KUALA LUMPUR: The 'when and how' remain the most crucial part of the the diesel subsidy rationalisation plan by the government.

In a statement to Business Times, Malaysian International Chamber Of Commerce & Industry (MICCI) president Christina Tee acknowledged that the  rationalisation of the fuel subsidy is a vital step in reforming Malaysia's economy, which can help reduce fiscal deficits, promote more efficient energy use, and encourage investment in renewable energy sources.

"However, the success of these measures hinges on the government's ability to execute them with integrity and transparency to maintain public trust," she added.

National Council of Professors fellow Professor Dr Azmi Hassan acknowledged Prime Minister Datuk Seri Anwar Ibrahim's move to curb speculation by making his May 21, 2024 announcement of diesel subsidy but reiterated the need for more details to allay public concerns.

"We definitely need targeted subsidies for diesel and petrol, but the problem lies in the mechanism itself."How will it be implemented? Will it be at the petrol station or elsewhere? This is crucial because if it's at the petrol station level, it could increase costs for petrol station owners," Azmi said.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the government has made significant efforts to ensure more businesses qualify for diesel subsidies, preventing a rise in logistic costs.

"I suppose the government should roll out an awareness campaign on subsidies. The public should know who are the beneficiaries, the amount allocated, the expected savings from the rationalisation and the potential areas that the government might spend more in order to lift the standard of living among Malaysians," he added.

Afzanizam said that education, healthcare, and infrastructure could be key areas for investment using the savings from subsidy rationalisation.

"If the public perceives the benefits of these changes, the government will likely gain more support and facilitate a smoother implementation process," he said.

"At the moment, the one that has been benefitting the subsidies are the Top 20 (T20) income group whereby 53 per cent of the subsidised fuel are being consumed by the T20."On top of that, there are 3.5 million foreigners who have been enjoying the fuel subsidies and not to mention the smuggling activities as the price of our fuel is extremely cheap compared to our neighbouring countries," he told the Business Times.

Afzanizam noted that the savings from the subsidy rationalisation can be used to give more cash aid to the deserving Malaysians. 

"More importantly, there will be more funds to be used for capacity building such as education which will help improve our productivity in the long run."The government can also allocate more resources to healthcare and infrastructure which eventually will help improve our productivity level," he added.

Last Tuesday, the cabinet agreed to kick off the country's fuel subsidy rationalisation programme with targeted diesel subsidy, saving the government around RM4 billion a year.

https://www.nst.com.my/business/economy/2024/05/1055619/when-and-how-most-crucial-part-diesel-subsidy-rationalisation-say