Leaked : RM7 billion in fuel subsidies

MCA wants the government to review fuel subsidy.

PETALING JAYA: Malaysia received a 20 billion litres budget for fuel consumption this year, yet 9 billion litres was lost in leakage.

A Maybank Investment Bank report revealed that leakages cost the government 6 billion litres in RON95 petrol subsidies, and another 3.5 billion litres of smuggled diesel subsidies.

“Converting it to Ringgit, it would amount to at least RM7 billion in subsidies alone, which covers almost one third of 2014 fuel subsidies,” said MCA Economic consultative committee chairman, Chua Tee Yong today.

Chua said that it’s a major concern since the demand for fuel has risen and our oil reserves are depleting.

He also pointed out that even if our petrol and diesel prices are subsidised, the prices of vehicles in Malaysia is extremely high.

“The government needs to consider the review of import and excise duty on cars, other modes of transport and their parts and equipment. With the exception of Singapore, our car prices are very high,” he added.

On top of that, there is the uncertainty of the impact of GST on fuel and diesel.

“The review is to ensure that the cost of ownership of vehicles does not burden the people further, especially the middle income group as only households with incomes below RM3,000 receive 30% of subsidised RON95,” said Chua.

“The burden will be too great,” he added if GST is taxed on fuel and diesel in addition to subsidy rationalisation.

“I recommend that fuel and diesel be treated as zero rated in view of rationalisation in the long term,” he stressed.

If, however, the Government conducts further subsidy rationalisation, they should take into consideration a balanced approach, he said.