Personal Finance 101: No more subsidy for RON95 in 2024
Are you worried when RON95 subsidy is taken away?
Facts first. What are the typical petrol prices here in ASEAN? As at November 2023 using google.com as source. In Thailand, RON95 petrol is around 37 Baht per litre. That’s close to RM5 per litre. In Indonesia it’s IDR14,360 or around RM4.30 per litre. In Malaysia, as at this week, it’s RM2.05 per litre. This is a subsidised rate. The UNSUBSIDIZED RON97 is RM3.47 per litre.
I have no idea why the petrol prices in Thailand and Indonesia is higher. Perhaps the logistics cost is higher? Storing cost is higher? Thailand is ranked 29th in the world for oil production but it’s insufficient for local consumption. Meanwhile Indonesia is ranked 22nd in the world. Malaysia’s ranked 25th in the world for oil production. Info Source here. Now let’s look at what was announced and when will it be implemented.
Article in nst.com.my Economy Minister Rafizi Ramli said the government would roll out a RON95 subsidy programme in the second half of next year, as part of its targeted subsidy programme.
Rafizi said the government needed to find new ways to mobilise its resources while reducing leakages and wastage.
He said Padu would be especially crucial to enabling the government to rationalise its subsidies or even implement social welfare reforms.
Putra Business School economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff said Padu needed to be comprehensive and well-tested before the programme roll-out.
He said, “It is a good move in line with the intention of the government under Budget 2024 to reduce the allocation of subsidy further which will be lower than this year.” Please do read the full article here: Article in nst.com.my
How much is the extra we have to pay without the subsidy?
If we drive 1,500km per month, that’s around 150 litres of petrol needed. We use a conservative number of 1 litre to 10km for petrol consumption. In other words, if our price becomes RM3.47 rising up from RM2.05, that’s an increase of RM213 per month for petrol consumption as soon as petrol subsidy is removed. How many of us would sell our car and jump into taking the LRT or MRT instead? It’s just RM50 per while month of unlimited travel yeah. That’s the My50 Unlimited Pass. (read here) Plus we get to walk a lot more!
Anyway, this will happen soon enough, so better be ready somehow. Of course, what if the government follows petrol price of neighbouring countries instead? In Singapore, RON95 is SGD2.24 per litre. That’s around RM7.80 per litre. I know you want to say you see Singapore earns in SGD and their petrol price is similar to Malaysia. Dear bro, their Certificate of Entitlement to buy a car is as below:
All the best and think a little before buying that high cc car yeah. Price of petrol may just double… next year.
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