CONGRATS UMNO, your president will be HIKING petrol prices AT LEAST ONCE next year!

KUALA LUMPUR — A World Bank economist has predicted today that there is bound to be at least one more fuel subsidy cut in 2014, in order for Malaysia to achieve its subsidy rationalisation numbers.

Speaking to a post-Budget 2014 dialogue here, Dr Frederico Gil Sander criticised Putrajaya for not communicating its timeframe for subsidy cuts to consumers and investors, which has caused anxiety against Malaysia.

“If you look at allocation, for fuel allocation is expected to decline quite significantly next year. Which I think signals probably some fuel subsidy rationalisation in order for targets to be met,” said the Bangkok-based economist who specialises in Malaysia.

“It would have to happen in the next fiscal years I think if the numbers are to be achieved,” he said, explaining that the allocation for 1Malaysia People’s Aid (BR1M) had been grouped in fuel subsidy allocation.

Malaysia has embarked on a series of subsidy cuts, starting with raising the pump price of RON95 petrol and diesel by RM0.20 per litre starting from September 3, to RM2.10 and RM2.00 per litre respectively.

The subsidy cut was announced by Putrajaya following global ratings agency Fitch which revised Malaysia’s sovereign debt outlook from “Stable” to “Negative” in July.

“Now if you look at the numbers it’s not clear whether they’re anticipating another round of subsidy rationalisation in 2014 or not. It appears that there may have another round,” he told reporters afterwards.

“Maybe they’re just counting on the fuel price to come down naturally with the market. So having a little bit of clarity on the communication on that will be good for consumers and investors.”

Last month, Maybank Investment Bank (IB) Research had predicted that gas and electricity prices are likely to be next in a round of price hikes following the fuel subsidy cut.

In its daily report, Maybank IB had predicted further subsidy rollbacks since the total savings from the Performance Management and Delivery Unit’s Subsidy Rationalisation Roadmap in 2010 has been much less than intended.

Launched in May 2010, the roadmap detailed a five-year period of subsidy rationalisation to save RM103 billion by cutting subsidies mostly for fuel (petrol, diesel, liquefied petroleum gas), gas, electricity, toll roads, and food (sugar, flour, cooking oil).

Since then, gas prices and electricity tariffs have been raised only once in June 2011, and sugar subsidy was cut once too in September 2012.

During the tabling of Budget 2014 on Friday, Prime Minister Datuk Seri Najib Razak said Putrajaya would stop subsidising sugar by the current 34 sen per kg, in a move that may cause cascading price hikes.