Wednesday, November 28, 2007

Petrol Prices increase in Malaysia

By Star Biz

The Malaysian Institute of Economic Research (Mier) says there is a possibility of a 30 to 40 sen increase in the price of petrol after the general elections due to the rising cost of subsidising fuel.

So far this year, Petroliam Nasional Bhd had to cough up about RM35bil in petroleum and gas subsidies.

The Government last raised prices at the pump in early 2006, when it was raised by 30 sen to RM1.92 per litre, at a time when crude oil was trading at US$60 a barrel. The crude oil price surpassed US$99 per barrel in overnight electronic trading on the Nymex recently.

Mier executive director Professor Datuk Dr Mohamed Ariff Abdul Kareem said the Government should cut the subsidies sooner rather than later due to the high cost.

“The amount to be cut will be up to the Government and it will most likely happen after the elections,” he told reporters on the sidelines of the National Economic Outlook Conference 2008/2009 yesterday.

Ariff said consumers would be comfortable with a hike of up to 40 sen.

Inflation, which might reach 3% next year on the back of fuel, toll and electricity tariff increases, might be dampened by an increase in revenue and a stronger ringgit, he said.

“With higher revenue, the Government may not pass on the entire burden,” he said, adding that the US dollar was expected to hit RM3 or lower next year, partly due to the diversification of foreign exchange reserves by China and the Middle East.

Ariff said that next year would see a slower growth rate for the global economy due to residue problems from the US subprime crisis and high crude oil prices but it would pick up again in 2009.

“We’ll see a rebalancing of the global economy in 2008 while growth in 2009 will correspond to 2007,” he said, adding that the Government’s target of 6% gross domestic product (GDP) growth next year was too high given the circumstances.

Mier had estimated this year’s GDP growth at 5.7% and for 2008, 5.4%.

Ariff said the targeted growth rate of 5.8% during the Ninth Malaysia Plan implementation period was a realistic target compared with the potential growth rate of 6.5% for the country.

Is happening again and is coming to us very soon! When will inflation happen to our salary or bonus?