KUALA LUMPUR – Prime Minister Datuk Seri Anwar Ibrahim has announced the government’s intention to gradually rationalise diesel subsidies to curb potential leakages and smuggling.
However, Anwar, who is also finance minister, said that subsidised diesel prices will be retained for specific user groups, such as goods transport companies.
He said currently, diesel fuel is subject to significant leakage concerns. The subsidised diesel price is fixed at RM2.15 per litre, while the market price stands at RM3.75 per litre. Consequently, the government bears a cost of RM1.6 per litre, totalling around RM1.5 billion ringgit.
Analysis of consumption data reveals a 40% increase in subsidised diesel sales since 2019, whereas the number of diesel-powered vehicles has risen by less than 3%. This indicates a potential for extensive smuggling due to the remarkably low Malaysian diesel price.
“To address leakage and smuggling issues, the government plans to gradually rationalise diesel subsidies. The concept involves preserving subsidised diesel prices for selected users, such as goods transport companies,” he said when tabling Budget 2024 in Parliament today.
“Meanwhile, other users will face higher prices. This approach aims to mitigate subsidy leakages while minimising the impact on the cost of goods for the general population.”
He said while the government recognises the right of traders to earn a reasonable profit, it is committed to combating cartel-like behaviour and price collusion that result in unjustified price hikes.
“Such practices run counter to the principles of fair competition under the Madani concept,” Anwar said, adding that the government will not stand idly by if the retargeting of subsidies is exploited as an excuse for unwarranted and reckless price increases.
“In light of this, the government’s primary focus is on eradicating these parasitic practices through stringent and comprehensive control measures under the Domestic Trade and Cost of Living Ministry.”
Additionally, he said the government will allocate RM10 million to enhance the capabilities and functions of the Malaysian Competition Commission. – October 13, 2023