KUALA LUMPUR, Sept 5 – The price hike of subsidised fuel starting Tuesday is timely as its implementation has been delayed for too long, an economist said.
Former Director-General of Malaysian Investment Development Authority (MIDA) Datuk Wira Jalilah Baba (photo) said Malaysians must look at the big picture whereby the government needed to address the current economic issues.
She said the government also needed to ensure positive economic development and sound financial management of the country.
“This is to ensure all Malaysians will still enjoy good living standards and economic prosperity,” Jalilah, who is now chairman of management consulting firm, Crewstone International Sdn Bhd, told Bernama today.
Meanwhile, Alliance Research economist Manokaran Mottain said the move by the government to rationalise the subsidies was a step in the right direction, given the current economic conditions.
“We have long been expecting these strategic policy reforms, which would raise competitiveness and improve Malaysia’s credit rating,” he told Bernama.
Global ratings agency, Fitch Ratings, had recently revised Malaysia’s sovereign credit rating outlook from stable to negative following scepticism over the government’s intention to manage its expenditure.
In the immediate term, Manokaran said the inflation rate was expected to shoot up towards four per cent, due to the first round impact on transportation, food and energy prices.
But, it is still below the 25-year high of 8.5 per cent registered in August and September 2008, after the unprecedented 70-sen fuel hike in June that year.
He said consumers would have to contend with higher transportation costs as a direct impact, which would likely spill over into the food basket.
“With an expected two per cent inflation rate in August, inflation for September would likely jump to three per cent and more.
“Even if the inflation rises further towards four per cent over the next four months, our full-year target of 2.5 per cent will still be on track,” he said.
Manokaran expected another round of subsidy rationalisation in the next six months, given the continuing increase in international prices for crude oil.
“We still anticipate another round of 20 sen cut in subsidy for petroleum products, which will raise RON95 prices to RM2.30 per litre,” he said.
RON95 petrol is currently priced at RM2.10 per litre and diesel at RM2.00 per litre after recent hike.
– BERNAMA
