Complete removal of price controls by Aug 08
Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad has said that the new price of RON97 at RM2.70 does not reflect the full market value, which could be as high as RM3.00-RM4.00 when price controls are completely removed in Aug 08. Based on our own calculations, if crude oil prices stay at the current level of US$125 per barrel in Aug 08, the estimated market rate under APM for RON 97 is about RM3.29 per litre, another 22% rise from the new price of RM2.70 per litre. At RM2.70 per litre, we believe the Government, which has exempted sales tax on petrol, will continue to forego the sales tax revenue under the automatic pricing mechanism (APM)
Source: Affin Investment Bank
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