Malaysia cuts back fuel subsidiaries to save up to RM1.1 billion

Malaysian Premier and Finance Minister Datuk Seri Najib Razak announced the price hikes of RON95 and diesel on Monday. RON95 will be sold at RM2.10 and diesel at RM2 effective from Tuesday. The reduction in fuel subsidiaries is expected to save the government up to RM1.1 billion.

“Currently, our subsidy system benefits everyone, including the higher income group and foreigners. Thus, we need to move to a more targeted subsidy system that caters for the vulnerable groups. The subsidy rationalization will be carried out in many stages…

“To reduce the burden of the low-income and vulnerable group following the fuel subsidy rationalization, BR1M (Bantuan Rakyat 1Malaysia) will be increased in the 2014 Budget, of which the quantum will be announced in the upcoming budget,” PM Razak said.

Moreover, the premier termed the narrowing current account surplus in the balance payments as a major cause of concern. Thus, all the public sector projects will be strictly evaluated before allocating the government’s money. Projects with low import content and high-multiplier effects are likely to steer clear of the evaluation.

“However, projects with high import component will be sequenced accordingly, so as not to adversely impact the balance of payments position. However, the Mass Rapid Transit (MRT) Lines 1, 2 and 3 will proceed as planned. The Southern Corridor High-Speed Rail project is still under negotiations,” he said.

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