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Malaysia Reviewing Subsidized Fuel System : Paper

Malaysia, which raised fuel prices sharply this month, is considering a plan to sell a fixed amount of fuel to motorists each month on subsidised rates, a report said on Monday.

Malaysia
CNBC.com
Malaysia

The system includes providing Malaysian motorists with a special card for buying a fixed amount of subsidised fuel each month, The Star newspaper reported, quoting Second Finance Minister Nor Mohamed Yakcop.

They will have to pay market rates for any additional fuel required, the newspaper said.

"We are still looking into this system as certain infrastructure would be required for the subsidised fuel cards to be used," Nor Mohamed was quoted as saying.

Malaysian Prime Minister Abdullah Ahmad Badawi, trying to calm public anger over the steep rise in fuel prices, said last week there will be no more hikes this year.

Malaysia, which followed Indonesia, Taiwan and Sri Lanka when it raised pump prices, has already started paying a subsidy of 625 ringgit ($190.8) a year to car owners and 150 ringgit to motorcyclists in an attempt to cushion them from higher fuel prices.

Still, analysts said public anger against the government remained high with many Malaysians questioning why they have to face steep hikes when their country, Asia's largest net oil exporter, earns 250 million ringgit a year in revenue for every $1 rise in crude prices.

Petrol prices were increased by 41 percent and diesel 63 percent this month in line with a global surge in oil prices, a measure that would drive inflation to a 10-year high of 4.2 percent in 2008.

Still, pump prices for petrol in Malaysia are among the cheapest in Asia.