Malaysians to benefit from fuel float system, says Najib

Prime Minister Datuk Seri Najib Razak at the launch of the Malaysia Agriculture, Horticulture and Agrotourism 2014 in Serdang, today. – The Malaysian Insider by Afif Abd Halim, November 22, 2014.Consumers will directly benefit from the managed float system effective December 1 for Ron 95 petrol and diesel, by way of lower prices, Prime Minister Datuk Seri Najib Razak said.

Bernama quoted him as saying that Malaysians will also see greater socio-economic benefits from the managed float system which enabled increased savings from subsidies.

"With savings of between RM10 billion (to) RM20 billion annually, we can for sure increase allocations to those sectors deemed important in the context of the country's socio-economic development.

"The agricultural, rural development, education and health sectors are among those for which we can increase allocations, as they all are directly linked to the wellbeing of the people.

"At the same time, the government is implementing the managed float system to provide direct benefits in the face of declining global fuel prices. If it goes down further, we can make adjustments according to the prevailing global market prices."

Najib told reporters this after officiating the Malaysian Agriculture, Horticulture and Agrotourism Show 2014, at the Malaysian Agro Exposition Park (Maeps) in Serdang, today.

The managed float system decided by the cabinet yesterday is the same as that for determining the retail price of RON97 petrol from July 2010.

Following the cabinet's decision, from December 1, there would no longer be any subsidies for both RON95 and diesel as the global market prices are now lower than the pump price. 

Najib, who is also finance minister, said the method would also educate the people that the rise or fall in fuel prices in the country did not depend on the government, but the global market.

Bernama quoted him as saying that the fuel subsidy was subject to a lot leakage, including widespread smuggling activities, and this caused the government to lose billions annually.

"Fuel entails a bulk subsidy, so the rich get bigger benefits from those in the lower-income group, alongside the widespread smuggling, and then tourists also come and buy our petrol.

"So, the fuel subsidy has a lot of leakage and losses," he added.

Najib was quoted as saying that apart from the fuel subsidy, the government had other ways to also assist the people and the managed float system did not mean that it had done away with the provision of subsidies altogether.

"Targeted subsidies as such have greater benefits, meaning, we will not do way with the 1Malaysia Peoples Aid (BR1M), incentives for fishermen and education, among others," he added.

- TMI