pay 85% of the taxes!
Reference:
Restructuring
fuel subsidies to go on, Sheridan
Mahavera, The Star, 5 March 2025
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