The government’s plan to remove petrol subsidies will begin in stages from January 2020. Under this scheme, the price of RON95 petrol will be raised by 1 sen each week until it reaches market value.
Deputy minister of domestic trade and consumer affairs Chong Chieng Jen said that this is to reduce the burden on the public, and also to prevent profiteering from a sudden jump in petrol prices.
The long awaited restructuring of RON95 petrol subsidies will be implemented next year, with the government providing RM30 per month for car owners and RM12 for motorcyclists. Road users will also only be able to claim these subsidies provided that their vehicles are below a certain engine capacity and that their household owns two or fewer vehicles.
A more targeted subsidy is intended to reduce government spending, while also ensuring that there is no extra burden on those who need financial assistance the most.
As it stands, the current RM2.08 per litre price of RON95 petrol is far below the actual market value of RM2.36 per litre. At an increase of 1 sen per week, it would take a total of 28 weeks, or seven months, to parity with the market value.
However, this amount of time will vary due to the floating price point. Additionally, the government has also said that it may also delay the implementation of the subsidy if the price of petrol were to drop below RM2 per litre.