But Petrol Dealers Association of Malaysia president Khairul Annuar Abdul Aziz said if the government decides to remove the cap and float the prices of RON95 and diesel, the association would prefer a monthly float rather than a weekly one.
He was commenting on reports that the government may remove the RM2.08 ceiling price for RON95 once it introduces targeted fuel subsidies.
Domestic Trade and Consumer Affairs Minister Saifuddin Nasution Ismail has said that the Cabinet has yet to make a final decision on the matter.
Khairul said the weekly float system could lead to “tense” situations between oil corporations and dealers, given that normal replenishment of RON95 is on a daily basis, while RON97 is replenished on a weekly basis, depending on sales and price.
“When global oil prices go up, dealers will stock up on their supplies prior to the price hikes. This also puts a strain on logistics companies as the demand will be high.
“When the oil prices go down, the petrol companies will want to push their supplies before the price reduction,” he told FMT.
Khairul said if prices are adjusted on a monthly basis, there would be enough time for oil corporations and petrol dealers to recover from the impact of the previous price change.
On the implementation of the targeted subsidies, he said the association hopes the mechanism will see cash aid given directly to the recipients as this would make their operations easier and reduce administrative costs.
He said mechanisms that involve many layers, such as where individuals who qualify for the subsidy pay a subsidised amount at petrol stations following which dealers claim the subsidised amount from the government, would be costly.
However, economist Firdaos Rosli from the Institute of Strategic and International Studies said the government should remove the cap on RON95 as this would allow inflation to happen naturally.
“Right now, there is no real push for an increase in wages, and with the petrol prices capped, the prices of goods are artificially kept lower,” he told FMT.
“The government should just allow for inflation because the real prices of goods will be reflected and it will underline that our salaries are no longer enough and push employers to increase salaries,” he said, adding that employers tend to look at inflation numbers in determining costs, including salaries. - FMT reports
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