Be careful with RON95 revision, urge groups

PETALING JAYA: Consumer associations, unions and small business groups have urged the government to review its plans to restructure subsidies for RON95 petrol as the global economy is facing uncertain times.

They pointed out that prices of goods and services had gone up across the board and cut into the disposable incomes of consumers and the profits of hawkers and small traders when blanket diesel subsidies were removed in June last year.

As such, they said the government should wait and assess the impact of new tariffs from the United States, which is the country’s third largest trading partner, before deciding to proceed with the plan to replace blanket subsidies with a targeted scheme.

“We need to implement this plan very carefully and not just stick to strict timelines,” said Datuk Indrani Thuraisingham, who is Federation of Malaysian Consumers Associations’ (Fomca) vice-president and legal adviser.

“It must be carefully calibrated to protect consumers and the compensation must be given out before hand. A sudden removal will intensify inflation.”

The government has said that it will end blanket subsidies for RON95 petrol – which keeps the price at pump at RM2.05 per litre – in the middle of this year.

READ MORE: Bracing for pump price pain

It is devising a mechanism to channel those subsidies directly to low income and low middle income households, while high earning motorists will have to pay full price for the fuel.

However, new tariffs announced by the United States on imports from Mexico, China and Canada, have rattled global markets and sparked worries of a world economic slowdown.

Indrani said while the US tariffs were not directed at Malaysia, it could affect the country’s exports such as electronics and palm oil.

Union leader Datuk Shafie BP Mammal echoed this view, saying that uncertain global economy sentiments make it necessary to review the RON95 policy.

“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, who is UNI-Malaysia Labour Centre president.

He also said the rise in the minimum wage to RM1,700 per month caused another round of price increases for goods and services, similar to what occurred when the price of diesel was floated last year.

“If the price of RON95 petrol goes up due to the targeted subsidy scheme, businesses will take the opportunity to raise prices again because the majority of the public use this fuel,” he said when contacted.

Federation of Malaysian Hawkers Associations president Datuk Seri Rosli Sulaiman said when diesel prices were floated, the supplies of some raw materials, such as cooking oil, had almost disappeared.

“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 said small traders, hawkers and their customers were still reeling from the economic impact of Covid-19 lockdowns and needed five years in order to rebuild their incomes.

“This is not the right time to cut fuel subsidies because the pain will be widespread,” he said.