Second Finance Minister Johari Abdul Ghani said in certain advanced countries, the governments leave fuel prices to float, and the oil and gas (O&G) industry players determine them.
“It is up to the government to set a ceiling price which is deemed fair for all.
“When we, the government have decided on the ceiling price, whether the O&G industry players want to sell the fuel at lower prices for promotional purposes would be left to them. This is one of the options we are looking at.”
Johari told reporters this on the sidelines of the Chinese New Year Celebration 2017 hosted by the Malaysia Retail Chain Association here last night.
He said the government had also to be mindful whether the policy would be a problem for those living outside the city.
On the reintroduction of fuel subsidies, Johari said it would not be good for the Malaysian economy as it was not sustainable.
“We are aware of the oil prices. We will monitor them. If they keep on increasing and if there is additional revenue, I think the government can consider a different form of assistance to the lower-income groups, but not those who are well off.”
He said the government would come out with a mechanism.
“However, as of now, there isn’t a formula yet, but the government has already decided that it can’t reverse this subsidy policy,” Johari said.
Johari said the government was mindful of the high cost of living and it was identifying the pressures of the bottom 40% (B40) income group.
According to the Economic Report 2015/2016, this B40 group comprises households with a monthly income of up to RM3,855.
Johari said if the Bantuan Rakyat 1Malaysia (BR1M) was insufficient, the government would consider increasing it to cushion the impact of fuel price increases.
“However, if oil prices decline in the future, the government needs to take back the BR1M. These are the variables and formula the government needs to undertake,” he said.
“We are unable to control the prices and, as a result, when the prices escalate, Malaysian fuel prices will also increase,” he said.