Petrol price may be at market rate in 2010

Published: 2009/10/27

DATUK Seri Ahmad Husni Hanadzlah today did not discount the possibility that petrol price at the pump could follow the market price or without subsidy once the subsidy management system is implemented early next year.

The Second Finance Minister said with the new structure, the offer of subsidy will be more targeted to the groups that qualify to enjoy the subsidised petrol price.

"The price of petrol might be fixed at the market rate but the targeted individuals will get the subsidy. There will be no subsidy for petrol price except for the targeted groups.

"The (subsidy management) system is being developed and it will start with petrol. It will be implemented between the first and second quarter," he told reporters after officiating the National Taxation Seminar 2009 here today.



The target groups are likely to involve the lower income group or those at a specific salary scale, he said.

MyKad could also become one of the mechanisms for giving out subsidy, he said.

In the 2010 Budget tabled last Friday, Prime Minister Datuk Seri Najib Tun Razak said the subsidy management system will be implemented early next year using the MyKad and existing infrastructure.

The subsidy system is also expected to be employed for other commodities.

"Under the current system, the given subsidy is enjoyed by all parties from the high income earners to foreigners entering the country," he said.

"Therefore, we need to have a system that is fair and we believe this move will ensure that it reaches the intended groups."

The system is expected to reduce the government's expenditure on subsidies and the savings can be then used for other productive activities.

Under the 2010 Budget, the government has allocated RM10 billion for fuel subsidising.

On the goods and services tax (GST), Ahmad Husni said following the social impact study, its implementation will be known by the end of this year.

He also gave the assurance that if it is to implemented, it will not burden the people and its percentage definitely lower than the current sales and services tax rate.

The minister also stressed that the GST will not be an additional new tax system, but a replacement of the current sales and services tax which charges between five and 10 per cent.

During the recent budget announcement, Najib who is also Finance Minister said that the study was to ensure that the GST to be implemented would be to stabilise the government's finances and not burden the rakyat. - Bernama