Fuel prices at the pump in Malaysia are low compared to that in many major world economies, according to a recent study by international accountancy network UHY.
Bernama reported on the findings of the study, which indicates that subsidisation at 30% for petrol and 40 % for diesel makes fuel prices in Malaysia considerably lower than many major developed economies, in particular European countries.
Comparatively, the UK, France and Germany all levy taxes of at least 60 % on petrol, and between 40 and 60% for diesel. As an example, filling up a tank on a Ford Transit van with diesel in Malaysia adds up to RM159, a third of what it would cost in the UK, where diesel prices are highest, the study states.
Environmentalists may argue that petrol taxes are important in cutting greenhouse gas emissions, but the transport lobby and SMEs say that keeping the costs down is vital for all businesses, the global accountancy network adds.
The study, UHY says, 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," said Alvin Tee, senior partner at UHY in Malaysia.
"Subsidising diesel prices is particularly beneficial for fast-growing small and medium businesses running fleets of commercial vehicles, especially in sectors like distribution and retail. These businesses can be key drivers of economic recovery," he added.
Fuel subsidies in Malaysia are reported to cost the government an estimated RM46 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, the Bernama report adds.
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