By Kuek Ser Kuang Keng | May 25, 11
Malaysiakini

The government will maintain petrol, diesel and liquified petroluem gas (LPG) prices for now, said Domestic Trade, Co-operatives and Consumerism Minister Ismail Sabri.

This was decided by cabinet earlier this morning, said Ismail (left) during a press conference at about 3.45pm today.

“This decision was made because the government takes consideration of people interest,” he said.

But Ismail said the cabinet did not discuss how long this postponement to cut fuel subsidies will last.

Earlier today, reporters were busy chasing down various ministers in Putrajaya to obtain confirmation that cabinet had indeed discussed subsidy cuts.

It was learnt that cabinet also did not reach a decision on the electricity tariff hike and other subsidy cuts. Instead, such matters would be deliberated by the the National Economic Council (NEC) on Friday.

One press briefing cancelled

According to Health Minister and MCA deputy chief Liow Tiong Lai, the dispute over the mismatch of Public Services Department (PSD) scholarships will be also be discussed at the NEC meeting.

The NEC panel is chaired by the Prime Minister Najib Abdul Razak, who is also the finance minister, and comprises 12 members, including senior cabinet ministers and officials such as Deputy Prime Minister Muhyiddin Yassin and Second Finance Minister Ahmad Husni Hanadzlah. MCA president Chua Soi Lek also sits on the council.

Earlier, a media briefing and press conference by the Energy, Green Technology and Water Ministry where subsidy cuts for electricity tariffs and RON95 grade petrol were speculated to be announced was cancelled at the last minute.

The briefing was scheduled to be held at 12.30pm today at the ministry’s headquarters in Putrajaya, to be followed by a press conference by minister Peter Chin.

The cabinet held its usual Wednesday meeting this morning where subsidy cuts were among the major agenda.

The media were later informed at mid-morning that the briefing and press conference had been called off when they reached the ministry’s headquarters.

Adding to the intrigue was the fact that no reason has been given on the cancellations. One of Chin’s aides told reporters that as of 12.30pm, the minister was still in the cabinet meeting.

Several newspapers published reports today claiming that cabinet would deliberate on increasing the electricity tariff and review prices of RON95, diesel and liquid petroleum gas.

It appears that the cabinet had an eleventh-hour change of mind in slashing subsidies.

Prior warning

Newspaper reports also claim that cabinet would look into widespread discontent of fishermen against the removal of the ‘super subsidies’ which would see diesel cost for them rising from RM1.481 to RM1.80 per litre.

The same move also affected the haulage industry as a total of nine types of vehicles would have to now pay 1.80 per litre of diesel.

Earlier this month, cabinet also decided on raising sugar and prices of RON97 grade petrol, which is almost guaranteed to provided inflationary pressure.

But Malaysians are already bracing for more subsidy cuts as several ministers including Muhyiddin have been repeatedly warning Malaysians that such a move was imminent.

Prime Minister Najib Abdul Razak also famously said that Malaysians were addicted to subsidies, likening it to opium.

According to some analysts, the additional fuel subsidies this year – estimated at around RM10 billion – could bump up Malaysia’s fiscal deficit to 6.3% this year, much higher than the 5.4% target set by the government.

While higher income from taxes and privatisation sell-off may off-set this increase, the deficit will still be higher than expected.

As such, Najib may be compelled to increase the price of RON95 – as every increase of 5 sen at the pumps will help the government slash RM650 million off the deficit.

[More to follow]