Background description of retail fuel price in Malaysia

According to the local news on 7 March 2013, the retail price of RON 97 will be RM2.90 per litre when it was previously RM2.70. Meanwhile, the retail price of RON95 remains unchanged as it is subsidized by the government. In May, a 20 sen drop incurred for RON 97 per litre. There was no change in price for RON 95 and diesel.

On September 2, 2013, Malaysia’s Prime Minister, Datuk Seri Najib Razak announced that the price of diesel and RON95 petrol would increase by 20 sen (Bridel & Lontoh, 2014) joining neighboring Indonesia to threaten investor confidence besides curbing in subsidies (Chong, 2013). There was a 20 sen price incremental to 2 Ringgit per litre for diesel and the new price for RON 95 is RM 2.10 per litre from RM 1 (Lim, 2013). “The hike was to prevent financial leakage and misappropriation of the subsidised fuel,” said Tun Dr Mahathir Mohmad, reportsBernama (Phung, 2014). The retail price of RON 97 continued to increase by 15 sen (Lim, 2013). In November, the price of RON 97 had gone down to RM2.75 per litre from the existing RM 2.85 per litre (Lim, 2013).

On the first month of 2014, the price of RON 97 went up 5 sen to RM2.80 per litre. Another 5 sen was incurred for the price of RON 97 in the following month. In March, the previous price of RON 97 brought up with a new retail price of RM2.90. The RON 97 price decreased with a 5 sen to RM 2.85 per litre. (Lim, 2013)

On 9th September, the price of RON97 dropped by 10 sen to RM2.75 per litre. (Lim, 2013). Royal Malaysian Customs Department senior assistant director Ishak Daud toldSin Chew Dailythat there is an addition of 80 to 85 zero-rated items. Prime Minister Datuk Seri Najib Razak announced that diesel and LPG will be exempted from the Goods and Services Tax (GST) taking effect in April 2015 (Tan, 2014). The prices for RON 95 petrol and diesel will slightly increase by 20 senon 2 October, announced by the Ministry of Domestic Trade and Consumer (Sze, 2014). The Sun reported that Political party PAS urged for an increase in price for both petrol and diesel, to allow petrol station operators compete with each other (Lim, 2014). Theprices of petrol and diesel were indicated to drop until January of next year (Lee, 2014).

In short, the graph in 2013 shows there’s an upward trend for Ron95 and diesel where there’s a rise in 20sens on 3 September. However, the fuel price for Ron97 fluctuates between a low of RM2.70 and a peak of RM2.90 before ending at RM2.75 at the end of the year. In 2014, there was a plateau in fuel price for Ron95 and diesel from January to September and then it increase gradually. For Ron97, the fuel price rises since January but then fell gradually after June.