While I understand the tough step taken by the Malaysian Federal Government to advance subsidy rationalisation which is a needed in the current fiscal challenges, but its implementation must be done properly to ensure those who needs them are not unproportionately affected and all resources freed must be transparently shown to be properly allocated to other well-being initiatives and efforts to promote growth in country.
This includes the announcement by the prime minister Datuk Seri Anwar Ibrahim on the government’s intention to introduce a targeted diesel subsidy in phases in his Budget 2024.
We understand the need for such rationalisation. Currently the price for diesel at open market is RM3.75 per litre and based on the current subsidised diesel price, which is set at RM2.15 per litre, the government needs to subsidise RM1.60 for each litre of diesel sold, or around RM1.5 billion ringgit in total.
On top of that, according to consumption data, subsidised diesel sales in Malaysian have increased by up to 40% since 2019, while the number of vehicles using diesel only increased by less than 3%, leading to the possibility of serious smuggling activities due to the low price of diesel in the country.
Although there will be exceptions, with subsidised diesel prices will continue to be enjoyed by selected users such as goods transport and logistics companies, while other users will be charged a higher price. With that approach, the government will be able to reduce subsidy leakage and at the same time, reduce the impact on the price of goods for the people.
That is why I urge for a proper timeline to be communicated to the public as well as a comprehensive implementation mechanism to be announced so that in our efforts to reduce wastage and corruption, we do not over burden those that really need it.
This is especially true for diesel subsidy rationalisation which affects many in Sabah and Sarawak who depends on diesel vehicles due to the demographics of these 2 regions.
That is why I suggest, that any subsidy rationalisation especially for diesel to be done progressively to allow the people and the market to adjust. There must not be a sudden huge increase or for the price to be floated immediately to prevent a sudden shock to market.
Secondly, the government should communicate a series of measures to transparently utilise the subsidy savings in impactful ways. The amount that is saved from the fuel subsidy can be spent in ways that are very easy to understand and also easier to understand by the common people and also impactful to them.
This includes communicating transparently on how such savings can be used to equip and improve our healthcare services or build more schools.
What is most important is a comprehensive implementation mechanism to ensure rebates and financial aids are channelled to the B40s and M40s to balance the increase in prices of diesel due to this rationalisation.
The mechanism must be transparent to reduce possible corruption and more important, efficient, so the assistance benefits the people that truly needs it a timely manner.