The rationalisation of fuel subsidies is unavoidable in developing nations including Malaysia, Petroleum Dealers Association of Malaysia (PDAM) president Datuk Hashim Othman has said, according to Bernama.
He cited as an example Indonesia's plans to cut fuel subsidies by 3,000 rupiah (RM0.82) before the year is up, saying that the move, drastic though it may seem, will save the country a trillion rupiah in the short term.
The PDAM president added that the money saved from reduced subsidies could go into Indonesia's transport infrastructure, including roads and public transport. The republic is facing a US$23 billion (RM75.48 billion) fuel subsidy bill – its biggest fiscal problem.
"For Malaysia, the move to slowly reduce the subsidy will neither shock the people nor cause a sudden change in the economic landscape. The reduction in stages… will also curb any sudden increase in the prices of goods and a slow down in demand," Bernama quoted Hashim as saying.
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