Automotive Fuel Subsidy

Published on May 20th, 2022 | by Daniel Sherman Fernandez


Can Average Malaysians Live Without A Fuel Subsidy Tomorrow?

Price of food and services will rise with a removal of the Fuel Subsidy.

Fact, we have been living with a fuel subsidy for decades and most of us have enjoyed this low priced fuel without thinking too much about how much it costs the Malaysian government every year. Fair statement.

Fuel Subsidy

All the social media chatter right now is about 42 percent, or a hefty RM11.76 billion of fuel subsidies are being enjoyed by the upper class 20 percent of Malaysian (T20 or ‘orang kaya’) households while only 4 percent, or just RM1.12 billion are being enjoyed by the lower middle class or poorer Malaysians which is 20 percent (B20).

But, we have also not questioned how much the super high salaries and allowances of our politicians are costing us Malaysians. Then let us not forget the high cost of keeping our very ‘bloated’ government staff that is also costing the taxpayer every year.

Lets not forget all the inflated costs for government vehicles, which are NOT low cost vehicles from Perodua and Proton but quality vehicles with higher costs.   

Then there is the somewhat taboo word of ‘corruption’ amongst the people in power and even those caught and proven to be corrupt are roaming free and easy and being referred to as ‘boss’.

All this and more are ‘swept under the rug’ for decades and meanwhile the average Malaysian (which is the majority right now) are about to lose their much needed fuel subsidy.

Fuel Subsidy

So, some will boldly say that this removal of fuel subsidy will spur the electric car demand and give us better air quality and so on. Meanwhile, right now, there is big shortage of electric cars from all EV manufacturers, from Hyundai with their IONIQ 5 to Mercedes-Benz with their EQA.

Plus, let us now discount the fact that electric cars are not cheap to buy. Nothing available right now below RM150K which means lower middle class Malaysians, or even middle class Malaysians cannot afford to buy.  

Like we have said many times before, electric cars right now and in the next 2 to 3 years will be for the rich (T20). Yes, there is some chatter about low priced electric cars coming, like the Great Wall Motors ‘Ora Good Cat’ for an estimated RM135k. Will it provide decent driving range? Will it offer decent after sales and warranty?

Then let’s go to the basics of an electric car. Is there enough charging infrastructure. Imagine 2023 Hari Raya (next year) and the total sales of electric cars in Malaysia triples as fuel subsidies disappear. Will there be enough charging points along the highways and small towns?

Then we have to see what happens to POWER subsidies. Yes, electricity in Malaysia is also subsidized. TNB is not going to sit quietly and lose money. They will also need to raise prices, which means electric car charging prices will go UP

Then it’s back to square one. Should have just kept to our cheerful and cheaper petrol powered car that can go the distance easily with plenty of fuel stations along every journey.

‘Lost money on selling our reliable and easy to maintain petrol powered car to buy a shiny new EV that costs as much to charge the battery as buying un-subsidized petrol and takes longer to charge’!

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