KUALA LUMPUR: A prominent economist says the government must ensure the public and industries have all the necessary information on plans to rationalise fuel subsidies ahead of its implementation this year.

Prof Tan Sri Noor Azlan Ghazali of Universiti Kebangsaan Malaysia (UKM) said the fuel subsidy rationalisation was crucial in ensuring fiscal sustainability.

"Public policy is not a Formula 1 race where you can change direction and speed easily, it is more like steering the Titanic," he said in a Facebook post.

"It takes time to change direction and it requires a whole of society and industry approach to respond (to changes)."

In his post, the Malaysian Inclusive Development and Advancement Institute director listed a number of "crucial" questions the government must address to ensure the initiative's success.

"Will the floating of fuel prices be done in stages or at once?" he asked.

He also asked what the estimated prices of fuel would be based on factors including production numbers, global demand, as well as current economic and geopolitical situation.

"What role will the government play once subsidies are eliminated? Will it play a role in ensuring fuel prices are 'fair' and how will it play this role?

"If the government is no longer involved in determining pump prices, how will it be determined?

Noor Azlan also asked if petrol stations and oil companies would be free to determine prices and if prices would no longer be standardised across stations.

"Would the price of petrol in rural areas be different from prices in urban areas based on demand and competition factors?

"How do we ensure fuel prices are 'fair' and not just based solely on fuel prices in the market but also (based on) the business models of petrol stations and oil companies?

"Will there be a limit as to how much prices can change? Who will decide that? Will it be subject to a period of time or based purely on market prices (of oil)?

Noor Azlan said the fuel subsidy rationalisation plan would have an impact on the cost of living, and this was why information on the initiative must be available for everyone to make the necessary preparations for its rollout.

Earlier this week, Economy Minister Rafizi Ramli reaffirmed the government's intention to push ahead with its plans to reduce petrol subsidies this year to address its fiscal deficit.

He also highlighted plans to gradually phase out blanket subsidies for RON95 fuel, which consumed a significant portion of last year's subsidy budget.

The government has said that money saved from subsidies will be channeled towards aid programmes for those in need, while hauliers will still be able to enjoy subsidised fuel with a Fleet Card.

https://www.nst.com.my/news/nation/2024/04/1040340/fuel-subsidy-rationalisation-economists-key-questions-government