The retail prices of RON95 and diesel are expected to go up in January due to an increase in the price of crude oil in the world market this month, said Finance Ministry Strategic Communications director Datuk Lokman Noor Adam.

He said the retail price of RON95 and diesel were set according to the average prices of the fuel in the world market for a month, as well as being influenced by the ringgit's movement against US dollar.

"The average (here) means the prices from day one to 31 (of the month) divide by 31 days. Not the global oil prices at the end of the month as understood by certain quarters.

"With the current strengthening of the US dollar against ringgit, the cost of purchasing crude oil will also increase. Hence, the surge of the retail fuel price in Malaysia," he said in a statement here today.

Lokman Noor said the retail prices of fuels in the country had been decided using the controlled flotation method since Dec 1, 2014 following a drop in global oil prices then, which saw the prices being determined by the market on a monthly basis.

He said there were still many people who could not accept the fact that the government needed to discontinue giving the bulk of subsidies and help the people by distributing the subsidy to the right group.

Lokman Noor said the previous bulk of subsidies given to the people meant that both the rich and the poor received the same amount of subsidy.

"For instance, in July 2014, we've subsidised RM0.6843 for each litre of RON95. Unfortunately, the rich people used the fuels in bigger quantity which was far more than the poor people.

"For example, the subsidy for the poor people driving (Perodua) Kancil were only around RM16.29 when they filled their tanks to full with RON95.

"Whereas those in the middle class bracket driving Toyota Camry spent RM150 for a full tank. The subsidy that the government has to pay to these group would be RM48.87, a three-fold increase than the poor. Is this fair?" he asked.

Lokman Noor said based on a study by the Finance Ministry, the government spent 70 per cent of the fuel subsidy to help the rich while the target group only enjoyed the remaining percentage of the subsidy, in the form of RON95 and diesel.

At the same time, he said the foreigners also enjoyed the subsidy which was borne by Malaysian taxpayers via the bulk subsidy system.

According to Lokman Noor, the subsidy given to the Malaysians were also enjoyed by the foreigners when the drivers of Singapore-registered vehicles entered the country on a daily basis, especially on weekends, and when the fuels being smuggled into Thailand and the Philippines were sold in the international waters.

"Subsidy means help, assistance and handout from the government to the people. If (you) ask who should get the assistance, we should certainly help the less fortunate first before the rich.

"And they should definitely be given to our people, not the foreigners," he said. -- BERNAMA