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Malaysia raises petrol, diesel prices

KUALA LUMPUR — Motorists will have to pay 20 sen (S$0.08) more per litre of RON 95 petrol and diesel from tomorrow (Oct 2), effectively hiking the fuel at the pumps after midnight tonight.

Motorists queue up to fill their vehicles with petrol before the nationwide 20 sen (S$0.08) petrol price increase at midnight in George Town, Oct 1, 2014. Photo: The Malay Mail Online/K.E. Ooi

Motorists queue up to fill their vehicles with petrol before the nationwide 20 sen (S$0.08) petrol price increase at midnight in George Town, Oct 1, 2014. Photo: The Malay Mail Online/K.E. Ooi

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KUALA LUMPUR — Motorists will have to pay 20 sen (S$0.08) more per litre of RON 95 petrol and diesel from tomorrow (Oct 2), effectively hiking the fuel price at the pumps after midnight tonight.

RON 95 will now cost RM2.30 per litre, up from RM2.10, while diesel will be RM2.20, an increase from RM2 previously.

This was announced by the Malaysia’s Domestic Trade, Consumer Affairs and Cooperatives Ministry this evening. The ministry said the move was in line with its subsidy rationalisation plan.

“Despite the increase, the government will still need to spend more than RM21bil on fuel RON95, diesel and LPG subsidies for this year.

“This move is in line with the subsidy rationalisation plan by the government to ensure that the country’s finances remain strong,” the ministry said in a statement today.

The ministry also said the move is aimed at preventing fuel smuggling to ensure the current subsidies of the commodity is not abused by irresponsible parties.

The ministry added incentives, including increased amount of cash aid Bantuan Rakyat 1Malaysia (BR1M) will be given to those the needy and lower income group to offset the burden of the increased fuel prices. Other measures include aid for families with school-going children as well as tax incentives.

The government has yet to announce whether petrol and diesel will be subjected to the Goods and Services Tax (GST).

The last time Putrajaya slashed fuel subsidies was on Sept 2 last year where Prime Minister Najib Razak had announced a 20 sen reduction in RON95 petrol and diesel subsidies effective from the next day, and a 15-sen decrease in RON97 petrol two days later, causing outraged Malaysians to form long queues at petrol stations to fill up and take to social media to express their views.

However, economists had hailed it as the right move to address the ever-increasing government debt. Mr Najib had said at the time that the new prices would save the government at least RM1.1 billion.

Malaysia’s national debt, currently at 54.6 per cent of GDP, hovers just below a critical legal ceiling and is jointly ranked with Pakistan as having the second highest debt-to-GDP ratio among 13 emerging Asian markets after Sri Lanka, according to data compiled by Bloomberg.

Ratings agency Fitch also maintained Malaysia’s sovereign debt outlook at “Negative”, rating Malaysia’s long-term foreign currency sovereign debt at A minus, which is the last rung of the upper-medium grade ratings.

Putrajaya has continued to rack up debt despite trimming the headline deficit number, saddling the nation with liabilities amassed primarily through government-linked firms.

Malaysian household borrowings have also kept apace, hitting 86.3 per cent of GDP in 2013 when it had been just 60.4 per cent less than six years ago, surpassing even that of the US, which stood at 80.6 per cent registered in the first three months of this year. AGENCIES

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