Like the rest of the world, Malaysians will have to get used to paying market prices that fluctuates on a daily or weekly basis for petrol.
Although Malaysia no longer subsidizes petrol but unlike the majority of the country, we do not tax it which is why Malaysia is among the top 20 cheapest petrol in the world. (the average price for petrol around the world is RM4.57 per litre).
It was not too long ago in early 2016 that we enjoyed the cheapest petrol in decades when our petrol prices dropped to RM1.60 per liter for many months when global oil prices plunged below US$30.
There is little point blaming Najib for petrol price increase (or praising him when petrol prices reduce) since he does not control the global oil market.
However, there is no denying that more expensive petrol will burden some people more than others.
Going back to blanket subsidies for petrol is a big “No” due to the huge cost as well as the wastage, leakages and inefficiency involved – which is why more and more countries are cutting blanket subsidies.
(I also do not want to benefit certain Whisky-drinking friends who drives Mercedes who complains bitterly that they now have to pay RM3.60 per liter extra this week to pump a full tank for their Mercedes)
In fact, even Pakatan has now U-turned and acknowledged this. They no longer wants to give blanket subsidies for petrol and only promises in their alternative budget 2018 to give only a 20sen rebate off the floating market prices for motorcycles and cars below 1,000cc
However, there will be certain segments of the population who will be impacted by higher petrol prices.
Finance Minister II Johari’s revealed yesterday that the govt may increase the amount and frequency BR1M payments should petrol prices rise above a certain level but such payments will stop when petrol price falls below the level.
I find this proposal very interesting as it does not amount to blanket subsidies while ensuring the lower-income groups are not impacted by higher petrol prices.
In fact, if this scheme is done right then the lower income group may gain even more compared to the increase amounts they have to pay for petrol
When global oil prices increase (and petrol prices increase), our govt also benefits with higher revenue – thus it is only fair that such increase revenue is shared back with the lower income groups.
What is more fair than that?