Thursday, June 5, 2008

It's NOT a Hoax that Malaysia Has Increase Fuel Prices!


It was rumored that the new fuel price in Malaysia will be effective by midnight (June 4, 2008) will be increased from RM 1.92 to RM2.70. And that's like a 78 cents hike which sums around 40%. That shocking statement made by our current Prime Minister Abdullah Ahmad Badawi (Pak Lah) has shocked the whole region of Malaysia.

On national television, Pak Lah said that it took him four hours to decide on whether to increase the fuel. That four hours to decide?? What in the world? Does he even have a business planning strategy or something to at least inform us. Another rumor or fact said that the fuel will be increased again on August 14, 2008.

According to thestar online:

“Our effort is certainly not an attempt to be popular but we try our best to help the people. We cannot satisfy everyone,” he said.

Abdullah said demand for public transport would go up with the rise in fuel prices and the Government was currently addressing the need to improve services.

He reiterated that the public should make changes to their lifestyle, saying they must ensure there was no wastage in resources such as water, energy and food.

He said if certain adjustments were made, the public would not be “too badly affected by price increases”.

He said the hike in fuel prices would cause a projected increase in inflation of around 4% to 5%. It would also have an impact on the country’s gross domestic product (GDP) growth but was confident that it could be maintained at 5% this year.

Abdullah said the Cabinet committee on anti-inflation had to come up with a system to ease the public’s burden from higher fuel prices.

“What is important is that we want to ensure the restructuring will encompass a mechanism that will protect and benefit those in the lower and middle income group.

“We are truly committed in ensuring these groups will not be burdened by the increase in petrol and food prices,” he said.

Asked if the subsidy restructuring would result in Malaysians going to the streets to demonstrate their unhappiness, Abdullah was confident the people would not resort to that.

The Changes

Price increase

Petrol – RM0.78/litre
Diesel – RM1/litre
Commercial and industrial – 26%
Retailers and small restaurant operators – 18% (for first 200kWh per month)
Residential – new pricing structure for users above 200kWh per month

Prices effective today (per litre)

Petrol – RM2.70 (previously RM1.92)
Diesel – RM2.58 (previously RM1.58)


> RM625 per year
For private vehicle with engine capacity of 2000cc and below, including private pickup trucks and jeeps with engine capacity of 2500cc and below.

> RM150 per year
For each private motorcycle with engine capacity of 250cc and below

> RM200 reduction on road tax
For private petrol and diesel vehicles with engine capacity above 2000cc

> RM50 reduction on road tax
For private motorcycles with engine capacity above 250cc

Streamlined diesel subsidy
(for approved transportation companies, vessel owners and fishermen)

> Diesel – RM1.43 per litre (previously RM1 per litre for fishermen and RM1.20 per litre for vessel owners)

> RM200 per month for every owner and employee of Malaysian-owned vessels registered with the Fisheries Department

> 10sen per kilo incentive for every kilogram of fish caught by registered vessels

> 10sen per litre for every litre of diesel used by river transportation operators according to approved quota

Gas subsidies restructure
(for Peninsular Malaysia)

> For power producers – from RM6.40 per mmBtu to RM14.31 per mmBtu

> For industrial users (consuming less than 2mmscfd) – from RM9.40 per mmBtu to RM24.54 per mmBtu

> For industrial users (consuming above 2mmscfd) – from RM11.32 per mmBtu to RM32.56 per mmBtu

Electricity tariff restructure

> Households using 200kWh and below every month will not be affected. This covers 59% of households in Peninsular Malaysia with a monthly bill under RM43.60.

> Commercial and industrial users face 26% increase. Small retail and business outlets consuming under 200kWh per month face 18% increase.

Liquefied Petroleum Gas (LPG) and
Natural Gas for Vehicle (NGV)

> No change. Prices remain at RM1.75 per kg (LPG) and RM0.635 per litre (NGV)

Oil palm windfall tax

> For Peninsular Malaysia 15% for every tonne of CPO exceeding RM2,000

> Sabah and Sarawak 7.5% for every tonne of CPO exceeding RM2,000 > Abolition of cess tax

Service tax threshold for restaurants and eateries

> Service tax now for restaurants with annual sales of RM3mil (previously RM500,000)

According to Uncle Lim's blog:

At a press conference held at 5.30pm, Prime Minister Abdullah Ahmad Badawi also announced that the government plans to offer rebates to motorists to offset the fuel price increase.

Under the scheme, vehicles below 2000cc will receive a RM625 rebate annually - to compensate for 800 litres of fuel used under the new price.

Meanwhile, motorbikes will be given a rebate of RM120. The money will be paid by postal order.

Rebate will be paid when motorists renew the road-tax for their vehicles.

The government is expected to save RM4 billion under this new subsidy restructure.

However, the government is slowly expected to head towards totally abolishing the fuel subsidy.

If petrol is to be sold at full market prices, it could be as high as almost RM4 a litre - about 50 percent above current levels.

Since 2004, petrol has gone up by 97.1 percent, while diesel increased by a whopping 231 percent [see chart below].

Higher TNB tariffs

Abdullah also announced that the road tax for vehicles above 2,000cc will be reduced by RM200. For motorbikes above 250cc, their road tax will be slashed by RM50.

The diesel subsidy for fishermen will be fixed at RM1 per litre while vessel owners will have to pay RM1.20 per litre.

The premier also announced a price hike in gas supply for electrical and industry sectors.

The premier further said that the electricity tariffs too would be increased.

He added that the power tariff rate would remain the same for households which use about 200 kilowatt of electricity, which would still cost them RM43.60.

Any usage beyond this would fall under the new price which will be announced by power supplier Tenaga Nasional soon.

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