Wednesday, February 3, 2010

New fuel subsidy scheme

The prices of petroleum has been fluctuating during the past few years, has reached its peak and also collapsed to its' lowest. Over the many years in Malaysia, we have enjoyed the subsidized rate for petroleum as the government absorbs the excess amount. Therefore, we have and are still paying much less for fuel in comparison to other countries like the US, UK, Australia and Singapore. Well, the compensation for those countries is that the prices of cars there are much cheaper and the government has to ensure their public transport is in tip-top conditions.

During the recent years, our Malaysian government has started to slowly reduce the subsidy, causing the amount that is paid by consumers to increase. The latest news is a new scheme that will be implemented on May 1. Basically, a few effects if this scheme takes place is:

1. People using rented cars or have no car under their ownership will pay the full unsubsidized amount for fuel
2. Each owner can only register one vehicle-the other vehicles if not put under someone else's name will not receive any subsidy
3. Petrol subsidy capped at 100 litres per month-to be reviewed as this amount is considered insufficient. This means if you use more than 100 litres, you have to pay full price for the excess over 100 litres.

For the full article, please read The Sun Daily

In my opinion, our government has been going through a budget deficit and now its time for them to recoup as much money as possible. This scheme will keep the  majority or if not everyone on their toes when it comes to petrol consumption-well at least initially. After awhile, everyone gets used to it again and everything is back to normal. However, the amount that is subsidized will definitely be inadequate especially for people in the  business line who incur high transportation for their goods or services. Well, once again the extra costs will be passed on to consumers, we'll find the laksa or kolo mee going up again over time, wages will have to increase and inflation catches up again as everything gets more expensive. Hopefully by that time, if the government wants to cushion inflation, they'll make the subsidy schemes to favour businesses and consumers. But well, for all these to play out, it'll probably take a couple or even many years depending on the market and world situation. Besides, this scheme is taking place on May 1 and various press releases are preparing the public for it so that they can be prepared. The final decision of the government is yet to be officially announced.

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