There has been recent sudden announcements of Malaysia’s petrol subsidies removal for RON95 & diesel instead of the expected government implementation of tiered subsidy levels. What are the expected/estimated results of the removal?
- Price of petrol in the very short term to go down as the government currently adjusts prices on a monthly basis using a managed float system. (We have been paying slightly higher then the market rate of petrol)
- Short-mid term price of products may be impacted especially if there are major shifts in oil prices
- Price of petrol may rise significantly as petrol prices worldwide fluctuate. There may be more BR1M government aid given in those circumstances.
- Long-term removal of subsidies viewed as positive by most analysts & the market. However, bigger concerns of corruption & other indiscriminate spending.
- Huge savings for the government as fuel subsidies rose as high as RM28.9billion in 2013 (13.7% of operating expenditure)
- Bank Negara OPR expect to remain stable at 3.25% & no rates change with the subsidies removal.
- Pricing RON95 RM2.30/l & diesel RM2.20/l in Dec 2014.
- 2015 RON95 pricing averaging RM2.50/l.
- Launch of more electric/hybrid vehicles. Sadly the earlier tax incentive on hybrid/green vehicles had expired.
- Consumer spending to be uncertain due to the changes. Expected GDP growth 5% & inflation 3.2%.
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