|  Despite weeks of warnings, the cabinet now appears to be delaying subsidy cuts that will cause a price hike for fuel.
The federal government will maintain petrol, diesel and liquified petroluem gas (LPG) prices for now, said Domestic Trade, Co-operatives and Consumerism Minister Ismail Sabri.
This was decided by the cabinet at its weekly meeting this morning, he told a press conference about 3.45pm today at his office in Putrajaya.
 "This decision was made because the government takes into consideration the people's interest," he said.
"At the same time, the government will continue to study subsidy rationalisation in a holistic manner following the rise of oil and gas prices in the global market."
Ismail said the cabinet did not discuss how long the decision will be postponed: "(As to whether there will be any hike) in the future, I cannot give a certain answer."
Should the international oil price continued to rise, Ismail added, the government would revisit the issue.
Ismail also denied that the decision was made in view of possible snap polls or pressure by the opposition.
"This is not true. It has nothing to do with the general election. Subsidies are not a new thing, but have existed for a long time.
"We did not listen to the opposition. The Umno Youth wing had also raised the issue. It has nothing to do with the opposition."
Asked if the government is on track to achieve the 5.4 percent deficit target without further subsidy reductions, Ismail said it is still working hard towards this.
"From the perspective of subsidy rationalisation, we will look at it from a holistic way. Maybe there are other ways (to achieve the deficit target), not just by reducing subsidies."
 Currently the price for RON95 petrol, diesel and LPG stands at RM1.90/L, RM1.80/L and RM1.90/kg respectively
However, the cabinet decided to maintain the decision to withdraw the 'super subsidy' for deep-sea fishing boats despite strong protests from fishermen.
"The subsidies for public transportation are still being maintained including for school buses and taxis. We don't give subsidies to commercial transportation (operators alone). Poor fishermen also enjoy subsidies including those in the A, B, C and C1 class.
"Those in Class C2 are not given a subsidy because these involve big deep-sea fishing boats.”
He said the government has saved some RM600 million and RM100 million respectively by withdrawing the 'super subsidy' for fuel used for lorries and fishing boats.
Confusion for the media
Earlier today, reporters were kept busy chasing down various ministers in Putrajaya to obtain confirmation that the cabinet had indeed discussed subsidy cuts.
 According to Health Minister Liow Tiong Lai, the cabinet did not reach a decision on the electricity tariff hike and other subsidy cuts. Instead, such matters will be deliberated by the the National Economic Council (NEC) on Friday.
Liow also claimed that the dispute over the mismatch of Public Services Department (PSD) scholarships will also be discussed during the meeting.
However, Ismail said the cabinet did not discuss the electricity tariff hike and there was no decision to refer the RON95 price issue to the NEC.
"There was no (discussion on electricity tariff hike). I didn't realise. Maybe I went to the toilet," he quipped.
The NEC panel is chaired by the Prime Minister Najib Abdul Razak, who is also the Finance Minister, and comprises 12 members, including senior cabinet ministers and officials such as Deputy Prime Minister Muhyiddin Yassin and Second Finance Minister Ahmad Husni Hanadzlah. MCA president Dr Chua Soi Lek also sits on the council.
 Earlier, a media briefing and press conference by the Energy, Green Technology and Water Ministry - at which subsidy cuts for electricity tariffs and RON95 grade petrol were speculated to be announced - was cancelled.
Adding to the intrigue was the fact that no reason was given. An aide to minister Peter Chin (left) told reporters that as at 12.30pm, the minister was still at the cabinet meeting.
Several newspapers published reports today claiming that the cabinet was to discuss increasing the electricity tariff and to review prices of RON95, diesel and liquid petroleum gas.
The reports also claim that the cabinet would look into widespread discontent of fishermen against the removal of the 'super subsidies' which would see diesel cost rising from RM1.481 to RM1.80 per litre for them.
The same move would also affect the haulage industry as nine types of vehicles will have to now pay 1.80 per litre of diesel.
According to some analysts, the additional fuel subsidies this year - estimated at around RM8 billion - could bump up Malaysia's fiscal deficit to 6.3 percent this year, much higher than the 5.4 percent target set by the government.
While higher income from taxes and privatisation sell-off may offset this increase, the deficit will still be higher than expected.
As such, Najib may be compelled to increase the price of RON95 - as every increase of 5 sen at the pumps will help the government slash RM650 million off the deficit. |
Comments