KUALA LUMPUR: The government will intervene if global crude oil prices rise too high to cushion the impact on RON95 petrol and diesel, said Deputy Finance Minister, Datuk Chua Tee Yong.
"However, the intervention mechanism has not been finalised yet, and the evaluation process being undertaken by the Domestic Trade and Consumer Affairs Ministry, is still ongoing," he told a press conference, after delivering his keynote address at the 19th Malaysian Capital Market Summit here today.
Chua said the government's move to let market forces determine fuel prices, via a managed float system, was to enable consumers to enjoy the current downtrend in global oil prices.
The managed float mechanism, to commence on Dec 1 as announced last Friday, superceded the government's initial plan of an income-tiered fuel subsidy.
"With the current low oil prices, not announcing the float, means the government has to impose tax on petrol. This is not what we want to achieve," he said.
In making a comparison, Chua said neighbouring Indonesia had priced the lower grade RON88 petrol at RM2.35 a litre, while the premium RON92 and RON95 at about RM2.70 and RM3.20 respectively, and substantially higher than that in Malaysia due to taxes.
He believed that in the short-term, there should not be any increase in global oil prices, given that the Organisation of Petroleum Exporting Countries, had also not indicated any reduction to exports.
"However, we will continue to monitor these developments to ensure the floating of fuel prices would not be an extra burden to the people. The government has allocated a subsidy budget of about RM37 billion for next year.
"If there is any uptrend in oil prices, it has to look into other mechanisms that can be used, either via a subsidy or assistance, to ensure people are not badly impacted," Chua said.
He said the low oil prices backdrop would also result in some savings of between RM10 billion and RM20 billion annually in terms of subsidies, given that this expenditure normally consumes RM2 billion a month.-- Bernama