Reduction In Oil Subsidy Unavoidable In Developing Countries, Says PDAM

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KUALA LUMPUR, Nov 2 – The fuel subsidy rationalisation plan is unavoidable in developing countries, including Malaysia, which has opted to do this in stages. The President of the Petroleum Dealers Association of Malaysia (PDAM) Datuk Hashim Othman in stating this, also cited the move by Indonesia to cut the fuel subsidy by three thousand rupiahs or 81 sen, as an example.

He said, although deemed drastic, the step will enable the republic to save a trillion rupiahs in the short term. “The reduction in stages by Malaysia will also curb any sudden increase in the prices of goods and a slow down in demand. “The savings from the increase in fuel prices can be reinvested in transport infrastructure and Indonesia as such, needs more roads and public transport among others.

“For Malaysia, the move to slowly reduce the subsidy will neither shock the people nor cause a sudden change in the economic landscape,” Hashim told Bernama. The Indonesian government will reduce the subsidy for petrol and diesel by year-end to overcome the huge fiscal deficit being experienced by the country. Indonesia’s fuel subsidy stands at US$23 billion.

Malaysia is reducing the fuel subsidy in stages with the latest move seeing a 20 sen increase in the price of RON95 petrol and diesel, with its own fiscal deficit in mind. Hashim said following the move, the Malaysian government had also shown its commitment to help the people, via the 1Malaysia People’s Assistance Scheme (BR1M). “The government must find ways to support those who need help, especially the lower income group,” he added.

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