Diesel Subsidy Costs Malaysia RM1 Billion A Month

Tags: diesel, finance minister, Finance Ministry, fuel subsidy rationalisation

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Following the Prime Minister’s announcement of the impending diesel fuel subsidy rationalisation, Finance Minister II Datuk Seri Amir Hamzah Azizan has stated that the diesel subsidy costs the government RM1 billion a month to maintain.

Adding to that, the government also has to bear losses amounting to RM4.5 million a day from leakages.

Hence, the diesel fuel subsidy rationalisation is one of the key reform measures under the Ekonomi Madani framework to ensure a sustainable fiscal management for the government, without compromising the needs of the people.

According to a video from his Linked in page, Amir stated that the disparity between Malaysia’s subsidised diesel price and the market rate has caused years of smuggling into neighbouring countries.

The subsidised diesel price also incentivised large segments of the commercial sector to increase profits on the back of cheap diesel, which they are not originally eligible for.

Subsidy rationalisation will come, but only when the government gets it right

When asked about when can the public expect the fuel price changes to be implemented, Amir said, “subsidy rationalisation will come, but we will not press the button if we have not got this thing sorted out well.

“What the government is doing now is fine-tuning it to make sure that when it presses the button, it gets it right and it actually looks after the right groups and actually gets enough savings from the system as it stops.”

Subsidy rationalisation designed to take away subsidy from the rich and foreigners

Last Tuesday, Prime Minister Datuk Seri Anwar Ibrahim announced that the fuel subsidy rationalisation will start with diesel first; starting in Peninsula Malaysia, while the implementation in Sabah and Sarawak will happen later.

In his speech, Anwar stated that the fuel subsidy rationalisation is a needed initiative in order to make sure that the subsidy is actually going to people who really need it most.