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Fuel price may cause pricing problems, says Chua

December 3, 2014

Deputy finance minister says change caused by managed float system needs to be gradual to gauge market reaction

chuaKUALA LUMPUR: Businesses may face problems pricing their products due to the free-floating mechanism which causes the fuel pump price to fluctuate daily, noted Deputy Finance Minister Chua Tee Yong.

The government recently announced that the retail price of RON95 petrol and diesel would follow the managed float system from December 1, using an automated pricing mechanism formula.

“We need to have a gradual change to see how it fits the current context and the market’s reaction to it,” he said after delivering his keynote address at the Understanding The Law on Estate Agency Practice and Implication on Government, Agencies and Private Sector seminar today.

The one-day seminar organised by the Board of Valuers, Appraisers and Estate Agents Malaysia (BOVAEA) aims to combat crimes committed by illegal estate agents and brokers.

Chua said floating the pump price of fuel according to market forces reduced the subsidy burden on the government and increased its savings.

He said Malaysia used Singapore’s Tapis Crude price as a benchmark, a price which was still averaging above US$100 a barrel to date, which is in line with the government’s expectations for this year.

Petronas has hinted that if the slump in global oil prices persist, dividend, taxes and royalty paid to the government next year would also be lower.

Commenting on this, Chua said that while the amount of dividend must be decided and agreed by both parties, no one can predict the global oil price movement.

Meanwhile, Chua will discuss with the Customs Department as to whether the maintenance fee for residential apartments will be exempted or included in the zero-rated list for the Goods and Services Tax (GST).

“This is because the bodies handling the maintenance fee are usually non-profit or voluntary in nature.

“They are worried that when the GST is implemented, there might be an increase in service charges or the maintenance fee,” he said.



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