Expected Price Hikes in Malaysia for 2016

It’s been several weeks since Budget 2016 was announced by the government, but that doesn’t mean that its effects were felt only in the few days following that. On the contrary, the repercussions that come with Budget 2016 won’t be felt until it comes into effect next year. Here’s a list of expected price hikes next year, based on the reduced allocations given to the various ministries listed below.

(Sourced from iMoney and The Rakyat Post)

#1 Government-subsidised items
The Ministry of Finance saw the largest cut in its allocation within Budget 2016, from RM39.247 billion to RM32.247 billion. The 17.8% reduction was made through a reduction in subsidies which is expected to go down a whopping 45%! Malaysians are already faced with subsidy cuts for sugar and petrol. The lower allocation here points to a probability that further cuts on subsidies for rice, cooking oil, electricity, fishermen’s incentive and rice production incentives, low-cost housing, medical, welfare and 1Malaysia initiatives being removed in stages. With the subsidies removed, these items or items related to these processes will definitely see a price hike.

#2 Public higher education
The second largest cut in allocation was targeted at the Ministry of Higher Education, which saw its budget reduced by 15% or RM2.4 billion. Public universities in particular will feel the brunt of the cut, as their funding will be reduced by a little over RM1.4 billion. Universities that will be affected are Universiti Malaya, Universiti Malaysia Terengganu and Universiti Teknologi Mara. The Ministry has assured that fees for undergraduate programmes at public universities will remain the same, but it will probably mean less scholarships, student loans, facilities and amenities.

#3 Cooking oil… and food
First petrol, now cooking oil? Apparently so, if the 60.8%, or slightly over RM1 billion, reduction in the Ministry of Plantation Industries and Commodities is any indication. The single largest portion of the cut came from the RM950 million cooking oil price stabilisation scheme which will be completely removed under Budget 2016 – that means no more ceiling price on cooking oil. This will mean that consumers will likely have to pay more for cooking oil, and subsequently outside food.

#4 Train fares and flight tickets
In face of the impending hike in train fares come Dec 2, commuters are right to dread the coming year, as there is a high probability of further raises in transportation fees. Under Budget 2016, the Ministry of Transport saw a budget reduction of 14.1%, or RM648 million to RM3.955 billion. Areas that will see cuts include subsidies for KTM trains and flights from rural regions. Subsidy for “uneconomical” KTM routes will be slashed by more than half, while rural flights and aircraft rental will be reduced by RM5 million from RM160 million. Two groups of people will be affected by this cut, namely the commuters who go to work via train, and urbanites who return to their hometowns during weekends or festivals.

#5 Electricity
Even if the train or flight ticket hikes don’t affect you, this one definitely will. The Energy, Green Technology, and Water Ministry will suffer a RM605 million (21.1%) cut down to RM2.262 million. Consumers will have to pay more for electricity as the electricity bill subsidy will be completely removed. Currently, poor households which use less than RM20 in electricity have their electricity bill fully subsidised by the government.

It looks like the various impending price hikes next year, from food to transport to electricity, will take a major toll on everybody’s expenses. Time to start planning your expenditures wisely, save money by resisting temptation (be it the latest gadget, designer bag or indulgent food) or find some ways to make some side income. After all, as the saying goes, ‘when there’s a will, there’s a way’.