Government Diesel Subsidies Remain a Burden Despite Rationalisation

Despite efforts to rationalise diesel subsidies, the government continues to shoulder a substantial burden, amounting to RM10 billion annually, as disclosed by the Finance Ministry in a parliamentary written reply.

Breakdown of Subsidies

According to NST, the ministry revealed that this annual subsidy includes RM4 billion earmarked for the public transport and logistics sectors. Diesel prices are maintained at RM1.88 per litre for 10 types of public transport vehicles and RM2.15 per litre for 23 types of logistics vehicles.

In addition, RM3.3 billion is allocated for diesel users in Sabah and Sarawak, who benefit from the RM2.15 per litre rate. Fishermen receive RM1.2 billion in subsidies, with diesel priced at RM1.65 per litre. Another RM1.8 billion is provided through the cash assistance programmes Budi Individu and Budi Agri-Komoditi.

Reduction in Total Subsidies

The ministry noted a reduction in the total annual subsidy from RM14 billion last year to RM10 billion this year. This decrease is attributed to targeted subsidies, which have saved the government RM4 billion in operating expenses annually.

This information was provided in response to Ahmad Fadhli Shaari (PN-Pasir Mas), who questioned the anticipated savings from the rationalisation of fuel subsidies.

Government Initiatives

On May 21, Prime Minister Datuk Seri Anwar Ibrahim announced the cabinet’s decision to implement fuel subsidy rationalisation, with a focus on diesel. Following this, on June 9, Finance Minister II Datuk Seri Amir Hamzah Azizan declared that diesel prices in Peninsular Malaysia would be set at RM3.35 per litre, effective June 10, based on the market rate using the Automatic Pricing Mechanism formula.

Amir Hamzah stated that this move would save the country RM4 billion annually and enhance its long-term financial position. He also mentioned that diesel prices would be announced weekly by the Finance Ministry, with ongoing monitoring to prevent price instability.

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