Malaysia Abandons Fuel Subsidy Restructure Plan

From KP Lee.
Malaysia decides not to proceed with fuel subsidy restructuring plan due to "negative response from the public," says Domestic Trade Minister Ismail Sabri Yaakob. Current subsidy of 30 sen/liter for gasoline maintained, no plans to "fully float" gasoline prices without government subsidy, no immediate plans to raise gasoline prices, he says. Government had initially intended to implement new plan on May 1 involving complex 2-tier fuel subsidy system, to try to lower effective contribution from state. Action Economics director David Cohen says more stable oil prices, better economic outlook "has meant that the government can afford to be more patient... especially for a politically-difficult decision." Cohen says with Malaysia's growth staying above forecast, fiscal deficit not as big an issue as for some other countries, "there is less urgency". Still, adds, a long-term solution has to be found sooner or later. Sabri says state spent MYR3.4 billion on gasoline subsidies, MYR1.9 billion on diesel subsidies in 2009; studying best mechanism to eventually adopt.