Malaysia May Sell Limited Amount Of Subsidized Fuel From Next Year

Malaysia May Sell Limited Amount Of Subsidized Fuel From Next Year

16 June, 2008

KUALA LUMPUR: Malaysia, which recently raised fuel prices, is considering a ration system to sell a limited amount of gasoline and diesel at subsidized rates, a news report said Monday (16 June).

The ration system would replace the cash rebate that is currently being given to owners of small and medium-sized cars to partly compensate them for the price hike, The Star daily said, quoting two Cabinet ministers.

Second Finance Minister Nor Mohamed Yakcop was quoted as saying the government may issue a special card to motorists to buy the subsidized fuel.

"We are still looking into this system as certain infrastructure would be required for the subsidized fuel cards to be used," he was quoted as saying.

The Malaysian government reducedfuel subsidies earlier this month, raising the pump price for gasoline by 41% and diesel by 63%.

To soften the impact on the middle-class and poor Malaysians, the government also announced an annual cash rebate of 625 ringgit (US$191) for owners of cars with engine capacity of less than 2,000 cc and a 150 ringgit (US$46) rebate for motorcycle owners.

But post offices across Malaysia, entrusted with handing out the cash, were inundated with massive crowds when the system went into force on Friday (13 June).

"We are talking about rebates for 500,000 cars a month and that does not even include motorcycles," Domestic Trade and Consumer Affairs Minister Shahrir Samad was quoted as saying by The Star.

"Surely there can be a better system of dispensing subsidy to vehicle owners ... we have to work on it."

Any changes would be made after the current one-year rebate period, Shahrir said.

Aides of Nor Mohamed and Shahrir confirmed the comments. They declined to be named citing protocol.

Gasoline now costs 2.70 ringgit ($0.87) a liter, or $3.30 a gallon, at pumps. Still, petrol prices in Malaysia _ a net oil exporter _ are lower than in most other Southeast Asian countries.

Since the increase, opposition parties and non-governmental organizations have staged scattered protests throughout the country and are preparing for a mass rally on 5 July.

Prime Minister Abdullah Ahmad Badawi has defended the decision to raise fuel prices, saying the government can no longer afford the subsidies due to rising world oil prices. However, he has promised not to raise pump prices this year. (AP)