Malaysia’s pump prices among lowest globally – thanks to subsidies

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petronas gas stationMalaysians enjoy some of the lowest petrol pump prices among the major world economies, according to a new study by UHY, the international accountancy network, Bernama reported.

UHY says that Malaysia offers subsidies of 30 per cent for petrol and 40 per cent for diesel, reducing fuel costs to a considerably lower price than many major developed economies, in particular European countries. This means that the cost of filling the tank of a Ford Transit van with diesel in Malaysia amounts to RM159 ($49) – just a third of the cost of filling up in the UK where diesel prices are highest.

UHY says that as diesel is used in the majority of commercial vehicles, this subsidy is great for businesses.

In comparison, the UK, France and Germany all levy taxes of at least 60 per cent on petrol, and between 40 per cent and 60 per cent for diesel.

UHY says that while environmentalists argue that petrol taxes are important in cutting greenhouse gas emissions, the transport lobby and SMEs say that keeping the costs down is vital for all businesses.

Liquefied Petroleum Gas, a more environmentally-friendly alternative to petrol or diesel, is taxed at zero per cent, but does not attract a subsidy.

UHY adds that this study is a reminder of the importance of maintaining tight control on the levels of business taxation, especially as the recovery from recession starts to gather pace.

“Emerging market economies are much more focused on growth, and providing assistance to businesses through lower taxation and subsidies where necessary,” says Alvin Tee, Senior Partner of UHY in Malaysia.

“The Malaysian economy is one that levies low taxes on consumption in general, and focuses on direct taxation of businesses, such as through corporation tax, as the key generator of revenue,” he added.

UHY states that most emerging economies have considerably lower levels of taxation on fuel than developed economies.The fuel subsidies in Malaysia are reported to cost the government an estimated $14 billion per year. The subsidies have also led to issues with the smuggling of fuel into neighbouring China and Indonesia, which have a much higher cost of fuel.

Alvin Tee says: “While the Malaysian government does lose a lot of money by having a fuel subsidy, it has determined that it makes such a contribution to the country’s strong GDP growth that it is willing to accept the loss.”

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Reading Time: 2 minutes

Malaysians enjoy some of the lowest petrol pump prices among the major world economies, according to a new study by UHY, the international accountancy network, Bernama reported.

Reading Time: 2 minutes

petronas gas stationMalaysians enjoy some of the lowest petrol pump prices among the major world economies, according to a new study by UHY, the international accountancy network, Bernama reported.

UHY says that Malaysia offers subsidies of 30 per cent for petrol and 40 per cent for diesel, reducing fuel costs to a considerably lower price than many major developed economies, in particular European countries. This means that the cost of filling the tank of a Ford Transit van with diesel in Malaysia amounts to RM159 ($49) – just a third of the cost of filling up in the UK where diesel prices are highest.

UHY says that as diesel is used in the majority of commercial vehicles, this subsidy is great for businesses.

In comparison, the UK, France and Germany all levy taxes of at least 60 per cent on petrol, and between 40 per cent and 60 per cent for diesel.

UHY says that while environmentalists argue that petrol taxes are important in cutting greenhouse gas emissions, the transport lobby and SMEs say that keeping the costs down is vital for all businesses.

Liquefied Petroleum Gas, a more environmentally-friendly alternative to petrol or diesel, is taxed at zero per cent, but does not attract a subsidy.

UHY adds that this study is a reminder of the importance of maintaining tight control on the levels of business taxation, especially as the recovery from recession starts to gather pace.

“Emerging market economies are much more focused on growth, and providing assistance to businesses through lower taxation and subsidies where necessary,” says Alvin Tee, Senior Partner of UHY in Malaysia.

“The Malaysian economy is one that levies low taxes on consumption in general, and focuses on direct taxation of businesses, such as through corporation tax, as the key generator of revenue,” he added.

UHY states that most emerging economies have considerably lower levels of taxation on fuel than developed economies.The fuel subsidies in Malaysia are reported to cost the government an estimated $14 billion per year. The subsidies have also led to issues with the smuggling of fuel into neighbouring China and Indonesia, which have a much higher cost of fuel.

Alvin Tee says: “While the Malaysian government does lose a lot of money by having a fuel subsidy, it has determined that it makes such a contribution to the country’s strong GDP growth that it is willing to accept the loss.”

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