Search

(…) Energy subsidization for all consumers remains a major and long standing fiscal, budgetary, developmental, environmental, and thereby political issue. (…)

(…) Energy subsidization for all consumers remains a major and long standing fiscal, budgetary, developmental, environmental, and thereby political issue. State involvement in the oil, gas and electricity sectors persists, with government-linked company PETRONAS remaining the biggest contributor to the government budget. It allows, inter alia, for subsidization of power generators through a government imposed low natural gas price, a pass-through element that is intended to benefit the end users. (…)

Energy subsidies remain in place for all consumers despite reduction/rationalization efforts undertaken in July 2010 and 2011 when rising oil and gas prices made the subsidy burden "unsustainable" (sections 3.4.4.2 and 4.5). Subsidies for liquefied petroleum gas, diesel, and gasoline rose from RM 9.6 billion in 2010 to RM 20.4 billion in 2011, RM 24.7 billion in 2012, and RM 20 billion in 2013. The subsidized gas price for the power sector allows the electricity tariffs to remain at favourable rates; by end 2012 PETRONAS had extended about RM 182.8 billion in gas subsidy (cumulative forgone revenue) to both the power and non-power sectors. In addition, the Government needs to approve any plans for raising fuels cost that can be passed through to power consumers. While intended to help poor households, fuel and energy subsidies tend to be especially badly targeted, in part because they indirectly subsidize automobile and other purchases that are affordable only by better off households; they are also detrimental to government efforts to improve environmental quality and to promote greener growth.

In 2010, Malaysia began a rationalization effort to reform its subsidies regime through a phased five-year reduction of subsidies on gasoline, cooking gas, electricity, and road tolls, that was projected to save a cumulative total of US$33 billion. However, only minor reductions in diesel-fuel subsidies and an increase in electricity tariffs and the price of natural gas for the power sector entered into force in 2011. The initiative lost momentum in 2012 as the Government "changed its focus to mitigating the rising cost of living" issues. As a result, in 2012, Malaysia raised subsidies expenditure by 21.6% to RM 44.1 billion (4.7% of GDP, Table 1.1), compared with RM 36.3 billion (4.1% of GDP) in 2011, due to higher provision of fuel subsidies, the biggest burden. In 2013, total allocation for subsidies amounted to RM 46.7 billion. Such subsidies have also encouraged over-consumption of both fuel and sugar, together with substantial smuggling activities, and has led to shortages; it seems that subsidized diesel, sugar, and rice are illegally exported. Subsidy rationalization resumed with a petrol subsidy reduction of RM 0.20 per litre, effective 3 September 2013, and the elimination of the subsidy on sugar effective 26 October 2013. To ensure a targeted subsidy system, the Government envisages gradually restructuring the subsidy programme; a portion of the savings from the restructuring would be distributed in the form of direct cash assistance, while the other half will be used to finance development projects.

(…) Price and supply controls over essential goods and services were reinforced, while sugar price subsidies were abolished and those on petrol were reduced. (…)

The Malaysian economy remains one of the most highly subsidized in the region and the world. In 2013, almost RM 47 billion were allocated for various types of subsidies, incentives, and assistance, including subsidies for petroleum products (53% of the amount), food, health, agriculture and fisheries, utilities, tolls, as well as welfare and education. (…)

Malaysia's 2006 National Automotive Policy (NAP), which was reviewed in 2009, aims at inter alia: (…) NAP 2013 was also aimed at turning Malaysia into a hub for energy efficient vehicle (EEV) production through strategic FDI and DDI, in line with the aspiration of becoming a regional leader in the green automotive industry. NAP was launched in January 2014.

(…) As from June 2011, imports of used parts/components have been prohibited, and imports of used commercial vehicles are to be prohibited from 2016 onwards in line with the NAP 2009, to ensure consumer safety and environmental protection. A vehicle type approval (VTA) process has prevented the import and sale of "sub-standard" vehicles, parts, and components since January 2009. (…)

(…) In 2012, the Government commenced implementation of partial or complete lifting of foreign equity restrictions in 17 services subsectors under six sectors (professional services; communications services; distribution services; educational services; environmental services; and health related and social services), and formalized the market-access status quo in accountancy services where full foreign equity participation was already permitted (Box 4.1). (…)

(…) The Government has continued to autonomously liberalize foreign equity restrictions in a swathe of services sectors; in 2012 it commenced implementation of partial or complete lifting of foreign equity restrictions in 17 services subsectors, under 6 sectors: professional services; communications services; distribution services; educational services; environmental services; and health-related and social services. (…)