Govt’s fuel quota ‘U-turn’ economically sensible, says economist
Tan Peck Leong says moves to cut the subsidised fuel quota and its restoration in September were attributable to changes in crude prices and subsidy costs.
Economist Tan Peck Leong from Universiti Teknologi Mara argues that the government's recent changes to the fuel quota are economically sensible. The April reduction to 200 litres and subsequent restoration to 300 litres can be explained by global oil price levels. Tan points out that maintaining subsidised RON95 at RM1.99 per litre became increasingly expensive for the government due to high oil prices.
He estimates that if 1% of BUDI95 users utilized the additional 100 litres in April, it would have cost the government an extra RM36.5 million. However, the restoration of the 300-litre quota only adds an estimated RM29.3 million per month, which is RM7.2 million less than in April. The economist believes that describing the quota changes as a political move oversimplifies the situation. According to him, the two moves can be reconciled economically.
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