Diesel price announcement bodes well for Malaysians although some questions its availability and supply
Just recently, the Malaysian government announced price of its diesel will be subsidized at a rate of RM2.10 beginning July. The backbone of the country in terms of logistics, agriculture, transportation to name a few, rely heavily on diesel to power their businesses.
A reduction no matter how small it may be, is still a reduction. The ripple effect is gargantuan for the economy simply because the cost of living is linked in many ways to prices of oil.
Malaysia’s Finance Ministry has announced that its citizens would be entitled to purchase subsidised diesel at RM2.10 per litre through a MyKad-based mechanism, similar to the Budi95 programme.
Also, on a high note, retail price of diesel in Sabah and Sarawak would also be consistent with the retail price in Peninsular Malaysia. Of course, non-citizens and ineligible parties will have to purchase diesel at the unsubsidised price.
Given the strain on global oil supply brought about by the Middle East crisis, the move is important to ensure that the subsidy is enjoyed only by Malaysians and reduce leakage and smuggling of the fuel.
Dr T. Saravanan, chief executive officer of the Federation of Malaysian Consumers Associations said the move was timely and that it would help ease cost-of-living pressures, especially for households and businesses that depend on diesel-powered vehicles.
“Lower fuel costs can also help stabilise the prices of goods and services, benefiting consumers nationwide. At the same time, effective enforcement and monitoring are crucial to prevent leakages, smuggling and misuse of subsidised fuel. Any subsidy mechanism must ensure public funds are used efficiently and reach the intended beneficiaries,” he said.
However, there were some who were cautious like Malaysian Tamilan Tow Truck Association president Mathevaanan Mohanaraja who expressed that the effectiveness of the initiative would ultimately depend on how much subsidised diesel each MyKad holder is entitled to receive.
It was noted that many users already find the allocation under the current Budi Madani RON95 (Budi95) programme insufficient for their needs. “Our fuel consumption is high. Even 100 litres can be used up very quickly. So we are not sure if the allocation will be enough, and it probably won’t be. Another issue is supply. Sometimes petrol stations do not have sufficient diesel. The government may say supply is available, but the reality on the ground can be different,” he said.
Only time, and our Malaysian government, will tell how effective it would be for the people and businesses of Malaysia
