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KUALA LUMPUR: The government wants to stabilise the rationalisation of diesel subsidies first before considering further reforms, Finance Minister II Amir Hamzah Azizan, said stressing that this approach is to ensure careful and measured adjustment.
“For now, we are focusing on diesel subsidies. Once we have stabilised diesel, we will consider others. The government’s current focus is on diesel subsidies,” he told reporters at BNM Sasana Symposium 2024 (SS2024) at Sasana Kijang, Bank Negara Malaysia, here today.
He said the government’s current effort is to enhance public understanding of why subsidy rationalisation is being implemented.
“And to encourage eligible individuals to apply for our Budi system, where we provide cash transfers through Budi Individu, and Budi Agri Commodity for eligible citizens,” he added.
Last Sunday, Amir Hamzah announced the rationalisation of diesel subsidies, starting with an increase of 3.35 sen per litre at petrol stations. The goal of the rationalisation is to reduce leakage, where many subsidies have been benefiting neighbouring countries and sectors that do not qualify.
“By aligning the market price with the price at petrol stations, there is no incentive for people to shift from one sector to another, thus reducing sectoral leakage. Initial observations indicate that the increased price has led to a reduction in the volume of diesel crossing borders. Conversations with oil companies confirm that volumes at border stations have decreased,” he explained.
Amir Hamzah said the government believes that targeting subsidies can reduce leakage and is crucial to support sectors affected by price increases.
“The SKDS scheme allows public land transport to buy diesel at subsidised prices. Public transportation, including express buses, school buses, ambulances, and hearses, still receive diesel subsidies. The government has also extended these subsidies to logistics companies, helping to control the impact on goods prices,” he said.
On Sunday, the government announced that the retail price of diesel fuel is set at RM3.35 per litre starting June 10 in Peninsular Malaysia, while in Sabah, Sarawak, and Labuan, it remains at RM2.15 per litre.
Through targeted subsidies, prices per litre for eligible sectors are: SKDS 2.0 for logistics vehicles RM2.15; SKDS 1.0 for public land transport (school buses, express buses, ambulances, fire trucks) RM1.88; and for fishermen RM1.65.
Earlier, in his keynote speech, Amir Hamzah said the Malaysian economy is projected to grow between 4% and 5% in 2024, supported by export recovery and resilient domestic demand.
He said trade recovery will be underpinned by the global technology upcycle and further recovery in tourism activity.
“Household spending would be underpinned by improving income and employment. Investment activity will be driven by further progress of multi-year investment projects by both the public and private sectors.”
The implementation of catalytic initiatives under various master plans, such as National Energy Transition Roadmap, New Industrial Master Plan 2030 and 12th Malaysia Plan will further boost investment, Amir Hamzah said.
Hence, he added, the government is committed to delivering a meaningful structural reform because this is necessary to build a more prosperous and inclusive Malaysia.
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