Groups Urge Reconsideration Of RON95 Subsidy Restructuring

Consumer associations, unions, and small business groups have called on the government to reconsider its plan to restructure RON95 petrol subsidies due to the uncertain global economic climate. They argue that eliminating blanket diesel subsidies in June of last year contributed to a global increase in prices for goods and services, which negatively impacted consumer disposable incomes and small business profits.

The vice-president and legal adviser for the Federation of Malaysian Consumers Associations (Fomca), Datuk Indrani Thuraisingham, commends that the government assesses the effects of new tariffs from the US, Malaysia's third-largest trading partner, before replacing blanket subsidies with a targeted scheme.

“We need to implement this plan very carefully and not just stick to strict timelines. It must be carefully calibrated to protect consumers and the compensation must be given out before hand. A sudden removal will intensify inflation,” he says.
Union leader, Datuk Shafie BP Mammal echoed the opinion. He believes that the RON95 policy needs to be reviewed due to the unpredictable nature of the global economy. He also stated that the increase in the minimum wage to RM1,700 per month has caused another wave of price increases for goods and services, similar to what happened when the price of diesel was raised last year.

“Malaysia could feel the effects of this global uncertainty so we must be very careful. We must look at whether people in the lower income group can actually survive another round of subsidy cuts,” said Shafie.
Datuk Seri Rosli Sulaiman, the president of the Federation of Malaysian Hawkers Associations, has expressed that the supply of essential raw materials for hawkers has been severely affected by the fluctuating prices of diesel. He specifically mentioned that cooking oil had almost disappeared from the market when diesel prices were fixed.

“Some of our members said that some wholesalers would not even sell them cooking oil unless they were also buying other materials from these stores,” he said.

Rosli expressed concerns over the long-lasting financial repercussions of the COVID-19 lockdowns, emphasizing that it would take a significant amount of time - an estimated five years - for certain segments of the economy to fully recover. He specifically highlighted small business owners, hawkers, and their customer base as being particularly vulnerable to the economic fallout.

The government intends to cease blanket subsidies for RON95 petrol by mid-year. This action will remove the current RM2.05 per litre price cap, requiring high-income drivers to pay full price. The goal of this initiative is to redirect subsidies towards low- and low-middle-income households.

However, the United States' recent announcement of extra tariffs on imports from China, Canada, and Mexico has shook international markets and raised concerns about a worldwide economic slowdown. Although Malaysia was not the target of the US tariffs, the nation's exports, including electronics and palm oil, may be impacted.

Source: The Star.