More BR1M possible if fuel prices escalate, says Johari

However, the fuel subsidies are not applicable for ordinary citizens

Pic By HUSSEIN SHAHARUDDIN

THE government may consider providing temporary cash aid to a selected group of Malaysians, who are struggling to keep up with the increasing fuel prices amid the rise of global oil prices.

Finance Minister II Datuk Seri Johari Abdul Ghani said the recipients of the assistance are mainly those already on the 1Malaysia People’s Aid (BR1M) list, who are susceptible to any increase in fuel pump prices that also directly affects the cost of living.

He said the government will be financially able to provide such cash incentives, as its revenue is expected to improve in tandem with the rise of global oil prices.

“The government does notice the escalating global oil prices, and maybe if the increase leads to higher government revenue, we can give back to the society like additional BR1M,” he said in the Dewan Rakyat yesterday, while winding up debates on the Supply Bill 2018 at the committee stage.

Johari said for every US$1 (RM4.17) increase in global oil prices, the government’s income increases by RM300 million.

“So, because Budget 2018 was drafted based on an average oil price of US$52 per barrel, the government will have additional income of RM3 billion if the average oil price stands at US$62 per barrel in 2018,” he said.

Prime Minister Datuk Seri Mohd Najib Razak announced RM1,200 BR1M payout for over seven million recipients nationwide at the tabling of Budget 2018 last month, The government has allocated a total sum of RM6.8 billion for BR1M handouts next year.

Johari said the higher fuel prices had resulted in higher headline inflation in recent months, as transportation contribute 13.7% in inflation calculation.

“The fuel price increase has led to the increase of headline inflation to over 4%, but our core inflation has been stabilising at 2.5%,” he added.

On Dec 1, 2014, the government officially ended all fuel subsidies, taking advantage of low oil prices at that time and potentially saving the government almost RM20 billion annually.

In 2013, the government spent RM29 billion on subsidies for RON95, RON97 and diesel.

Johari said the government would also be spending RM1.6 billion in fuel subsidies next year.

The fuel subsidies are, however, not applicable for ordinary citizens — as the assistance is mainly targeted at farmers and fishermen.

Petrol prices surged between six sen and seven sen per litre effective today, the highest level since the introduction of the weekly fuel price system in April.

According to the Domestic Trade, Cooperatives and Consumerism Ministry, RON95 increased by seven sen to RM2.38 per litre, while RON97 will go up by six sen to RM2.66 per litre.

The last time petrol prices hit a record high under the new system was on April 20 when RON95 was RM2.27 per litre, while RON97 was RM2.54 per litre.

Meanwhile, the price of diesel increased by five sen to RM2.25 per litre.

Brent crude oil price surged to a two-year high on Nov 6, touching as high as US$64.27 per barrel — its highest since May 2015.

The hike was related to the rise of Saudi Arabia Crown Prince Mohammad Salman, who had openly supported a production cut agreement by the OPEC. The Brent crude oil price eased to US$61.36 per barrel yesterday.

A managed float mechanism was placed where pump prices would be adjusted according to the market rate. The floating price announcement was changed from monthly to weekly in April.

Malaysia’s Consumer Price Index (CPI) — an instrument to determine inflation — rose to an eight-year high in February 2017, as average inflation grew 4.5%, the highest since November 2008 when it hit 5.7%.

The inflation expansion breached Bank Negara Malaysia’s estimation for headline inflation for 2017, ranging between 3% and 4%.

The CPI rose at a higher rate of 4.3% in September 2017 compared to the corresponding month in 2016.