Prices of diesel will officially be floated starting today as the long-anticipated subsidy rationalisation exercise in Malaysia kicks off. Beginning from midnight today, diesel is now priced at RM3.35/litre in Peninsular Malaysia, while it is still maintained at RM2.15 in Sabah, Sarawak, and Labuan for now.

Over the past two years, the government has stated its intentions to review its fuel subsidy mechanism to Malaysians in a bid to prevent leakage and provide assistance to those who need it more as the government allocation for subsidy has ballooned to RM80 billion in 2022. It has been testing various mechanisms, and it appears that the government has a mechanism locked in place and is implementing the rationalisation exercise in stages.

The first stage starts today with the flotation of diesel fuel in Peninsular Malaysia, where the RM3.35/litre price is based on the Automatic Pricing Mechanism formula for the month of May. This is a 55.8% increase, and despite that, diesel prices in Malaysia is still the second-cheapest in Southeast Asia. The flotation of diesel fuel will be implemented in Sabah, Sarawak, and Labuan at a later date.

To ensure that prices of goods and services are not severely affected, the government had previously stated that diesel subsidies will continue to be available for commercial vehicles and public transportation under the Subsidised Diesel Control System (SKDS), and also to certain categories of fishermen.

On top of that, cash aids of RM200 per month will be available to eligible Malaysians through the Madani Subsidy Assistance Programme (BUDI MADANI) launched a few weeks ago. This covers both individuals and as well as small traders and farmers who own private diesel-powered vehicles.

At a press conference to announce the flotation of diesel fuel, Finance Minister II Datuk Seri Amir Hamzah Azizan stated that the government will save the country around RM4 billion annually and strengthen the country’s financial position in the long run.

“The targeted subsidy decision (by the government) is not an easy step, but one that has been given particular attention. We want to curb leakages that have resulted in losses for the people and the country. We have suffered huge losses yearly and that can impede the country’s economy,” he added.

• TAGS:
• Datuk Seri Amir Hamzah Azizan
• Diesel Subsidy
• Subsidy rationalisation