PUTRAJAYA – The diesel subsidy rationalisation programme to be implemented should have little impact on the cost of goods and services since almost all transportation companies would continue to enjoy subsidised diesel.
The government is expected to issue about a million diesel fleetcards as part of its effort to shield the transportation sector from the impact of possible higher fuel prices that will come with the rationalisation programme.
The fleetcard will mean these vehicles will continue to enjoy diesel at a subsidised price, which in turn will remove the need for transport companies to hike the cost of their services.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the subsidy rationalisation programme’s impact on the cost of transportation should be neutral and subsequently should not be used as a reason for raising the prices of goods and services.
Nevertheless, there could be occasions when parties may want to take advantage of the rationalisation programme.
He said this during a recent briefing for senior editors at the Finance Ministry.
Subsidised diesel at the pump now retails at RM2.15 per litre. This price should continue for the transportation industry with the use of fleetcards, each to be assigned to one vehicle and non-transferable.
The fleetcards will also help in monitoring consumption and to see if subsidised purchases were for target groups and not abused, such as for smuggling or commercial uses.
Public transportation vehicles will continue to have access to diesel at RM1.88 per litre.
Depending on the global fuel market, unsubsidised diesel currently costs RM3.48 per litre.
Regardless, the impact on the entire subsidy rationalisation programme, not just from diesel, could see inflation rise between 2% and 3.5% per year. Inflation for April was at 1.8%.
Amir Hamzah said the government will continue to monitor prices and will also raise the level of enforcement to discourage profiteering.
On May 21, Prime Minister Datuk Seri Anwar Ibrahim announced that the cabinet agreed to implement targeted diesel subsidies, projected to save the government around RM4 billion annually.
However, these targeted subsidies will not affect users in Sabah and Sarawak.
Additionally, the government will continue providing diesel subsidies to certain business sectors using diesel commercial vehicles while mitigating the risk of sudden price hikes for goods and services. – May 31, 2024